Employment Law

Key considerations for employment contracts

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Here at Coutts we understand how important it is as a business owner to maintain positive and healthy relationships with employees. We also understand how crucial it is for an employer to protect their interests and limit their exposure to various claims by their employees.

With the combination of the Fair Work Act 2009 (Cth), the National Employment Standards and Modern Awards, entering into well written employment contracts is essential.

In fact, even if you don’t enter into a written agreement with your employees you are still entering into an oral agreement and therefore owe certain duties and obligations to your employees.

Under the National Employment Standards, whether there is a written employment agreement in place or not, a set of minimum entitlements automatically applies to employees. For example, maximum weekly hours, annual leave, public holidays and notice of termination, and these entitlements are on top of the employee entitlements already provided for under the relevant Modern Awards.

Although you do not legally need to provide an employee with a written agreement, employers often struggle if a dispute arises with an employee in the future, as there is no record of the agreed terms of the employment relationship.

So, the question arises, why not enter into a formal written agreement that clearly outlines everybody’s expectations and obligations?

Some key items to consider when it comes to employment contracts are:

1.       Does the agreement comply with current legislation?

Employment agreements will need to comply with the Fair Work Act 2009 (Cth). It is likely that any employment agreement entered into prior to 1 January 2010 will need to be reviewed to provide for the provisions in this act.

2.       Have you reviewed the relevant award?

Employment agreements must comply with the applicable modern award. Awards will often dictate:

·       minimum wages;

·       overtime and penalty rates;

·       types of employment such as casual or permanent;

·       employee classifications;

·       expenses such as travel and meal allowances;

·       breaks, hours of work and rostering;

·       leave entitlements.

It is not uncommon for employment agreements to contain a provision that is inconsistent with the award without the employer even realising, for example paying an employee less than what is required under the award for their position.

In most situations it is likely that the award would prevail and the provision in the employment contract is overridden by the award. To avoid disputes with employees or a breach of the law, it is crucial to ensure the employment terms comply with the law and in particular the relevant award.

3.       Is a restraint of trade necessary to protect your business?

Restraints of trade are very common to try and prevent an employee from working with a competitor, poaching clients or other employees.

However, restraints of trade are only enforceable where the employer can show the restraint is necessary to protect legitimate business interests such as trade secrets, confidential information and clients. The restraint can’t be against public interest, as the employee has a right to earn a living. For example, a restraint which tries to restrict employees from working for a competitor for 100 years within Australia, is unlikely to be enforceable.

Factors to be considered when determining the enforceability of the restraint include the nature of industry, the time of the restraint, the distance of the restraint and overall how reasonable the restraint is.

It is really important to have a properly constructed restraint that is clear, well-worded and reasonable to give the restraint the best chance of being enforceable.

4.       Does the employee know what is expected of them?

A written employment can clearly define the duties and role of the employee to create certainty and ensure the employee is aware of an employer’s expectations.  

5.       Does the agreement protect your confidential information?

Often a business has confidential information which may include things such as financial statements, manufacturing processes, trade secrets or client databases. It is important to ensure your employment agreement protects this information and that an employee is prohibited from disclosing confidential information as it may harm the business.

6.       Have you covered your intellectual property?

Employees are likely to be using your intellectual property throughout the course of their employment, so it’s important to ensure it remains your intellectual property.

Depending on the type of employment, the employee may also be developing or creating new inventions, processes or procedures whilst employed with you. If this is the case, you may want to consider ownership of these creations and covering it in the employment agreement to protect your interests.  

7.       Does it deal with the policies of the business?

You should consider if you have any policies you want to incorporate into the employment contract. For example, a drug and alcohol policy or a work health and safety policy. However, if you are including policies in an employment contract, you may also bind yourself to follow and implement those policies under contract law. Alternatively, you might want policies to be acknowledged by the employee as lawful directions. Generally, if you make the policies accessible and clearly communicated to employees you should be able to rely on those policies.

 

Coutts have expertise in preparing tailored employment agreements that both protect the interests of employers, as well as ensure employees are aware of their obligations. Call 1300 268 887 and book an appointment with Alexandra Johnstone or Keely Irving today.

For further information please don’t hesitate to contact:

Keely Irving
Lawyer
keely@couttslegal.com.au
02 4607 2124

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Disastrous mistakes in contracting

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Having worked in the legal industry for over 23 years, I’m often asked what are some of the more disastrous mistakes that I’ve seen clients make in contracting. Here’s a round up of just some of them:

1) Relying on a handshake deal: whether it’s because the relationship is going so well at the start or one stage or another (honeymoon phase, anyone?) or whether it’s because you’ve been mates for so long... or family... or like family. Every contract is there for your worst case scenario and while it’s hard to envisage anything ever going wrong, let’s remember best laid plans... Time and time again I’ve provided legal services where only one party kept up with their handshake deal or the relationship is falling apart and so the other party isn’t adhering to the handshake deal (among other things). Not putting things in writing, upfront can have a disastrous roll on effect.

2) Relying on past experience or a good track record: because surely when nothing has EVER gone wrong in the past, this time round it’s going to be a repeat of the same... right? Many times I’ve dealt with aggrieved parties who can’t believe the hand they have just been dealt because it’s never happened to them before or never happened with this other party. It only takes once bitten to be twice shy and ensure that you never want to deal with a repeat of what’s in front of you. Not taking the time to prepare a timely agreement, upfront is always a risky move.

3) Starting work when the contract isn’t finalised or signed: Pretty much a classic move by the other party. Once you’ve started work even in the absence of a contract you’ve lost a good deal of your ability to put genuine pressure on the other party to hear out your issues and address them to your satisfaction. Near enough isn’t good enough and you could end up being bound to the draft or, as noted above, losing genuine negotiation ability once you start work. Take the time to work out the lead time and time needed to get the agreement right and at least cover off your top/high risks and get them started before the start date.

4) Signing a contract that’s incomplete: Often there are multiple authors or contributors to a contract- someone else is pulling together the attachments or the scope of work or the KPIs and that part of the contract has been blank every time you’ve reviewed it. Point blank you don’t have certainty of what you’re signing up to. Ask for a complete contract. Review it and be sure it makes sense to you and is in the form and contains the terms you’ve agreed to.

5) Not tailoring the contract: The contract is an allocation of risk between the parties. If you haven’t turned your mind to the risks for a contract, you have missed an opportunity to properly allocate the risks and work out the party best to manage and control the risk. If you haven’t tailored the contract, have you even turned your mind to and covered off the worst case scenario for your project or contract? How is this contract going to work best for you? More often than not a short time investment and a brief risk allocation meeting at your end can identify at least your top five risks and you can weave these into the draft contract and look at who is going to bear those risks in the current version. You have an opportunity to make sure you ensure the contract works to respond to your risks and consider the project/contract at hand, rather than hope that your generic template (or the contract you used last time) does what you want when you need it to.

6) Finding something on the internet: Sadly I hear this one too often. “I got this from the internet”- first of all- you don’t own that document. Secondly, you haven’t turned your mind to whether the document assists you, covers of your risks or is even remotely suitable to you. You’re rolling the dice big time with this approach.

At Coutts, we provide practical, simple and focused legal advice and solutions. We can prepare short and simple contracts right up to the most complex. We can advise you regarding any range of things- risks and issues in the whole contract right down to the top 5 risks only. We can conduct risk allocation workshops and prepare tailored contracts. Rest assured, we are here to help and our advice and solutions are always effective, commercial and clear.

For further information please don’t hesitate to contact:

Alexandra Johnstone
Partner
alexandra@couttslegal.com.au
02 4607 2110  

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

My employer closed down, how do I get my entitlements?

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Why would my employer shut up shop?

Sometimes employers close their business if it’s not sustainable to continue to run the business. If the business is not making any money and is unable to pay its debts, then the business is what’s known as insolvent. If a business becomes insolvent it may go bankrupt or into liquidation.

 

The difference between bankruptcy and liquidation

Bankruptcy is a legal process for a person who is unable to pay outstanding debts. It relates to the individual and their debts.

 

In comparison ‘liquidation’ most commonly refers to the legal process for closing a company that cannot pay company debts.

 

How does this affect me as an employee?

If a business cannot pay its debts, then there’s a risk that it cannot pay its employees.

 

In some situations, employees may lose their jobs and the employer may not be able to pay the employees their wages or accrued entitlements such as annual leave, long service leave or superannuation.  

 

If your employment is being terminated, generally you should receive notice of this and it’s likely the termination is effective immediately.  

 

This can be a very stressful time for an employee as the termination could occur very suddenly and leave employees without access to their hard-earned entitlements.

 

But that’s my money, what can I do to get it?

When an employer has declared bankruptcy or gone into liquidation then the employee may be able to recover their owed entitlements through the Fair Entitlements Guarantee.

 

The Fair Entitlements Guarantee is a legislative scheme run by the Australian Government, Department of Jobs and Small business. The specific purpose of the scheme is to help employees by providing financial assistance to those who lost their jobs because their employer went bankrupt or into liquidation. This means that an employee can make a claim to the government to be paid their employee entitlements because their employer cannot pay them.

 

Under the Fair Entitlements Guarantee employees may be able to claim the following:

  • Up to 13 weeks of unpaid wages;

  • Annual leave;

  • Long service leave;

  • Up to 5 weeks of payment in lieu of notice;

  • Redundancy pay (limited to 4 weeks per full year of service).

You will not be able to claim unpaid superannuation guarantee contributions through the Fair Entitlements Guarantee.

 

To be eligible to make a claim an employee must meet certain criteria. Some of the criteria includes:

  • The employer is owed entitlements by the employer;

  • The employee is an Australian citizen or at the time termination the employee is allowed to work in Australia because they have a permanent visa or special category visa holder;

  • The employee lodges a claim within 12 months of the date they lost their job or the date their previous employer went bankrupt or into liquidation;

  • The employee lost their job because of the employer’s liquidation or bankruptcy, or they lost their job less than six months before the liquidation or bankruptcy.

 

Some people are not eligible to make a claim such as a contractor, a director of the company or a relative of the director if the director held that position within 12 months before the company went into liquidation.

 

Eligible employees can lodge a claim with the Fair Entitlements Guarantee by submitting a claim online (https://www.jobs.gov.au/fair-entitlements-guarantee-feg) or posting in a claim form.

 

If your employer was a company, you might be able to make a claim to the liquidator for your employee entitlements. A liquidator may ask employees to submit claim if the liquidator thinks a payment might be able to be made from money or assets the company has left. This is called a proof of debt form and if accepted the employee is treated as a creditor. The company may have other creditors, so the employee may not be able to recover all of what they are entitled to if there is not enough money left.

 

The team at Coutts understands that this can be a stressful and confusing time for employees. Coutts can assist in giving you further guidance on the processes involved and assistance on submitting a claim to recover your employee entitlements.

 

For further information please don’t hesitate to contact:

Alexandra Johnstone
Partner
alexandra@couttslegal.com.au
02 4607 2110  

Keely Irving
Lawyer
keely@couttslegal.com.au
02 4607 2124

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Higher penalties for consumer law breaches take effect.

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Overview

On 23 August 2018 the Commonwealth Parliament passed amendments to the Competition and Consumer Act 2010 (Cth) to significantly increase the penalties for breaches under the Australian Consumer Law (ACL). This follows recommendations arising from the review of the ACL which reported in 2018.

The increased penalties are as follows:

  • ·for companies: a breach of the ACL has been increased from $1.1 to the greater of:

    • $10 million;

    • 3 times the value of the benefit received by the company; or

    • where the benefit cannot be determined, 10% of the company’s annual turnover in the preceding 12 months;

  • for individuals: a breach of the ACL has been raised from $220,000 to $500,000 per breach.

Consequences

The financial penalty increases are substantial – particularly where there are multiple breaches which can increase the amount of the maximum penalties exponentially.

The increased penalties will have a profound impact on businesses who are found in breach of the ACL and where the Court imposes a financial penalty order. Potential breaches of the ACL which will attract the increased penalties include misleading and deceptive statements about goods or services, unconscionable conduct and other unfair commercial practices as well as breaches of product safety and information standards set out in the ACL.

Recent cases have shown an increased willingness on the Courts to impose substantial financial penalties for breaches of the ACL - even under the old penalty regime. For example:

  • ·in mid 2018 Meriton was ordered to pay a pecuniary penalty totalling $3 million in respect of multiple instances of misleading and deceptive conduct arising from the posting of online serviced accommodation reviews on TripAdvisor;

  • in April 2018 Ford was ordered to pay financial penalties totaling $10 million in respect of multiple counts of unconscionable conduct arising from incorrectly advising consumers that the shuddering of some vehicles was caused by their driving style when it was, in fact, caused by an inherent defect in the PowerShift transmission of certain vehicle models.

We can expect to see much higher pecuniary penalty orders when cases come before the Courts under the new penalty regime. The laws are likely to encourage the ACCC to undertake an even greater number of enforcement actions.

Considerations as to the quantum of pecuniary penalty orders

If a business does breach the ACL and a pecuniary penalty order is imposed, then the amount of the pecuniary penalty will depend on a variety of factors. Those factors include the nature of the conduct and the damage caused, whether the conduct was deliberate or inadvertent, whether the offender received financial gain from the conduct, whether the conduct has occurred previously, the length of time over which the conduct occurred and the size and culture of the offending company.

Key Take-Aways

It is now more important than ever that businesses take all necessary precautions to avoid non-compliance with the Australian Consumer Laws - otherwise there will be the risk of substantial financial penalties. It is imperative that businesses have in place all necessary policies, procedures and training to reduce the risk of potential breaches. The existence of such procedures will also help to minimise the financial penalties which may be imposed if breaches do arise.

 

For further information please don’t hesitate to contact:

Daniel St George
Senior Associate
daniel@couttslegal.com.au
1300 268 887

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Rockpool: The importance of getting your employee wages and entitlements correct

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As a result of a process described by Rockpool Dining Group (Rockpool), in their press release of Sunday 14 October 2018 as a “reconciliation review of annualised salaries for eligible employees”, Rockpool is making what they refer to as “top up payments” to employees in the order of approximately $1.6m and covering only the 2017-2018 financial year.

 

Rockpool includes the Australian Rockpool Bar and Grill venues and other restaurants and bars. Earlier this year, in a separate press release, Neil Perry made a statement denying that Rockpool had any issues with respect to employee wages and entitlements.

In their subsequent 14 October press release, Rockpool cited as contributing to the underpayment, their 2,400 employees with an annual payroll of approximately $100m overall, as well as “disparate payroll systems and the complexity of multiple shifts, sites and rosters” which they described as “pos[ing] an industry-wide challenge”.

This originally started as an anonymous staff claim that overtime was being paid incorrectly.

Generally speaking, any salary for an employee covered by an award must be greater than the entitlement of that employee calculated against the employee wages and entitlements under the award.  Many employers conduct a regular assessment against any salary package against the award to ensure that their employees are at least receiving the minimum wage and entitlements they would receive if they were being paid solely in accordance with the award.

It appears that at least some Rockpool staff were paid such annualised salaries as provided for in the relevant Award.  The “reconciliation review” conducted by Rockpool was noted in their 14 October press release as “required to ensure that award employees who receive an annualised salary are appropriately compensated, taking account of minimum award terms and conditions.  Where, following a reconciliation process, an employer assesses that an employee would have received more on award terms, a “top up” payment is made.”

For many small businesses, rectifying backdated employee wage and entitlements could have grave impacts, particularly if there is a large monetary correction required.  It is clearly imperative to ensure that each business understands and pays employee wages and entitlements correctly right from the start. 

At Coutts we regularly advise clients in relation to their obligations and responsibilities under the relevant Awards.  We also prepare employee agreements that are clear, practical and accurate, to avoid, among other things, any inaccuracies with employee wages and entitlements.

For further information, or a review of your company constitution or agreements, please don’t hesitate to contact:

Alexandra Johnstone
Partner
alexandra@couttslegal.com.au
02 4607 2110

 

Terms and Conditions: a snapshot on fundamental considerations for your business

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Terms and conditions are a risk management tool and an allocation of roles and responsibilities

Terms and conditions are important to protect businesses and to make it clear what a customer is signing up to. The existence of terms and conditions in our daily lives is inescapable, they outline the way goods and services are provided and accepted. For example terms and conditions will describe what is being provided to the consumer, payment details, time frames, return/refund policies, warranties and disclaimers. You may not notice, but terms and conditions are everywhere, on the bottom of online shopping sites, on signs before we enter into car parks, a waiver before go-karting, attached to quotes, or a in the form of a box to be ticked saying ‘I have read and accept the terms’ before we can buy a concert ticket online. Irrespective of the size of your business it is extremely important to have well thought out terms and conditions when conducting transactions and that fit seamlessly with the way you conduct business.  It is also critical that terms and conditions cover off risks to you and your business and are not considered unfair contracts under the new unfair contracts regime.

 

The importance of timing your terms and conditions right

It is crucial to provide your terms and conditions to a customer before you start providing any goods or services to that customer. This has been a fundamental feature of contract law for decades, the case of MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 8 ALR 131 stated that a purchaser must be afforded a ‘reasonable opportunity’ to either accept or reject the terms and conditions of purchase. It is not generally sufficient to provide a client or purchaser with a copy of your terms and conditions after the agreement has been entered into or after you have started providing goods and services to that customer. With this in mind, your business should set out the expectations of the transaction from the beginning in order to be afforded maximum protections.  

Your terms and conditions are essentially an allocation of risk between you and your customer and a risk protection tool.

 

Tip: ensure that your customers read and understand your terms and conditions

A business should make their terms and conditions easily accessible and obvious. It is wise to include the terms and conditions at the start of the document, with the signing section to follow – this helps ensure the customer has the opportunity to read and consider the terms and conditions before signing.

Ideally, the way you structure your terms and conditions should make it difficult for a customer to argue that they were unaware of the terms because they didn’t read them. This happened in the case of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 where a party attempted to argue they could not be bound to the terms and conditions of the contract as they did not read them. The provisions were on the reverse page of the agreement and despite being on the reverse, the party was held to have accepted them upon signing the document.

However, be careful that the terms and conditions are not underemphasised on purpose. The case of Director of Consumer Affairs Victoria v Domain Register Pty Ltd [2007] FCA 1603 held that the small and difficult font outlining where the terms and conditions were to be viewed was a direct attempt to give important information no prominence for commercial gain.

 

How might I incorporate terms and conditions to online purchases or online services?

Generally, there are two ways in which you can include your terms and conditions online.

1. “Click Wrap Agreement”

This technique of acceptance requires a consumer to click on a button to the effect of “I agree” or tick a box saying something similar. The terms and conditions will usually be accessible through another link. In eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768 it was agreed that “click wrap” was an effective way to convey terms and conditions. However, this method of agreement has been a controversial one in Australia and overseas as the judgments have considered all the relevant facts in making a determination as to whether the agreement to the terms and conditions was validated by the click.

2. “Browse Wrap Agreement”

On a website there may be a link to the terms and conditions displayed somewhere on the website, often the bottom of the page, and require clicking a hyperlink to view them. In these situations, there is no requirement to click on an “I agree” type button but contrastingly, the consumer may not even be aware of the terms and conditions. The courts have typically been less likely to enforce agreements made through the “browse wrap” display technique as the notice to consumers has not been made obvious. 

 

What are the essential inclusions for my terms and conditions?

Your specific individual terms and conditions will vary depending on the services offered and the nature of the transactions. It is important to tailor your terms and conditions to the way you supply the service or product and not to copy and paste from a competitor, particularly given you do not have ownership or any rights to use or change the terms and conditions of a competitor. 

Some essential inclusions for your business might include:

  • The goods or services: What is the customer receiving? What is its purpose, function or use?

  • Payment terms: It should be clear when you will be paid. Is it before or after the product or service is provided? How many days do they have to pay? Is there a deposit required?

  • Additional costs, fees or disbursements: In what circumstances will the customer incur an additional fee, cost or disbursements?

  • Time frames: When will the product/service be provided to the customer? What happens if the deadline is missed?

  • Intellectual property: If applicable, it is crucial to state who owns what intellectual property to avoid transferring any rights to it.

  • Warranties: What are you warranting? How long is the product or service good for its purpose? What if the product or service is defective or faulty?

  • Returns and refunds: What is the process for returning a product or obtaining a refund? Your process will need to comply with Australian Consumer Law.

  • Termination: How can the agreement be ended? Is there a time frame or expiry date? Who can end the agreement and when? What are the consequences of termination?

  • Dispute resolution: What is the process for dealing with a dispute if it arises?

  • Indemnities and liability: If something goes wrong, who is liable for what? Which party is on the hook for certain acts, claims, consequences, damages and costs?

  • Confidentiality: What elements of the agreement are confidential and cannot be disclosed to other people?

It is also important to know what you cannot include. The Australian Consumer Law provides a set of consumer guarantees, which cannot be altered or excluded by any terms or conditions. Some of the guarantees include:

  • Guarantee as to acceptable quality;

  • Guarantee as to fitness for a particular purpose;

  • Guarantee as to due care and skill;

  • Guarantee as to reasonable time for supply;

Any terms and conditions which attempt to alter any of the guarantees found in the Australian Consumer Law will not be valid.

The unfair contracts regime which was extended on and from November 2016 has also impacted on the types of terms that cannot be included. For example, many terms and conditions would state that the party supplying the goods or services could unilaterally change the terms of the agreement without giving the other party notice or the opportunity to terminate the agreement. This is now unacceptable and could result in the terms and conditions being determined an unfair contract.

The use and inclusion of terms and conditions in your transactions and agreements are essential to safeguard your business and make it clear what the consumer can expect. At Coutts we are able to prepare tailored terms and conditions, which will take into account the individuality of your particular business. We can ensure you are complying with the law but ensuring the terms and conditions have the look and feel of your business and are plain language and friendly. Please do not hesitate to contact our experienced team to enquire about amending or obtaining terms and conditions for your business.

 

For further information contact:

Rebecca Watts
Lawyer
rebecca@couttslegal.com.au
02 4607 2148

 

 

 

Gardening Leave - what it is and why it's relevant.

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What is gardening leave?

Gardening leave is a concept where the employer does not require the employee to come to work and perform their usual duties, but the employee still receives their usual remuneration despite not actively working.

 

Gardening leave usually arises in the following situations:

  1. Where the employee has resigned, and the employer does not want the employee engaging with clients during the relevant notice period; 

  2. Where the employee has been suspended while awaiting disciplinary action;

  3. Where the employer is considering terminating the employee; or

  4. Where the employer has provided the employee with time to find alternative employment.

 

Does an employer have a duty to provide work?

Gardening leave has raised many questions around whether the employer has a duty to provide an employee with work or whether the employer can enforce a right to gardening leave.

 

There is no automatic implied term in an employment relationship that an employer must provide an employee work. The duty to provide work must be expressly stated in the contract. The primary obligation of the employer is to pay the employee’s wage.

 

However, if the job requires a particular special skill or talent for example if the employee is a singer, then there may be an obligation on the employer to provide the work.

 

From a practical perspective, the right of an employer to place an employee on gardening leave must typically be first set out in that employee’s contract.

 

Does an employer have a right to place an employee on gardening leave?

The issue of whether the employer has the right to place an employee on gardening leave in the first place has been an area of debate. In the case of Tullett Prebon (Australia) Pty Ltd v Purcell (2008) 175 IR 414 the employee resigned, and the employer placed the employee on gardening leave and ordered the employee not to attend work during the notice period. The employee was under a fixed term contract and had resigned before the end of the fixed term. As such the employer refused to accept this and sought an order to prevent the employee from working with a competitor whilst the contract was still on foot. The court upheld that the employer had an express right to direct the employee not to attend work whilst the contract was ongoing.

 

Similar, in the matter of Actrol Parts Pty Ltd v Coppi (No 2) [2015] VSC 694 the parties were arguing about whether the employer had the right to place the employee on gardening leave under the employment contract. Following the employee’s resignation, the employer placed the employee on gardening leave and during the gardening leave the employee joined a competitor. This normally would have been a breach of the employment contract however, the employee tried argued that the employer did not have an express right under the employment contract to place him on gardening leave in the first place and therefore, the contract was repudiated by the employer and the employee was free to work with the competitor.  

 

The employee in this case was a sales representative with access to clients and confidential information. Therefore, the court said that it was an implied term that the employer could place the employee on gardening leave.

 

In conclusion, the court deemed the employer could place the court on gardening leave. However, the employer made the mistake of removing the employee’s motor vehicle and mobile phone during the gardening leave which were part of the employee’s salary package. This meant the employee was not receiving his usual remuneration and the employer was found to have repudiated the employment contract and the employee was able to work for a competitor.

 

Key practical tips 

  • Check employment contracts for clear provisions which enable employers to place employees on gardening leave;

  • Consider whether an employee is receiving the usual remuneration and employment benefits the employee ordinarily receives during any gardening leave and ensure you understand the legal implications of this;

  • Seek legal advice if there is no express right for an employee to be placed on gardening leave but you would like to take this course of action;

  • Seek legal advice about actions taken during the gardening leave by an employee, including searching or obtaining new employment with a competitor. 

 

At Coutts we have experience in drafting employment agreements, reviewing and providing advice on employment agreements and employment disputes. Coutts understands the importance of providing clear and accurate advice to try and prevent disputes in the first place and to resolve them when they do occur as soon as possible. Please contact our Commercial Law department today if you have any questions.

 

For further information contact:

Rebecca Watts
Lawyer
rebecca@couttslegal.com.au
02 4607 2148

 

 

 

So, you think your employees are casual? Think again!

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A recent decision handed down by the Federal Court of Australia has sent shockwaves through the business community, and most relevantly, employers who believe they have employed staff as casuals. This decision could see casual employees now becoming entitled to part-time or full time employee benefits.

 

WorkPac Pty Ltd v Skene [2018] FCAFC 131 was handed down by the Full Federal Court on 16 August 2018.  The case involved an entitlement to annual leave under the Fair Work Act for an employee who had worked as a “casual” for approximately four years.

 

WorkPac Pty Ltd (“WorkPac”) operated a labour-hire business and employed Mr Skene as a fly-in, fly-out dump-truck operator, from 2010 to 2014, at coal operations in Queensland. Upon the cessation of his employment, Mr Skene claimed that he was a permanent full-time employee of WorkPac and as such, he was entitled to annual leave and other entitlements a full-time employee is entitled to, as provided in the National Employment Standards (and as set out in sections 87 and 90 of the Fair Work Act). WorkPac argued that Mr Skene was in fact a casual employee as defined in their employment agreement and enterprise agreement, and as a result, was not entitled to annual leave and the related entitlements he claimed.

 

The Full Bench found that Mr Skene was entitled to accrued annual leave of $6,700.00, and further, that Mr Skene was also entitled to $21,000.00 in compensation. Significantly, The Court also set a future date for the Court to decide if WorkPac will be fined for their failure to pay Mr Skene permanent employment entitlements and as such their breach of the Fair Work Act – it is not yet over for WorkPac.

 

So the question posed is, I am an employer should I worry about this? Simple - this case may leave employers and businesses open to claims from ‘casual employees’, for entitlements reserved for part-time or full-time permanent employee’s only. Further, employees have six years to make these claims, and as such, business owners and employers may be hit with claims from employees who were terminated (or left) the business years ago.

 

The National Employment Standards, modern awards and enterprise agreements – can’t I rely on the definition of ‘casual’ in the award or agreement? 

 

The National Employment Standards (“NES”) set out the minimum standards that apply to the employment of employees, and importantly, provide for the payment of annual leave, sick leave, and other part time or full-time benefits. The NES standards cannot be displaced, meaning, an employer cannot “contract out” of these minimum standards.

 

The NES were relevant in this case as the applicable award and enterprise agreement that covered Mr Skene had attempted to define a casual employee through the use of their agreements. Prior to this case, this approach was widely accepted.

 

The Court however found differently. The Court found that modern awards and enterprise agreements were not the appropriate place to define whether an employee was ‘casual’, and as such, whether an employee is in fact casual will fall on the legal definition as defined by case law.

 

How is a casual defined (and can an employer define who is a casual)?

The Court recognised the difficulty in identifying how the term ‘casual employment’ is currently defined. The phrase ‘casual employee’ is not defined in the Fair Work Act, and as such, the Court was required to turn to previous caselaw and the indicators of a ‘casual employee’. The Court repeated that the following features are indicators of a casual employee:

1.     Firstly, the Court referenced that the term ‘casual employee’ has no precise meaning. The Court reiterated that the question of whether any particular employee is a casual employee, depends on the objective characterisation of the nature of the particular employment as a matter of fact and law, having regard to all of the circumstances [159]. This means whether an employee is actually a casual will be determined on a case by case basis; 

2.     The features of informality, uncertainty and irregularity of employment indicate casual employment [162];

3.     A casual employee will not have any commitment from the employer for continuing and indefinite work, according to an agreed pattern of work [172];

4.     Likewise, a casual employee will not give any firm commitment to the employer of continuing and indefinite work [172]; and

5.     Other caselaw have identified irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability as indicia of casual employment [173].

 

The Court also referenced the fact that if a worker meets the definition of a full or part-time employee, they are not required to be paid a casual loading. If, however, an employee elects to pay a worker casual loading, the mere fact of this payment does not automatically render an employee as casual. This means that, even if you are paying an employee casual loading (because you have deemed them as casual), you may still be required to pay the said employee full or part-time entitlements – a double dipping on the employee’s behalf.

 

What do I need to do?

Following the findings of this case, it is an extremely important time to review the structure and employment of your current workforce. In particular:

 

1.     Review your current employment agreements and ascertain if the agreements reflect the employment status of each staff. It is common for staff members to commence as casuals, and as time progresses, their role shifts into that of part-time or full-time employment;

2.     Question yourself:

a)     Are you only relying on the definition of ‘casual’ in the relevant award or enterprise agreement when defining the employment of your staff?

b)    Is there a mutual commitment between yourself and a casual staff member, for ongoing employment?

c)     If you have classified an employee as casual, do they have irregular work patterns, with uncertainty, discontinuity, intermittency of work and unpredictability?

d)     Do you or your employee believe or know that they are casual?

 

If you have casual employees and the findings of this case have you concerned, you should contact us to seek advice on whether your casual employees are in fact casual, and how careful contract drafting may assist to avoid staff members ‘double dipping’ or making a claim against you for further entitlements. 

 

For further information contact:

Allyce Silm
Lawyer
allyce@couttslegal.com.au
02 4607 2119

 

 

 

Modern Awards now include Unpaid Domestic Violence Leave

Modern-Awards-now-include-Unpaid-Domestic-Violence-Leave.jpg

The Fair Work Commission has recently issued a model clause to form part of all modern Awards in respect of unpaid domestic violence leave. The clause applies to all employees, regardless of casual, part-time or full-time status that are covered by an industry or occupation Award (known as “modern Awards”). It will not apply to employees covered by Enterprise Awards, State public sector Awards, Registered Agreements or Award free employees. The inclusion of this additional entitlement arose from the Commission’s four-yearly review of all modern awards.  The change took effect from the first full pay period on or after 1 August 2018.

As a result of the change, all modern Award employees will be entitled to five (5) days of unpaid domestic violence leave annually. The 5 days of unpaid leave will renew at the beginning of every 12 months, can be taken in full or in parts (including a part day) during the 12 month period but will not accumulate from year to year.

Employees covered by the change will now be entitled to take unpaid leave to allow them to deal with:

  • family and domestic violence that they may be experiencing; or
  • ancillary matters arising from the impact of domestic or family violence, which would be considered impractical to attend to outside of an employee’s ordinary working hours (for example, attending a Court hearing).

Under the changes, “family and domestic violence” has been defined broadly to include behaviour which is:

  • threatening, violent or otherwise abusive by a family member, causing an employee to be fearful; or
  • behaviour that seeks to control or coerce an employee.

A wide definition of a “family member” has also been adopted to include:

  • a spouse, de facto partner, child, parent, grandparent, grandchild or sibling of the employee; or
  • a child, parent, grandparent, grandchild or sibling of a spouse or de facto partner of the employee; or
  • a person related to the employee according to Aboriginal or Torres Strait Islander kinship rules.

To obtain access to the leave, an employee is required to give their employer notice of the leave as soon as possible (in some urgent cases it may not be possible for the employee to give notice until after the leave period has started). Additionally, if the employer requires, an employee must give evidence to satisfy a reasonable person as to the bona fide nature of the domestic violence leave. Employers are obliged to take reasonably practicable steps to keep confidential the information provided by employees. Disclosure by employers is possible, but only where required by law or where necessary for the protection of the safety, life and health of employees or other persons.

 

Key Take Outs

Employers need to be aware of the introduction of unpaid domestic violence leave into all modern Awards, the rights of employees to obtain up to 5 days unpaid leave every year and the processes and procedures which must be followed in relation to such leave.

There is also the potential for further legislative changes in this area with the Commonwealth government pledging to amend the Fair Work Act (2009) to extend unpaid domestic leave to all other employees not covered by modern Awards, the Labor Party being committed to an additional National Employment Standard mandating 5 days of paid domestic violence leave per year and the union movement pushing for 10 days of paid domestic violence leave per year.

 

Coutts are highly experienced in advising clients on their employment rights and obligations. Please contact our Commercial Law Team if you require any assistance.

 

For further information contact:

Daniel St George
Senior Associate
daniel@couttslegal.com.au
1300 268 887

Riley Earle
Lawyer
riley@couttslegal.com.au
02 4647 7447

 

I Think I Have Been Unfairly Dismissed – Now What?

Many of us rely on our employment as our means of livelihood, which protects our families’ standard of living. Losing your employment can jeopardise this security and put yours and your family’s future at risk. , It is important to understand your rights if you have been dismissed - especially if you have been unfairly dismissed.

 

Unfair dismissal – what exactly is it?

In NSW, if you are employed on a permanent basis (or a long term casual employee), your employer can only terminate your employment in a way that is not harsh, unjust or unreasonable. Many employers rely on a “valid reason” for dismissal in arguing that a dismissal was not unfair. A valid reason can be a reason based on your capacity to work or your performance at work, your conduct, or the employer’s change in need no longer requiring the work you were hired to do to be performed (i.e. a redundancy). Usually, before being able to legally dismiss you on the basis of your capacity to work, or, prior to dismissing you based on your conduct, the employer is required to give you a warning and a reasonable opportunity to correct your behaviour.

 

If your employer fails to give you a warning and a reasonable correction opportunity, this could mean that your dismissal is considered an unfair dismissal. Unfair dismissal occurs where an employee is terminated from their position in a manner that was unreasonable, unjust or harsh.

 

Section 387 of the Fair Work Act 2009 (Cth) sets out the criteria to consider when determining if a dismissal is harsh, unjust or unreasonable. Examples of this criteria are:

·       whether the employee was notified of the reason for dismissal,

·       the degree to which the size of the employer’s business would impact the procedures in effecting the termination,

·       whether  dedicated HR personnel are engaged by the business, and

·       whether the employee was denied a support person when dismissal discussions took place.

The section 387 factors must be considered when assessing and making an application for unfair dismissal with the Fair Work Commission.

 

It is also important to note that not all dismissals are regarded as unfair dismissal. Unfair dismissal does not typically arise where there has been a genuine redundancy in the business due to your position no longer being required in the business, changes in operational requirements of a business or where you have been consulted prior to the redundancy.   

 

Who is protected by Unfair Dismissals?

There are a wide range of individuals who are protected under the unfair dismissal laws in the Fair Work Act 2009 (Cth). The law extends to:

 

·       Employees who have worked at least 6 months in a business that employs more than 15 employees; or

·       Employees who have worked at least 12 months in a business but where less than 15 people are employed in the business.

 

If the employee was receiving an income greater than $142,000, they must be covered by an enterprise agreement or an award in order to be eligible for this process.

 

Those who are not covered by unfair dismissal laws are:

 

·       Independent contractors;

·       Employees who resign (and are not forced to resign by their employer);

·       Labour hire workers who are terminated from the company hiring them (but not from their employer); and

·       Vocational placement workers.

 

Employees who have had their employment terminated by a business with fewer than 15 employees may not be eligible to make an unfair dismissal application, however this is assessed on a case by case basis. Instead, small businesses are covered by the Small Business Fair Dismissal Code. The code highlights what is required by small businesses when immediately or otherwise terminating a person’s employment, and whether the dismissal was unfair. 

 

How do I raise a claim?

Unfair Dismissal claims are initiated in the Fair Work Commission by submitting an application form either online, by email or by post. The Application must be submitted within 21 days of your dismissal taking effect, unless exceptional reasons exist to explain why this was not possible. This 21-day time frame is extremely strict, and if it is not met, the employee is required to seek special leave from the Fair Work Commission to be granted the right to file the claim outside of this deadline.

 

The current price to submit an application is $70.60.

 

The application form requires information about the details of your employment, informing the Fair Work Commission of when you were notified of dismissal and the date the dismissal  took effect. The form must also state the reasons for dismissal and why you believe it to be unfair, and the outcomes you seek out of the unfair dismissal process.

 

The Fair Work Commission will then provide a copy of your Application to your former employer, who is given the opportunity to respond or object to any claims you have made, within seven days.  

 

What happens after the application?

The Fair Work Commission will then allocate a date for a conciliation conference. This usually occurs through a telephone call, giving an opportunity for the employee and former employer to attempt to resolve issues through negotiation, with an independent third party present in the discussion.

 

If a resolution cannot be reached, the Fair Work Commission will hold what is known as a jurisdiction and arbitration conference. At this stage, a Commissioner will determine if any objection made by an employer is valid and finally determine whether dismissal was unfair. The decision made at this point is binding on the employer and employee. 

 

I have been dismissed wrongly but I don’t believe I have been unfairly dismissed. What can I do?

 In addition to unfair dismissal, there are further unlawful reasons that your employer cannot use to terminate your employment. These reasons are separate from unfair dismissal, but are still commenced with the Fair Work Commission, and are called “general protections”. General protections are designed to:

 

-        Protect workplace rights;

-        Protect freedom of association;

-        Protect individuals from workplace discrimination; and

-        Provide relief for individuals who have been a victim of any of the above.

 

In short, an employer (or a person) cannot lawfully take any ‘adverse action’ against an employee (or another individual) because that person has a workplace right that they have exercised (or even proposed to exercise). General protections apply to contraventions of the Fair Work Act 2009 (Cth) when an individual has been dismissed, or, when an individual has not been dismissed and their general protections have been breached. If the contravention involves a dismissal, the employee again has a strict 21-day deadline to lodge an application.

Coutts understand the stress involved in being unfairly dismissed from employment, or a dismissal involving a breach of general protections, and are happy to assist you with this process. Our team have experience in determining likelihood of success, considering employee eligibility across business structures, drafting applications, representing at conciliation, jurisdiction and arbitration conferences.