As we have covered in previous client alerts, the COVID-19 pandemic has created a raft of unique challenges for employers striving to maintain safety, efficiency and productivity, and employees who, perhaps for the first time in their working lives, are now consistently working from home. For many of these employees, feelings of social isolation have led to reports of anxiety and depression, and with the Silly Season just around the corner, this means some serious red flags for employers. In this client alert we examine some of the current difficulties, and projected difficulties that COVID-19, will have on employees, and how best employers might deal with them.
Social Isolation
According to a recent survey conducted by the Royal Melbourne Hospital, half the healthcare workers surveyed are feeling “burnt out” and wanting to leave their profession due to the overwhelming volume of issues they are being called on to deal with due to community mental health complaints caused by COVID-19 and from workers working from home. Remote working, whilst it might at first have sounded convenient insofar as employees could ‘pop a load of washing in the machine’ or ‘run the kids up and back from school with minimal disruption to their work day’, are now experiencing a raft of new and unique difficulties.
For example, employees are reporting:
· feeling isolated, lonely, or disconnected from their colleagues;
· being unable to ‘switch off from work’;
· reduced boundaries between work and personal life;
· having difficulty staying motivated;
· having difficulty prioritising workload;
· feeling uncertain about personal productivity and whether they are performing according to expectations;
· feeling guilty about not performing work or family duties as effectively; and
· insomnia and sleeping problems.
These issues can manifest for simple reasons such as a misunderstood email communications or exclusion from a particular virtual meeting. These difficulties are exacerbated by the inability for employees to readily discuss their grievances with their colleagues, so they end up ‘stewing in their own juices’. In turn, this can lead to claims of workplace bullying, taking time off on account of feeling stress and anxiety and general performance issues, all of which combine to reduce an employer’s overall productivity. More concerning however is the very real effect this may be having on the mental health of employees.
Employers have a duty to ensure that they provide a safe system of work and that employees are not subjected to the risk of mental health concerns because of the way they work. On top of this obligation, employers need to be cognisant that most people are struggling in some way with the consequences of the pandemic. As such, it is reasonable to expect that the level of underlying mental health issues is far greater now and can easily be exacerbated by a poor work environment or other work stressors. Employers really need to be taking careful consideration of these unseen matters and at least making reasonable efforts to ensure they have considered the matters that may increase the risk of mental health concerns for their employees and put in place mechanisms to address this if possible.
It is fairly assured that we will see a dramatic increase in litigation by employees against their employers both in the workers compensation arena and for breach of employers’ work health and safety obligations as a result of mental health claims. Responsible employers who wish to ensure they do not have to deal
with such litigation and want to ensure increased sustained productivity are well advised to pay special attention to their employees emotional and mental wellbeing.
Given the current time of year, most organisations would historically have been planning Christmas functions. These functions were an important part of the employer’s ability to say thank you to its employees and give employees a social environment to enjoy themselves and interact with colleagues in a far more relaxed context. It was an opportunity to increase company moral and reinforce the organisations culture. However, for the most part, this year these types of gatherings will not be possible. So how can businesses address this gap, given the ever-increasing need for this type of social interaction?
Virtual Christmas Parties
In years gone by, the office Christmas party was a welcome opportunity for employees to let off steam and celebrate the end of the year in the company of their colleagues. Of course, that set the scene for overindulgence and inappropriate workplace behaviour which, for some employers and employees, made for some very difficult conversations upon returning to work.
This year, due to restrictions on numbers at various venues and some offices still not catering for a full return of their employees, virtual Christmas parties will become a new norm whereby work colleagues will get together through the use of technology such as Zoom. Rather than supplying a controlled amount of alcohol at a planned and regulated office function, employers may send a small selection of alcoholic beverages to their employees by mail/courier.
Whilst it is highly impractical to send an excessive amount of alcohol by courier to be enjoyed by employees at the virtual office party, employers have no means of controlling the quantity of alcohol consumed by individuals, as they may well ‘stock up’ in their homes. This may result in some employees, within an employer sponsored virtual party environment, becoming heavily intoxicated. Not only does this create an unsafe situation, but, when coupled with some employees’ enduring feelings of anxiety, social isolation, disconnection and, in some cases, feeling as though they have been the subject of bullying, intoxication could result in serious inappropriate workplace behaviour. Where an employee has felt disenfranchised for an extended period, is in the comfort of their own home and whose normal inhibitions are depressed by alcohol, the potential for outbursts of offensive and unacceptable behaviour is omnipresent.
To mitigate this risk, it behoves 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 being conducted virtually and not 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 virtual Christmas parties;
2. consulting with staff in relation to your expectations of their behaviour at virtual 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.
Furthermore, it should be agreed prior to the commencement of the virtual event that an ‘event moderator’ will be in place and, at the first sign of inappropriate comments or behaviour, employees will be dismissed from the virtual event (by being disconnected from the Zoom meeting).
Finally, as is the case at in-person functions, employers should be cognisant of employees looking to ‘kick-on’ at the conclusion of the virtual event. Whilst this is less likely where employees commenced the function from the comfort and safety of their own homes, the potential exists that some employees, who may have overindulged, see fit to want to meet with some of their colleagues at a venue and continue the festivities.
It is almost impossible for an employer to prevent this if an employee, or group of employees, are so inclined; however, to mitigate the risk, an employer should seek to have pre-emptive conversations with their employees prior to the virtual function, including the risks to their employment should they engage in drink driving, let alone theirs and others’ safety, and that any unsavoury incidents that might occur between work colleagues, even after the conclusion of the virtual event, may have ramifications when they return to work.
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. This is particularly poignant this year for employees who might be suffering from mental health issues caused by prolonged COVID-19 isolation. A ‘steady hand’ is required.
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.
For many of us, working from home at least some of the time this year has become the norm. For quite a significant number of employees, working from home has become a regular and permanent (or at least current) way of working. We have written previous client alerts regarding the steps employers should take to ensure they are meeting their legal obligations if they have employees working from home. In this client alert, we examine some recent cases in the Fair Work Commission (FWC) which have had to deal with the legal implications when working from home, is not all its cracked up to be.
In a recent decision of the FWC, Deputy President Coleman was required to decide whether the employer, Red Energy Pty Ltd, who had encouraged its employees to work from home during COVID, and then required them to do so due to the lockdown in Victoria, had a positive obligation to provide its employees, and more particularly the applicant, with a desk from which he could work at home. The company had provided its employees with laptops, headsets, adjustable chairs, ergonomic assessments, and access to occupational therapists, but refused to provide the applicant with a desk. The Applicant argued that he had recently moved house, did not have a desk and was not in a financial position to buy one.
The Applicant argued that he had no choice but to resign given he could not work as the company had refused to buy him a desk. The Applicant then commenced an unfair dismissal claim. The Deputy President however found that the Applicant did not have to resign but chose to do so. The FWC found that the Applicant could have remained employed and bought himself a desk.
The decision is illustrative of a pattern we are seeing emerge, where employees now feel that they have the “right” to work from home and can demand that the employer facilitate that this occur. This is not in fact the case, unless you as an employee are unable to attend for work (for example because of a lockdown or requirement to isolate), you do not have any “right” to work from home. In fact, even in those circumstances, it is open to the employer to require the employee to take paid or unpaid leave. If an employer however directs employees to work from home, it does have certain obligations to ensure the employees are able to work from home. It may be that if the employee cannot purchase or acquire the necessary equipment to enable the employee to perform his or her duties, the employee can refuse to do so, but this is not the same as terminating the employment, and nor does it mean the employee is forced to resign as is demonstrated by the Red Energy decision.
What about the difficulties of managing behaviour and performance of employees working remotely? This issue was front and centre in another recent FWC decision. In this recent decision by the FWC, the FWC has found in favour of an employee who had commenced unfair dismissal proceedings as a result of her summary dismissal.
The company argued that the employee, who was a sales representative who worked remotely, failed to provide weekly sales reports for which she had been previously warned, had several customer complaints and had a poor attitude and lack of respect for management. The final straw for the Company was the fact that it appeared from the employee’s Instagram account that she had conducted personal activities during working hours.
The FWC found that the company had conflicting and competing expectations for its employee including requiring daily sales reports, service all customers, comply with new reporting obligations and do so for less pay in the COVID-19 climate. Although the FWC found that the reporting failures warranted formal performance counselling they were not sufficiently serious to amount to a valid reason for termination. The same conclusion was reached in relation to the other grounds of dismissal sought to be relied upon by the employer, with the FWC finding that:
“When COVID-19 hit, the combination of reduced hours to do the job, demotivation arising from reduced hours and pay and an additional reporting obligation combined to create a set of circumstances in which an objective assessment of performance was fraught.
“Yet in that very context untested assumptions about conduct from social media posts led to an unfair conclusion that [the salesperson] had fooled the business.”
It is evident that in the context of COVID-19 and the fact that the employee was working remotely, objective assessments of her performance became difficult. Ultimately the decision to terminate her employment was found to be unfair.
What these two recent decisions illustrate, is the complexity that working remotely (and especially from home) brings to the employment relationship. Appropriate performance management and maintaining employee morale and a positive and cohesive culture is an enormous challenge for most employers most of the time. This task has been exacerbated by the increase in the number of employees working from home. Employers and employees alike need to adjust to this “new normal’ by being more mindful of the challenges faced by remote working.
It is illustrative of the complexity of the issues surrounding working from home, that the ACTU’s national executive is currently debating a Working from Home Charter of Rights, which will amongst other things seek to address the issue of “turning off” as well as privacy and data protection.
We are Here to Help
Working from home can create a number of complex and competing challenges for employers and employees. We are here to assist our clients ensure they are compliant with all their legal obligations including ensuring that if employees are working from home, they remain a vital and connected part of the team.
If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue, please feel free to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.
It would seem self-evident to most people that if you are employed, as an employee you owe certain duties to your employer, the most basic of which is not to put yourself in a position of conflict with that of your employer. This idea that as an employee you owe certain duties to your employer is certainly one of the cornerstones of the employment relationship. It is so important that the law implies certain duties into the relationship of employment, including the duty of fidelity and good faith. This duty of fidelity is extremely broad and would encompass most activities associated with the proper performance of the role. It should however, be distinguished from the fiduciary duty owed by senior employees and officers of the employer. The fiduciary relationship imposes duties over and above those required by the duty of fidelity, and has been described as follows:
“An employee owes an obligation of loyalty to the employer but .. will not necessarily owe that exclusive obligation of loyalty, to act in the employer’s interest and not in his own, which is the hallmark of any fiduciary duty owed by an employee to the employer”.1
Essentially, fiduciaries are subject to the “no profit” and “no conflict’ rules. This means that a fiduciary must not profit from their position of trust and not bring their own interests in conflict with their fiduciary obligations.2 This is what most people understand as the pillar of the no conflict of interest obligation. However, this obligation is not universal to all employment relationships, but only applies to those who hold a fiduciary relationship. It is also not entirely clear to whom the duty applies and the extent of the common law duty. As such, the scope of the duty often turns on the facts and circumstances in question.
Certainly, senior managers and company directors are subject to a fiduciary obligation, however, even in these cases it is not always clear how far this obligation extends. In the decision of Nottingham University v Fishel, Dr Fishel was employed full time as a director of the University’s infertility research and treatment clinic. With the knowledge of the university, he accepted paid consultancies in private overseas clinics. He also provided university staff under his supervision, to work in these private clinics. Dr Fishel received substantial fees for this work from the private clinics, which he retained. The university brought proceedings against Dr Fishel for breach of contract and breach of his fiduciary duties. Although, arguably obtaining outside work was a breach of contract because Dr Fishel did not actively obtain permission to do so, the University suffered no damage from his activities. It sought however to argue that Dr Fishel had breached his fiduciary duties and as such it was entitled to an account of profits, which would mean the University could claim the monies paid by the private clinics directly to Dr Fishel. The court considered whether in this circumstance, Dr Fishel owed the University a fiduciary obligation to act solely in the interests of the employer. The court found that this was not the case in respect of his own work in the overseas clinics, which was common knowledge at the University and in fact encouraged. However, the sending of University staff to overseas clinics for which Dr Fishel received a fee was a breach, because Dr Fishel had used his own position to place his own financial interests above his duty to the University.3
It is clear that the common law duty of fidelity and that of a fiduciary overlap. It is also clear that the scope of the fiduciary duty is dependent on the position held by the employee and the particular circumstances. This is not very helpful for most employers. As such, it is common for contracts of employment to include express contractual prohibitions dealing with conflicts of interest. The purpose of these clauses is to make clear to employees that they must not act in conflict with the employer’s interests and the scope of prohibition.
The case of Buitendag v Ravensthorpe Nickel Operations Pty Ltd4, dealt with a claim by Mr Buitendag for the breach of his employment contract by virtue of his summary termination. Mr Buitendag was the general manager of the employer and was employed subject to a written contract of employment. Mr Buitendag was summarily terminated because the Company claimed he had breached his employment contract in a number of areas, principally: he failed to make full and fair disclosure and made misleading statements to his manager, Mr Wilson in relation to the donation of a transportable house to the Hopetoun Clay Target Club (the Club) of which the Mr Buitendag was a founding member; requested an employee of the respondent to prepare drawings for the Club’s clay target range; requested an employee of the Company to action the donation of materials owned by the Company to the Club; requested Ertech, an independent contractor who provided services to the Company, to voluntarily undertake earthmoving works for the Club. These matters were held to involve a contravention of the conflict of interest principle.
It was a term of the employment contract that the Mr Buitendag comply with and conduct himself ethically and professionally as detailed in the company’s Code of Conduct .A further term of the employment contract was that Mr Buitendag was required to familiarise himself with, and comply with, all workplace policies and procedures and with the Company’s rules, policies, practices and procedures as introduced or amended from time to time. Those included, relevantly, the Company’s Conflict of Interest Standard (Conflict Standard). Other express terms of the employment contract included obligations to diligently and faithfully serve the Company and protect and further its interest at all times.
The trial judge found that this term reflected the duty of good faith and fidelity that is implied into contracts of employment as a matter of law. The trial judge also found that the high levels of discretion and trust placed in Mr Buitendag placed him under a fiduciary obligation in the exercise of his powers on behalf of the Company. The trial judge stated:
“[The appellant] was subject to the ‘no conflict’ fiduciary rule, that is, [the appellant] was under an obligation not to bring his interests or duty to a third party into conflict with the interests of, or his duty to, his employer without the informed consent of his employer.”
The Company was a mining enterprise situated in a small town with a predominantly farming community, with few education, sporting or recreation facilities. Mr Buitendag and a few others wanted to establish a shooting club, and approached the town council to give them a piece of land for this purpose at a reduced rent. The town agreed. Mr Buitendag in his role at work, became aware of two transportable houses on Company property, and their donation to his Club and another club were within his delegated authority. However, given his involvement in the Club, he asked his direct manager for permission to donate the two houses to the respective clubs. The manager approved the donation on the basis that the cost to do so would be borne by the Club.
A conflict of interest will exist if the interest in question is in opposition to, or in tension with, the duty of loyalty. It does not necessarily have to benefit the employee.
It transpired that in seeking and obtaining the above approval, Mr Buitendag failed to fully inform Mr Wilson of his involvement in the Club, or that he had applied to the Company to fund the removal of the house. In addition, he failed to inform Mr Wilson of the reason the Company had acquired the land on which the demountable home was situated. The Court found that these misstatements and omissions were made to induce Mr Wilson to approve the donation of the homestead and were, as a result, a conflict of interest and a breach of his fiduciary duties. Mr Buitendag also argued that the breaches were not sufficient to amount to serious misconduct warranting summary termination. At trail the judge disagreed, and on appeal, the appeal court upheld the trial judge’s reasoning as follows:
“The breaches by [the appellant] may be considered together. They all related to the donation of assets and services to the Club or obtaining such donations. The breaches all arose from [the appellant] placing himself in a position of conflict of interest. [The appellant] did not accept that there was any conflict of interest at the time. When he gave his evidence [the appellant] did not accept that there was any conflict of interest. The breaches did not arise from a single act or omission. They arose from a course of conduct in which [the appellant] was in a position of conflict of interest and failed to act in accordance with his contractual and fiduciary obligations. [The appellant] held a senior position which required him to exercise significant responsibilities and discretion on behalf of his employer. His conduct was conduct which is likely to, and did, destroy his employer’s trust and confidence in him carrying out his responsibilities as general manager of [the respondent] in accordance with his contractual obligations. It justified [the respondent] terminating his employment summarily” 5
The Buitendag case demonstrates that even if the employee is not obtaining a direct benefit for himself, as in this case, the benefit was for the Club, the acts or omissions may still amount to a breach of the no conflict rule. In essence, Mr Buitendag improperly and in breach of the Company policies, his contract of employment and his fiduciary duty, placed the interest of the Club ahead of that of his employer. It mattered not that he did not derive any direct benefit from his actions.
The issue of breach of fiduciary duty and more specifically breach of the conflict rule was the central issue in the Federal Court decision of Ultra Management (Sports) Pty Ltd v Zibara [2020] FCA 31.
The salient facts in this case are as follows. Ultra Management is a sports management company, which finds and manages sportsmen, primarily involved in rugby league. Mr Zibara was an employee of Ultra and acted as a sports agent on behalf of Ultra. A number of sportsmen had engaged Ultra as their manager and had entered into management contracts with Ultra. Ultra decided to change the contracts it used, to allow for the portability of the agent. In other words, the amended contracts allowed the sportsman to terminate the management contract with Ultra on 7 days’ notice and allowed the relevant agent to re-engage with the sportsman thereafter. However, although, introducing the change to the contract, the Managing Director of Ultra informed Mr Zibara, that there was no need for new contracts to be entered into with current clients, and that the new contracts should only be used on the expiry of existing contracts. Without the knowledge or consent of the Managing Director, Mr Zibara persuaded a number of sportsmen to terminate their existing contracts and to enter into the new contract with the new portability clause. Mr Zibara then resigned his employment and proceeded to encourage these sportsmen to terminate their new contracts on 7 days’ notice and then sign with him.
Ultra, sued Mr Zibara claiming a breach of his fiduciary duties and in particular a breach of the no conflict rule. It sought an account of profits from Mr Zibara. This is a remedy which effectively seeks an order that any monies made by Mr Zibara as a result of his breach must be paid to Ultra. In its decision the Court found that Mr Zibara had breached his fiduciary duty to Ultra and held that all monies derived from the management contracts entered into between Mr Zibara’s new company and the player must be paid to Ultra. In addition, the Court held that the account of profit also applied to any renewal of the contracts in the future.
Lessons from the Cases
It is not uncommon for us to receive enquiries from employers and employees alike querying whether the actions of the employee in question amounts to a conflict of interest. Employees feel that they should be free to do as they please and especially in their own time. As such, the idea that they cannot work for a third party or pursue private interests unless they disclose this to their employer is an anathema. On the other hand, employers wish to ensure employees act in their best interests and this includes ensuring they do not pursue any interests that may conflict with the interests of the employer.
As we have outlined in this article, the scope of the obligation and to whom it applies depends on the relevant circumstances.
However, if you are a senior employee it is without doubt that you will owe a fiduciary duty to your employer, and this includes the duty not to act in conflict with the interests of the employer. The issue is less clear for lower level employees, as the implied duty of fidelity and good faith does not necessarily extend to ensuring that the employee always act in the best interests of the employer. It is certainly not going to be the case that a low-level shop assistant would be in breach of their duty of fidelity if in their free time, they worked in a different capacity.
We therefore recommend that all employers ensure the scope of the prohibited conduct in conflict with its interests is clearly an unambiguously set out in the contract of employment and company policies. Employers are able to ensure that if they wish to prevent employees from engaging in alternative employment, require them to disclose investment or other interests, and the like this is clearly set out in the contract. Employers will then be able to rely on the contractual clauses, if for any reason employees are found not to be bound by the implied duties or that the implied duties do not stretch as far as the employer would like.
We are Here to Help
Contracts of employment can be very effective in ensuring the legal rights of the employer. We are here to assist in unpacking these complicated yet vital documents. If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue, please feel free to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.
1 Helmet Integrated Systems Ltd v Tunnard [2007] IRLR 126 at [36]; Macken’s Law of Employment, 7th Edition at 217. 2 Macken’s Law of Employment, 7th Edition at 217. 3 ibid. 4 [2014] WASCA 29. 5 BUITENDAG -v- RAVENSTHORPE NICKEL OPERATIONS PTY LTD [2014] WASCA 29 at 141.
As the nation begins to emerge from the COVID pandemic and businesses slowly recommence their ‘as usual’ activities, employers are understandably keen to return to commerce as soon as possible. No doubt, many sectors of industry were hit hard by the pandemic; industries such as hospitality, retail, travel and tourism, professional sports and the arts, and despite the welcome assistance of the Federal Government’s JobKeeper programme, in its various forms, redundancies were inevitable.
Employees at all levels were either subject to modification in their job role and/or remuneration, or lost their positions entirely and now that it appears that there is some light at the end of a long and dark tunnel, those positions need to be refilled.
Employers who are now able are looking for employees. However, it behoves the responsible employer to maintain discipline with respect to industrial rules and regulations and such discipline begins with an agreement between employer and employee on appropriate and lawful work conditions under a written contract of employment.
Notice Provisions within a Contract
A written contract of employment signed by the parties serves a number of very important functions, chief among which is to set out in writing the terms on which the relationship is based so there is no uncertainty. However, too often we are informed that no relevant written contract exists, or it cannot be found. This leaves the door open for a Court to imply terms into the contract.
One of the most litigated areas of contract law in the employment arena, is the issue of the implied term of reasonable notice. This implied term is only enlivened where there is no current enforceable written contract of employment providing for the relevant notice to terminate the contract.
The national employment standards (“NES”) provides only minimum notice periods, and at least for employees not covered by an enterprise agreement or modern award, these notice periods are merely that, minimums. The NES does not proscribe the required contractual notice required to terminate an employment contract. The minimum notice in the NES provides for:
1. 1 weeks’ notice for 1 year or less of continuous service;
2. 2 weeks’ notice for more than 1 but less than 3 years continuous service;
3. 3 weeks’ notice for more than 3 but less than 5 years continuous service; and
4. 4 weeks’ notice for more than 5 years continuous service.
Furthermore, should an employee be over the age of 45 years and have served more than 2 years’ continuous service, they are entitled to an additional week’s notice.
Notwithstanding, what prevails where there is no written contract of employment, or no operative contractual notice period? Under such circumstances, it is left up to the Court to make the determination as to what “reasonable notice” would be in the relevant circumstances.
What is Reasonable Notice?
Without a written contract of employment, agreed on by both parties, reasonable notice will depend on a raft of factors. For examples, seniority of the role, length of service, difficulty in finding alternative employment at a congruent level, age of the employee etc.
The New South Wales Supreme Court was recently required to make such a determination in the matter of Roderick v Washington H Soul Pattinson Co Ltd (No 2) [2020] NSWSC 1224 (“Roderick”). In this case, the employee, was employed by the employer as a senior executive from 2006 to 2018 in various roles in finance. Without notice, and for subjective reasons, the employee’s employment as Finance Director was terminated.
Current Case Law
By way of background, Ms Roderick (“Plaintiff”) was employed by Washington H Soul Pattinson & Company Limited (“Defendant”) from the period 26 June 2006 to 12 April 2018. The Plaintiff was initially employed as Chief Financial Officer however in 2014 she was promoted to Finance Director, appointed to the Board and made a director of the Company. In January 2015, the Plaintiff was provided a draft employment contract upon appointment as Finance Director. This new contract was not signed. During the period December 2015 to December 2017, the Defendant invited the Plaintiff to participate in both the Long-Term Incentive (“LTI”) plan and Short-Term Incentive (“STI”) scheme. On 12 April 2018, the Plaintiff’s employment was terminated without notice on the basis that “she was not the right fit” and a new CFO was appointed the next day.
At the same time as the promotion, the employee was provided with a draft executive director employment contract. The employee attempted to discuss the draft employment contract with the remuneration committee, but a meeting never took place. The contract remained unsigned.
Ms Roderick commenced proceedings for notice of 24 months and payment of long terms and short-term incentives. At trial, the employer’s evidence was that the employee was ‘failing’ as finance director or otherwise not performing. The Court determined that such evidence was insufficient and in Ms Roderick had never been informed of any performance concerns. As such the Court, turned itself to the question of the notice required to be provided to the Plaintiff.
Irrespective of previous signed contracts, the employee was promoted to an entirely new role, with greater responsibilities. The Court found that the provision of the new unsigned contract to the Plaintiff was demonstrative of the parties’ intention that the original contract would not continue to apply to the new role. The Defendant had argued that in the absence of the Plaintiff signing the new contract her old employment contract continued to apply. In addition, the Court found that the new role was entirely different from the old role and together with the clear intention to create a new contract, it could not be concluded that the old employment contract continued.
In then determining the issue of “reasonable notice” that should be implied in the contract of employment, the Court found that, due to her length of service, her age, being 49 at the time of termination, the senior positions she held, and her failure to find appropriate alternate employment since her termination, 12 months’ notice of termination was an appropriate period of reasonable notice. The Court also then examined her claims for an award of a short-term and long-term incentive, and in both cases found in favour of the employee, despite the Defendant’s argument that she had performed poorly. The Court held that the Defendant’s failure to assess the Plaintiff’s performance and entitlement against agreed KPI’s was itself a breach of her contractual entitlements. The final award in favour of the Plaintiff meant that the Defendant was required to pay Ms Robinson in excess of $1 million in damages.
Advice to Employers
This case is illustrative in two important respects:
1. Employers ought to always ensure they have a valid, relevant signed employment contract in respect of their employees that is securely stored; and
2. Employers should have appropriate performance management structures in place to ensure that if there are performance issues that they are identified and dealt with appropriately, so they can be relied on if the employer wishes to take action.
Irrespective of the seniority of an employee, their length of service, the roles they previously fulfilled, or their otherwise recognised previous successes and competency, it is vital to ensure the foundational employment documents and procedures are appropriately followed. Employers should ensure they have unambiguous and clearly defined contracts of employment signed to by the employee, no matter what position the employee holds.
Given the enormous change COVID-19 has brought to many businesses, if this has caused changes in the way you engage with your staff, their positions, duties, remuneration or any other crucial element of their employment, these changes should be reflected in a revised employment agreement, signed by the employee. As the Roderick decision demonstrates, failure to do so can be very costly.
We are Here to Help
Contracts of employment can be complicated and, depending on the role and industry, may involve a raft of industrial instruments, including modern awards and enterprise bargaining agreements. We are here to assist in unpacking these complicated yet vital documents. If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue, please feel free to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.
Australia has officially entered its first recession for 29 years after the economy went backwards in the March 2020 quarter. The ongoing impact of COVID-19 has continued to have a significant detrimental effect on many businesses across a variety of industries.
In addition, the upcoming changes to JobKeeper later this month will also result in some employers no longer receiving JobKeeper payments to subsidise wages. As a result, many businesses are considering their options to safeguard their business and reduce expenditure over the coming months.
As a result of COVID-19, many businesses have changed the way they are conducting business and/or have changed the services they are providing. As such, we are seeing an increasing number of employers across many industries take anticipatory action, including considering changing their business structure and are considering redundancies in light of the current circumstances. A point in case: we have recently had a large restaurant contact us for advice as they no longer require their Events Manager as they are not holding functions and/or events and are unlikely to do so in the near future.
Consequently, it is imperative that businesses are aware of and adhere to their legal obligations when it comes to redundancy. To this extent, we thought it would be an opportune time to provide our clients with a refresher on the legal obligations which need to be discharged when carrying out redundancies.
The Legal Landscape
The legal definition of redundancy in Australia can be readily found in the Fair Work Act 2009 (Cth) (“the Act”). In order to give rise to a genuine redundancy the test to be satisfied is whether the employer no longer requires the job done by the employee to be done by anyone. In most circumstances, if an employee’s role is made redundant and their employment is terminated as a consequence, they will also be entitled to a severance payment, except where this is due to the “ordinary and customary turnover of labour”. This phrase was given judicial consideration by Justice Reeves in the decision of United Voice v Berkeley Challenge Pty Limited [2018] FCA 224 (“Berkeley”) in which the Court found that in order for an employer to rely upon the exemption, they need to show that the redundancy occurred in circumstances where: …”the redundancy component of that decision is for that employer, with respect to its labour turnover, both common, or usual, and a matter of long-continued practice”.
Whilst many employers try and use redundancy as a mechanism to exit an underperforming employee, redundancy is not an excuse for terminating an employee for poor performance. However, making an employee redundant does not purely involve telling them their role is no longer required. Procedurally, an employer has a number of obligations it must fulfil before it can lawfully end the employment relationship on the basis of redundancy.
The Process to be Followed
As termination for redundancy is recognised as a normal consequence of appropriate management action to deal with restructure or financial circumstances, it is afforded certain protections from legal action as long as an appropriate process is adopted. For employees who are covered by Modern Awards or other industrial instruments, or who have access to the unfair dismissal regime, the failure to follow the appropriate process may leave the employer open to a number of claims, including unfair dismissal and possibly injunction proceedings to stop the restructure from occurring.
As such, the first stage involves careful planning, and employers ought to be aware of employee entitlements such as to notice, accrued statutory leave and other incentive payments which are derived from the National
Employment Standards, industrial instruments, workplace agreements, contracts and policies. It is also pertinent to plan for contingencies in redundancy programs such as adverse media, industrial action and other forms of disputes. It is recommended that employers keep well documented records such as minutes of management meetings setting out the reasons for undertaking a restructure, downsizing or financial pressures necessitating redundancies. This will be most useful if the employee commences unfair dismissal proceedings or a general protections claim, challenging the validity of the redundancy of their role.
Notification and Consultation
Depending on the specific requirements contained in any applicable modern award/ enterprise agreement or other industrial instrument, the second stage of the process requires employers to notify impacted employees (and representative organisations contemporaneously) about “major workforce change” (discussed below), including redundancy as soon as a firm decision has been made. It is vital to ensure that communication is clear and all necessary information regarding the process and timing is given to impacted staff. Even if employees are not covered by an industrial instrument it is good practice to notify and consult with affected employees.
Once notification has taken place, consultation obligations should be discharged. For employees covered by a modern award or enterprise agreement, consultation is mandatory. This includes but is not limited to talking with staff about the likely impact of the change and what mitigation strategies can be adopted to reduce adverse consequences of the redundancies to individuals. Consultation should not be a perfunctory advice about what is happening, rather it is an opportunity provided impacted employees an opportunity to influence the “decision-maker” through joint discussion. An employer needs to genuinely take into account any matters raised in consultation by staff. The benefits of proper consultation include a reduction in legal claims post termination, a valid jurisdictional objection to unfair dismissal proceedings, but most importantly it goes a long way to assist those employees who remain with the organisation to be positive and committed and to appreciate that the employer has treated its people fairly.
The Fair Work Commission recently considered an employer’s obligations relating to redundancy during COVID-19.
In the decision of Freebairn v TJL Business Advisors and Accountants (2020) FWC 3915, Ms Freebairn was an administrative assistant three days a week at TJL Business Advisors and Accountants (“TJL”). TJL had suffered a significant decline in revenue as a consequence of COVID-19. As a result, TJL sought to decrease costs by reducing hours of administrative staff and made Ms Freebairn redundant.
Ms Freebairn argued that her dismissal was unfair because TJL had failed to engage in proper consultation with her before making its decision to make her redundant. Furthermore, she argued that if TJL had engaged in proper consultation, she may have had the option to work reduced hours and participate in the JobKeeper scheme.
In this regard, TJL did meet with Ms Freebairn, however, at the time TJL told her that she would be financially better off if it made her redundant and she applied for JobSeeker (instead of JobKeeper). TJL had asked Ms Freebairn whether she had any questions, comments or suggestions but she did not reply. This was the extent of the consultation that had occurred. Notably, Ms Freebairn was made redundant five days prior to JobKeeper commencing. The employer claimed it would have considered putting the employee on reduced working hours if she had asked about it, and in turn the employee claimed she would have considered it if the employer had mentioned it.
The Fair Work Commission found that merely asking Ms Freebairn whether she had “any questions, comments or suggestions” did not satisfy the award requirement for ‘consultation’, nor did telling her that she was better off under JobSeeker. Accordingly, as the employer had failed to meet its consultation requirements, the Fair Work Commission found Ms Freebairn’s termination was not a genuine redundancy but an unfair dismissal. The
Commission also noted that had she been properly consulted, the employee would have stayed employed until JobKeeper commenced and been eligible to register for it while also retaining her job. In calculating the compensation payable to Ms Freebairn, the Commission took into account that an office closure seven weeks later meant that Ms Freebairn’s employment would have terminated at that time. As such, the Fair Work Commission ordered the employer to pay the difference between what she would have received under JobKeeper for that period and what she received as pay during her notice period.
Considering alternative positions
The final stage in the redundancy process, which is required if the employer wishes to rely on any jurisdictional objection to an unfair dismissal claim and, if done appropriately can shield an employer from post-termination claims for breach of the general protection provisions, is to consider redeployment opportunities, and where appropriate, offer staff positions that may be suitable within the organisation or an associated entity. Many employers determine or otherwise pre-empt whether a role is suitable, and fail to offer the role to affected employees, because the role is a lesser paying position, requires relocation or retraining, or even constitutes a demotion. This should not be a decision for the employer but rather for the employee concerned, and should be discussed with the employee.
Payments and Entitlements on Redundancy
In circumstances where the employee’s position is terminated by reason of redundancy and no suitable alternative position is provided, an employer has a minimum obligation (subject to any enterprise-specific regime providing a more generous severance entitlement) to pay redundancy pay under the Act in accordance with the following scale:
· Less than one year’s continuous service — Nil
· At least one year but less than 2 years continuous service — 4 weeks’ pay
· At least 2 years but less than 3 years continuous service — 6 weeks’ pay
· At least 3 years but less than 4 years continuous service — 7 weeks’ pay
· At least 4 years but less than 5 years continuous service — 8 weeks’ pay
· At least 5 years but less than 6 years continuous service — 10 weeks’ pay
· At least 6 years but less than 7 years continuous service — 11 weeks’ pay
· At least 7 years but less than 8 years continuous service — 13 weeks’ pay
· At least 8 years but less than 9 years continuous service — 14 weeks’ pay
· At least 9 years but less than 10 years continuous service — 16 weeks’ pay
· At least 10 years continuous service — 12 weeks’ pay.
For completeness, redundancy pay is separate and in addition to an employee’s entitlement to notice and any other statutory benefits (such as annual leave or long service leave) which an employer is required to pay upon termination.
Employers are able to apply to the Fair Work Commission to reduce redundancy pay on the basis of incapacity to pay. There has been mixed success in relation to employers applying to reduce the redundancy pay as a result of the financial effects of CVOID-19. When deciding this type of application, the Fair Work Commission considers a number of different factors. However, the employer will be required to produce evidence of their incapacity to pay.
Managing Exposure and Risk
Managing legal exposures goes hand-in-hand with any change management program, and employers need to prepare themselves for the possibility of opportunistic unfair dismissal, adverse action or discrimination claims. A few steps we recommend employers should take to reduce these risks are as follows:
· An objective assessment of whether the proposed action is justified based on the circumstances being relied upon to effect the change;
· Ensuring that all legal obligations have been met with regard to the notification, consultation and redeployment process (if applicable);
· Following a robust communication strategy so that employees feel informed and included;
· Document the process thoroughly and maintain good records of decision-making before and during the redundancy process; and
· Ensure the appropriate severance and termination benefits are paid on termination.
If you have an employment law issue or need advice on any change management initiatives for your business, please do not hesitate to contact us for specialist advice or assistance.
This alert is not intended to constitute, and should not be treated as, legal advice.
A client of ours was recently approached by one of its employees, who had been on paid workers’ compensation benefits for several years and asked to be paid his accrued annual leave entitlements. After all, he had not taken annual leave at any stage during his recuperation from injury and understood that he had accrued a significant entitlement. Our client had simply assumed that because the employee was not working, was not on paid personal leave, and was receiving compensation payments, he was not continuing to accrue entitlements. They were wrong.
In this client alert we look at the definition of continuous service and the ramifications it has on a number of entitlements, including annual leave, long service leave, notice, redundancy, and unfair dismissal.
Continuous Service where an Employee is on Workers Compensation
Section 130 of the Fair Work Act (“FW Act”) restricts an employee from taking or accruing leave whilst receiving workers’ compensation; however, this restriction does not apply where taking and accruing leave during a compensation period is permitted by a compensation law. Whilst we do not intend to traverse the regulatory minefield of workers’ compensation legislation, it is worth noting that each State and Territory, and indeed the Commonwealth, have their own schemes when it comes to managing workers who are injured in the workplace. For example, in New South Wales, section 49 and section 50 of the Workers Compensation Act 1987 (NSW) expressly permits annual leave or personal leave to continue to accrue and allows an employee to use annual leave entitlements concurrently whilst they are on workers’ compensation. Similar permissions are granted under the respective compensation laws of Queensland, Western Australia and Victoria.
In our aforementioned client’s case, their employee had been injured in a Victorian workplace and had fallen into the category of ‘out of sight, out of mind’ whilst on compensation. As such, when our client terminated the employment of the employee concerned, it was compelled to pay a significant sum for the accrued annual leave entitlement to its employee.
Where the relevant State or Territory laws expressly prohibit the taking and accruing leave during a compensation period, or is otherwise silent on the topic, section 130 of the FW Act applies and leave entitlements will not accrue, or be permitted to taken whilst an employee is on workers compensation. This is the case in the Australian Capital Territory, the Northern Territory and under the Commonwealth scheme (Comm Care).
Relevantly, where service is deemed continuous for the purposes of accrual of entitlements, it can create liabilities for employers who have employees in receipt of long-term workers’ compensation. It can also create other issues with respect to redundancy entitlement and access to the unfair dismissal jurisdiction under the FW Act.
So, how do these inconsistencies in State and Commonwealth compensation legislation assist in answering the question of what is continuous service? Section 22 of the FW Act examines what constitutes an excluded period of service for the purposes of calculating “continuous service”. An excluded period does not break an employee’s continuous service; however, it does not count towards the length of the employee’s continuous service. Examples of an excluded period include:
· any period of unauthorised absence;
· periods of industrial action engaged in by employees;
· unpaid parental leave;
· unpaid leave or unpaid authorised absence; and
· absences where an employee is paid under income protection insurance.
For example, in Webster v Toni and Guy Port Melbourne Pty Ltd T/A Toni and Guy Port Melbourne [2010] FWA 4540 the employee had been on authorised leave during his employment due to a motor accident injury. The employee had just commenced employment with his employer and did not did not have enough accrued personal leave to take whilst recuperating, he did not receive payment from his employer during this period but was in receipt of payments from the Transport Accident Commission. As such, it was held that this period was an excluded period because it was ‘unpaid leave’.
In the case of L.M. v Standard & Poor’s (Australia) Pty Ltd [2012] FWA 9634, an employee was absent from work for about 5 weeks because of illness and was paid income protection insurance payments by a private insurer through his superannuation fund. It was held that because the employer was under no legal obligation to provide income protection insurance, the employee was again on ‘unpaid authorised leave’.
However, in the decision of the Full Bench of Fair Work Australia (as it was then known) in Workpac Pty Ltd v Bambach [2012] FWAFB 3206, a truck driver was only employed by Workpac for two and a half months before he suffered a workplace injury and was unable to work again for over 14 months. The worker was subsequently terminated by Workpac and sought to bring an unfair dismissal claim.
In this case, Workpac argued that the employee was not protected by the unfair dismissal laws because he had not completed the minimum qualifying period of six months “continuous service”. Workpac contended that the employee had only completed two and a half months continuous service from the time of employment to the date of injury. Workpac further argued that the period in which the employee was receiving workers’ compensation benefits should not be included as continuous service.
The Full Bench held on appeal that the truck driver’s 14-month period off work on workers’ compensation was an “authorised absence” because it was “legally sanctioned” under workers’ compensation legislation. The consequence was that the benefits paid whilst on workers’ compensation were made pursuant to the employer’s legal obligation to do so with the result that the absence was an authorised paid absence from work. The Full Bench thus determined that the employee’s absence from work on workers’ compensation was, in fact, “continuous service”.
It is thus safe to assume that, for the purposes of section 22 of the FW Act, the decision in Workpac means that periods of workers’ compensation are not excluded periods and that the meaning of “continuous service” has been broadened for at least this issue of minimum qualifying period, to include a circumstance where an employee is receiving workers’ compensation benefits.
Ultimately, for the purposes of section 22 of the FW Act and the definition of “continuous service” it appears distinguishable that where an employee is on unpaid leave or is on leave and in receipt of payment from a source separate to the employer (such as was the case in Webster and Standard & Poor’s) the employee’s service is excluded and does not count towards continuous service, whereas in Workpac, where the employee was on workers’ compensation (and thus being paid benefit conferred on the employer by the obligations under compensation legislation) the service is not excluded and is counted as continuous service.
Redundancy Payment Exposure
Whilst it is yet to be tested in the Fair Work Commission (“FWC”), considering the decision in Workpac where service continues to be counted whilst on workers’ compensation, it is reasonable to suspect redundancy payments based on length of service will similarly be treated. As such, any claim for length of service for the purposes of calculating severance pay in the case of a genuine redundancy will include time served on workers’ compensation in line with the Workpac decision.
Whether the calculation is based on the scale under the National Employment Standards, under a relevant Modern Award, or under the typically more generous redundancy provisions found in Enterprise Bargaining Agreements, an employee who spends significant periods of time on workers’ compensation benefit, is likely accruing an increased quantum of severance pay should they, at some point, be made redundant.
Where an employee is on workers’ compensation during recuperation and an employer, in consultation with the employee’s treating practitioner, plans to implement a return to work plan, there is no great controversy in said employee’s continuous service potentially generating quantum in the event of a genuine redundancy. However, where an employee is on longer term workers’ compensation benefits, and whose role is marked for genuine redundancy, it behoves an employer to appropriately manage the employee as to whether they can return to work in some capacity, through the assessment of an independent medical examiner, or whether they should be terminated by way of being incapable of fulfilling the inherent requirements of their position.
What Should Employers Do?
Considering the relevant State, Territory and Commonwealth regulations regarding employees on workers’ compensation, and the FWC’s clear determination that time served whilst on workers’ compensation is “continuous service” when determining the minimum employment period for access to the unfair dismissal jurisdiction, employers should be mindful that an employee on workers’ compensation should not be an employee who is ‘out of sight, out of mind’.
It should always be the first intention of the diligent employer, in consultation with the treating medical practitioner, to be taking all reasonable steps to reintegrate the injured employee back into the workplace in a capacity where they can meaningfully contribute in an environment that safely accords with their condition and recovery. Should it be impractical, unsafe or ultimately unfruitful (when taking appropriate medical advice) to return the employee back to work, and where no suitable alternative position exists, the diligent employer should exercise lawful means to sever the employment relationship on the grounds that the employee is not, and will not, be fit for the inherent requirements of the position, or any other suitable position.
Otherwise, the employer will likely become liable for a range of accrued employee entitlements and/or exposure to legal remedy which could otherwise be avoided.
High Court Overrules the Decision in the Mondelez Personal Leave Case
On 21 August 2019, the Full Court of the Federal Court made a landmark decision in Mondelez v AMWU [2019] FCAFC 138 whereby personal leave would be accrued and taken by reference to “days” rather than a notional number of average hours, meaning that an employee working three 12 hour shifts of ordinary hours per week would be entitled to be paid for 12 hours per day of personal leave taken. By way of a worked example, if an employee worked three 12 hours shifts per week (for a total of 36 hours per week), they would be entitled to 10 days personal leave per year paid at the rate of 12 hours per day taken.
What this meant in practice for a majority of employers, particularly those who did not utilise shift workers, was that part-time employees were entitled to the same 10 days of paid personal leave as enjoyed by full-time employees, regardless of the hours they worked.
Almost 12 months to the day of that Full Federal Court decision, the High Court of Australia overturned the appeal court’s decision and clarified that:
· the entitlement to 10 days of personal/carer’s leave under the National Employment Standards (NES) is calculated based on an employee’s ordinary hours of work each week, not working days; and
· 10 days of personal/carer’s leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year.
In layman’s terms, the High Court decision now restores an employee’s entitlement to accrue and take personal leave to that which was understood by most employers prior to the 2019 decision of the Full Federal Court. In other words, part-time employees accrue their personal leave, on a pro-rata basis, over the course of the working year.
We are Here to Help
We regularly advise clients on best practices to manage employees who are ill or injured, including, where appropriate, taking lawful avenues to sever the employment relationship where there is a genuine redundancy or the employee can no longer perform the inherent requirements of their position.
If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue, please feel free to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.
The Australian Government’s introduction of JobKeeper on 9 April 2020, has helped Australian businesses, not-for-profits and workers get through one of the most difficult times in our history in dealing with the COVID-19 pandemic. With Stage 4 restrictions in place in Victoria and the threat of similar lockdown in other states, the untimely termination of JobKeeper support on the 27 September 2020 brought great panic to businesses and employees.
On Tuesday, 21 July 2020, the Australian government announced the extension of JobKeeper benefits by six months to 28 March 2021, although there will be a gradual reduction in payments. In this week’s client alert, we will discuss the renewed JobKeeper payment, the JobKeeper directions which are scheduled to be repealed on 28 September as well as a number of other considerations in relation to managing your employees during this difficult time.
Update to JobKeeper Payments
The Australian government have announced changes to its JobKeeper Payment scheme, which will extend the scheme by a further six months from 28 September 2020 until 28 March 2021. The amendments are as follows:
a) Changes for extended period:
28 September 2020 to 3 January 2021 (“Period 1”):
• $1200 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week; and
• $750 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for less than 20 hours a week on average, and for business participants who were actively engaged in the business for less than 20 hours per week in the same period.
4 January 2021 to 28 March 2021 (“Period 2”):
• $1000 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week; and
• $650 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for less than 20 hours a week on average, and for business participants who were actively engaged in the business for less than 20 hours per week in the same period.
b) Eligibility Criteria for JobKeeper Extension:
Businesses seeking to claim JobKeeper, from 28 September 2020 onwards, will be required to reassess their eligibility for the JobKeeper extension. The business will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover in the June and September quarters 2020.
Businesses must have met the relevant decline turnover tests in both these quarters to be eligible for the JobKeeper payment for Period 1. Further reassessment of actual GST turnover in each of the June, September and December quarters 2020, must be conducted to remain eligible for Period 2.
The relevant decline in turnover that businesses and not-for-profits will need to demonstrate are:
• 50% for those with an aggregated turnover of more than $1 billion;
• 30% for those with an aggregated turnover of $1 billion or less; or
• 15% for Australian Charities and not-for-profits Commission-registered charities (excluding schools and universities)
Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS) as representing their GST turnover.
JobKeeper Enabling Stand Down Directions
To support the implementation and operation of the JobKeeper scheme in Australian workplaces, the Fair Work Act 2009 (Cth) (“FWA”) was amended to enable employers to give eligible employees a direction to stand down, or reduce their hours or days of work – known as Enabling Stand Down Directions (“JobKeeper Direction”). However, with the relevant legislation due to be repealed on 28 September 2020, these provisions will cease on 28 September 2020. As yet no announcement has been made regarding the extension of these legislative provisions. As such, the future operation of the JobKeeper enabling rules and directions framework is uncertain (although we suspect it will be continued in some form or another).
However, the continued effects of the COVID-19 pandemic continue to create an enormous impact to businesses in multiple industries. Accordingly, there is some concern for employers in relation to what will occur if the JobKeeper Directions cease on 28 September 2020. In addition, even if the JobKeeper Directions continue in some form or another, some businesses may not be eligible for the revised JobKeeper Payments and many employers may need to consider how they will effectively continue to keep their business viable and trading, if they cannot rely on the Jobkeeper Directions.
In this connection, we consider a number of issues below that may arise as businesses respond to the ongoing effects of COVID-19 in the coming months.
Standing down employees
Under the JobKeeper Direction, a qualifying employer can stand down an eligible employee, if the employee cannot be usefully employed for their normal days or hours because of business changes attributable to COVID-19 or government initiatives to slow down COVID-19 transmission. However, if the JobKeeper Directions are altered or cease operation from 28 September 2020, or in circumstances where the JobKeeper Directions continue but your business is no longer eligible for JobKeeper, it will be much more difficult to stand down employees, or unilaterally change their working hours.
In these circumstances, it may be possible for an employer to rely on section 524 of the FWA to stand down full-time or part-time employees, without pay. However, a stringent condition of this provision, relevant to the current COVID-19 situation, is that a stand down can only be used where there is a “stoppage of work for any cause for which the employer cannot reasonably be held responsible”. For example, if the Australian Government requires the business to close as a means of protecting the public during the pandemic (e.g. when the Australian Government ordered all fitness centres to close).
However, if an employer simply faces a reduction in trade volumes or where it is merely uneconomical to continue to employ staff, this will not be considered a “stoppage” of work under section 524 of the
FWA. In these circumstances, the organisation would be best suited to consider alternative measures such as having their employees work from home (if possible), asking staff to reduce their hours or encourage employees to take paid or unpaid annual leave.
Employers are generally free to vary a casual employee’s hours (including zero hours), however, employers should be more cautious when it comes to casual employees who have worked regular and systematic hours.
Reduction of Hours
From 28 September 2020 onwards with repeal of the JobKeeper scheme contained in the FWA, full time and part time employees will have an automatic right to return to the hours they were working prior to the JobKeeper Direction being issued unless the legislation is extended. Accordingly, in order to lawfully reduce or vary an employee’s working hours, the employee must consent to such variation. This means the employer should consult with the affected employees and request employees to reduce their hours. It is unlikely employees will consent unless they properly understand why it is necessary for them to do so. However, if employees do not consent to the reduction, even if all other employees do consent, they cannot be forced to comply.
Further, employers should review any modern award or enterprise agreement that applies to the business and how it prescribes the variation of working conditions. Most modern awards have been varied to allow flexibility to change hours by agreement. These changes however, are also due to terminate on 30 September 2020.
Employers are generally free to vary a casual employee’s hours as they fit, however again, should consult with employees who work regular hours and should aim to keep all employees informed of forthcoming changes.
Where an employer cannot come to an agreement to reduce an employee’s hours, this may result in consideration as to whether the only other viable option is for the employer to make roles redundant. We discuss this further below.
Directing Employees to take annual leave
Following the insertion of section 789GJ of the FWA in response to COVID-19, employees who are qualified for the JobKeeper scheme are required to consider, and must not reasonably refuse, an employer’s request to take paid annual leave. Employers can further agree to an arrangement with employees where twice the amount of annual leave is taken at half pay. This applies to certain award covered employees and all employees who are receiving JobKeeper.
Most modern awards now provide express provisions regarding the ability for employers to request employees to take annual leave. For example, modern awards which contain an express provision regarding the request for employees to take annual leave usually requires the employee to agree and the employee must not be left with less than a 2-week annual leave balance. However, like the Jobkeeper provisions, the employee cannot unreasonably refuse such a request. These provisions are also due to expire on 30 September 2020.
In the case of cessation of the JobKeeper Direction from 28 September onwards or in circumstances where your business may no longer be eligible for to receive JobKeeper, employers will only be entitled to request an employee to take annual leave if the employee has an excess of annual leave or if the business is being shut down for a period (e.g. Christmas/New Year period). The employer and employee will be required to come to an agreement in this regard.
Redundancy
In instances where the company has already considered alternative cost-saving avenues (such as reducing employee hours) or it is clear that the roles will not be viable regardless, employers may be required to consider redundancy. The JobKeeper Direction has not altered the rules in relation to redundancy and/or for calculating an employee’s redundancy entitlement, thus general redundancy rules under Division 11 of the FWA still apply.
In this regard, it is recommended that employers adhere to the following guidelines when undertaking redundancies:
1. Identify a potential selection of employees and ensure the employees chosen for potential redundancy is objectively fair.
2. Ensure the business consults with all employees potentially affected by redundancy (including any employees on maternity leave or long-term sick leave) and ensure consultation provisions contained in applicable modern awards and/or enterprise agreements are followed. Consultation should include the reasons for the redundancy, any attempts to find alternative roles within the organisation (including any related entities) and any other matters relevant to the employee concerned.
3. Give employees an opportunity to provide feedback during the consultation period and ensure the business genuinely considers the feedback provided. Even though we are currently experiencing unprecedented times, this will not be an excuse to forego a proper consultation process with employees and as such, employers must strictly comply with their consultation obligations.
4. Once a decision has been made in relation to the redundancy and all other options have been considered, employers must give employees notice (either provide the required contractual notice as long as it is more than the minimum notice required by the FWA, or pay notice in lieu).
5. Employers may also be required to pay the employee a redundancy payment. Redundancy pay is based on the employee’s original and usual rostered hours (not the hours under JobKeeper direction). However, employees with less than one-year service or where they are employed by a business with fewer than 15 employees, are not entitled to a redundancy payment. Where an employer is unable to afford to make a redundancy payment, there is an ability under section 120 of the FWA to apply to the Fair Work Commission for a reduction in the amount to be paid, potentially to a zero payment. It is also important to note that the termination payment must include all accrued (but unused) annual leave, including during any stand down period.
Notably, in circumstances where the redundancy is not a genuine redundancy and/or a proper redundancy process is not followed, an employee may be entitled to pursue an unfair dismissal claim. Depending on the reasons for the redundancy/termination of their employment they may be able to assert that they were terminated for other reasons (such as discrimination, etc) and may be able to pursue alternative claims available to them.
A way Forward for Employers
Undoubtedly the uncertain future of businesses due to the re-emerging threat of COVID-19 has created grey areas in the original JobKeeper scheme implemented by the Australian Government. The extension of JobKeeper payments till 28 March 2021, has provided comfort for many businesses, however, the uncertainty of the continued operation of the JobKeeper Direction and award provisions still remain. Ultimately, an employer’s policy and decisions in regard to stand downs, reduced hours and redundancy should be of collaboration and consultation with affected employees.
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.
Workplace bullying is a dynamic and complex phenomenon, its causes are often multifaceted and its impact individual and varied. It can have a profound effect on all aspects of a person’s health as well as their work and family life, undermining self-esteem, productivity and morale. For some it can result in a permanent departure from the labour market and in extreme cases, suicide.
The impact on the employer and work colleagues can be just as damaging, as bullying affects morale and generally negatively impacts all the employees who are exposed to the conduct. In turn it affects productivity retention rates and causes a serious financial cost to the business.
Bullying in the Workplace
Prior to 2013, Workplace bullying has previously been addressed through work health and safety laws. Since 2011, the Commonwealth and most states have adopted the national model for work health
In 2013, amendments to the Fair Work Act 2009 (Cth) (“FW Act”) conferred power upon the Fair Work Commission (“FWC”) to make (retrospective) orders to stop bullying from 1 January 2014. Where an individual or group of individuals repeatedly behaves unreasonably towards a worker or a group of workers at work and the behaviour creates a risk to health and safety, application can be made to the FWC to make a ‘Stop Bullying Order’.
The House Standing Committee on Education and Employment (“Standing Committee”), in its 2012 report, noted that repeated unreasonable behaviour is behaviour that a reasonable person, having regard to the circumstances, may see as unreasonable (in other words it is an objective test). This includes behaviour that is victimising, humiliating, intimidating, or threatening.
The Standing Committee further noted that a risk to health and safety means the possibility of danger to health and safety and is not confined to actual danger to health and safety. The bullying behaviour must create the risk to health and safety; therefore, there must be a causal link between the behaviour and the risk.
Common examples of behaviour that could be considered as bullying are:
· Abusive, insulting or offensive language or comments;
· Victimisation;
· Spreading misinformation or malicious rumours;
· Undue criticism;
· Excluding, isolating or marginalising a person from normal work activities;
· Unreasonable work expectations;
· Withholding information that is vital for effective work performance, or denying access to resources such that it has a detriment to the worker; and
· Practical jokes or rites of ‘initiation’.
Reasonable management action conducted in a reasonable manner does not constitute workplace bullying.
Despite the existence of the federal jurisdiction to deal with claims of bullying whilst the employee remains employed, the primary obligation for an employer to ensure a safe place of work still applies. The work health and safety obligations of all employers is paramount, and an employer’s failure to
ensure a safe place of work may result in significant liability for that employer. Despite the real legal risk and resulting costs, the hidden costs of bullying behaviour to both the employee and the employer can be extreme.
Bullying when Working from Home
Along with these traditional examples that often occur within the workplaces, the COVID-19 pandemic has taken many of us out of the traditional workplace environment to instead work remotely from home. Yet, this environmental shift has, in many cases, led to an increase in instances of workplace bullying.
When working from home, workers can experience an increase in anxiety, emails can be misinterpreted, and increased self-isolation may create a climate where effective communication is undermined as teams that once worked together in close proximity of each other, now suffer the tyranny of distance.
The main bullying problems when working from home include:
· Misinterpreted emails;
· Isolation and loneliness causing workers to act and react irrationally;
· Miscommunication;
· Lack of human connection;
· Emotion and anxiety being deflected onto others;
· No firm boundaries when it comes to calls and/or other communications outside of business hours.
Furthermore, where instances of bullying are directed at a worker who is working from home, a place that they would normally associate with safety and ‘quiet enjoyment’, the effect can be heightened as the bullied worker has no ‘safe haven’ to retreat to at the end of the day.
It is likely that employers will be met with an increased number of bullying complaints surrounding email communication where workers are working from home. Emails do not always express the full intention or sentiment of the sender and can be easily misinterpreted – particularly where the recipient is already feeling vulnerable due to anxiety, isolation and a paucity of peer support.
The sudden increase in people working from home is new to many businesses and workers may not have adapted to the new communication norms. It is also much easier for a bully to ignore or isolate a worker if the employee is not in the same physical location. The failure to properly communicate and include team members in relevant discussions is facilitated by the physical separation occasioned by remote work.
Workplace bullies, like all bullies, tend to be opportunistic and may refrain from attacking their target in front of a group of workers where they themselves might feel peer pressure for their bullying behaviour. Workers who may have previously enjoyed the peer support of their colleagues in the workplace environment are now more at risk of being targeted when working remotely.
Effects of Workplace Bullying
Workplace bullying often results in significant negative consequences for an individual’s health and wellbeing, for example, depression, anxiety, sleep disturbances, nausea and musculoskeletal complaints and muscle tension. In turn, these negative consequences to individuals inevitably lead to negative consequences to business. Loss of productivity through poor morale, increased absenteeism, workers compensation claims, the need to alter reporting lines and/or separating workers from particular groups and time spent documenting and pursing claims combine to place a considerable financial burden on business.
Furthermore, in Victoria, an amendment to the Victorian Crimes Act makes serious bullying on offence punishable by a maximum penalty of 10 years’ imprisonment. These amendments were introduced following the suicide of a young woman, Brodie Panlock, who was subjected to relentless bullying in her workplace. ‘Brodie’s Law’ as it is known has not been enacted in other jurisdictions but has been examined by the various attorneys general.
What can Management Do to Prevent Bullying in the Workplace and when Working from Home?
Professionalism, respect and civility should be enshrined in workers’ contracts and part of their job description. Furthermore, businesses need to have up-to-date and robust codes of conduct policies in place that deal with specific examples of workplace bullying. Training and professional development are key tools in reminding workers of their individual and group obligations to their colleagues, managers and reports.
Whether in the office or working from home, training modules completed through face-to-face workshops can now just as easily be accomplished online, either as a group (through video conferencing) or one-on-one.
Morning and afternoon catch-up meetings (particularly by way of video conference) when working from home, is a good face-to-face way for managers and their reports to get an understanding of where each other are up to with respect to their work. However, in addition to these more formal interactions, virtual breaks are also a good way for employees to touch base with their colleagues, in an informal social setting for 10-15 minutes of ‘water cooler’ talk, and for managers to ensure that their reports are coping and not suffering from bullying or other inappropriate conduct.
Other ways to keep the work climate fun and positive through the use of appropriate digital technology might include daily or weekly activities. Trivia quizzes and other games are a good way of breaking up the day and preventing workers from feelings of isolation when working from home.
Bullying however is conduct not confined to online behaviour and an employer needs to ensure it is vigilant in stamping out any behaviours whether in the office or not that amount to bullying of co-workers. Unfortunately, bullying is one of the most prevalent work health and safety issues in Australia today and affects almost all workplaces. The cost of dealing with this type of conduct may be far outweighed by the cost of ignoring it.
We are Here to Help
We regularly advice clients regarding the implementation of robust workplace policies and training including in the areas of appropriate workplace conduct. If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue, please feel free to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.
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.
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.
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.
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.