Australia: Promises to Employees, Unfair Dismissal Remedies, Take Home Pay: Workplace Relations Update

Contents

• Promises and representations to employees – a lesson from the GFC
• Casual employees and unfair dismissal remedies
• Stand down and disciplining a union delegate was not adverse action
• Take home pay orders – they have arrived!

Promises and representations to employees - a lesson from the GFC

By Stephanie Nicol of Gadens Lawyers, Sydney

It is not uncommon for employers to make representations as to future matters to lure prospective employees. However, employers who make false representations, or who otherwise make them without reasonable grounds, walk a dangerous path, particularly if the prospective employees can show that they relied on those representations to their detriment.

In the recent case of Robertson v Knott Investments Pty Ltd, the Federal Magistrates Court considered alleged misrepresentations about length of employment that were made to an employee during recruitment. The case arose as the employee was subsequently retrenched because of the global financial crisis.

Tied up in Knotts

Mr Robertson relocated to Australia to commence employment with Knott Investments as a Design Manager in January 2008. He responded to an on-line job advertisement and when interviewed, he disclosed his plans to relocate to Australia and retire here.

While Mr Robertson was ultimately offered the role with Knott Investments, he refused it because he had accepted a more lucrative role in India. However, when he became dissatisfied with his role in India, Mr Robertson contacted Knott Investments, and the recruiter it had engaged, to express his desire to continue to explore opportunities with Knott Investments.

After a series of communications, Knott Investments offered Mr Robertson employment. The terms of the offer were reflected in a draft contract of employment. Mr Robertson raised concerns about some of the terms of the draft contract, including that he wanted the contract to 'be valid for a minimum period of three (3) years from date of commencement.'

Mr Robertson was sent a further draft of the contract. That further draft did not reflect a minimum three year term and contained a four week notice period. Mr Robertson signed the revised draft of the contract and commenced employment with Knott Investments in January 2008.

Mr Robertson's employment was terminated for redundancy in April 2009.

Mr Robertson felt aggrieved by the termination of his employment, because he considered that during the recruitment process Knott Investments had represented to him that he would be employed by it for at least three years. As a consequence, he brought proceedings under section 53B of the Trade Practices Act 1974 (Cth) asserting that Knott Investments had engaged in conduct which was liable to mislead him about his employment, in particular, by making representations that he would be employed by it for at least three years.

The decision

The court noted that for Mr Robertson's claim to be successful, the following had to be shown:

• that representations were made to Mr Robertson about the length of his employment
• that those representations were misleading
• that Knott Investments had no reasonable grounds to make the representations
• that Mr Robertson had relied on those representations
• that Mr Robertson had suffered loss and damage because the representations were misleading.

While the court was satisfied on the evidence that representations had been made to Mr Robertson to the effect that he would remain employed by Knott Investments for three or more years, it formed the view that:

• Knott Investments had reasonable grounds to make those representations
• Mr Robertson had not relied on those representations to leave his job in India and accept employment with Knott Investments.

In coming to this view, the court was conscious that:

• at the time it was in negotiations with Mr Robertson, Knott Investments was experiencing growth in sales, production and employment. It had no way of knowing that the global financial crisis was coming or of predicting its impact on its business. As a consequence, absent this foresight, it was reasonable for it to have represented at the time that Mr Robertson would remain employed by it long term
• while Mr Robertson had a well paid and secure job in India, he was not happy there. In addition, Mr Robertson had signed a contract of employment with Knott Investments knowing it had a four week notice provision and in circumstances where Mr Robertson had sought unsuccessfully to have it amended to specify at least a three year term.

Ultimately, the court determined that Mr Robertson signed the contract not because of any representations that he claimed he relied upon but 'because he had no reason to believe he could not competently carry out the demands of the position and because he believed that this would add to the success of the ... company who would have no reason not to continue to employ him.'

For these reasons, Mr Robertson's claim was unsuccessful.

Key lessons for employers

Employers should ensure that during any recruitment processes undertaken that they (and anyone acting on their behalf) do not make any representations to a prospective employee about their prospective employment unless the employer has reasonable grounds to make the representations.

Casual employees and unfair dismissal remedies

By Nicholas Linke of Gadens Lawyers, Adelaide

A recent decision of Fair Work Australia (FWA) in Ponce v DJT Staff Management Services Pty Ltd has provided guidance as to how FWA will determine what constitutes regular and systematic employment for casual employees to provide them access to an unfair dismissal remedy.

Ordinarily under the Fair Work Act 2009 (Cth) (FW Act), a casual employee is excluded from making an unfair dismissal remedy application. However, if a casual employee is employed on a 'regular and systematic' basis and has a reasonable expectation of continuing employment, FWA has the ability to provide an unfair dismissal remedy. In addition, to obtain an unfair dismissal remedy, the employee must have completed the minimum employment period, which is twelve months for an employee of a small business employer, and six months for all other employees.

The casual affair

Mr Ponce was engaged by DJT Staff Management on a casual basis from 6 September 2006 to 29 October 2006 and then from 3 February 2008 to 29 October 2009. On 12 November 2009 he was told that he would not be offered any further shifts and on 18 November 2009 he was provided with a separation certificate.

During his employment, Mr Ponce was offered on average four to five days of work each week. He accepted the offer of shifts most of the time. The total hours of his work each week were similar to a full time employee's hours. While disputed by DJT, FWA found that Mr Ponce was not told each day that he was required to work, rather there was a general understanding that there was work available.

The decision

FWA held that Mr Ponce was employed on a regular and systematic basis as there was a clear pattern to his work and an agreed arrangement that Mr Ponce was to be provided with shifts by DJT. In making this finding, FWA outlined some useful indicators as to whether a casual employee is engaged on a regular and systematic basis, which covers a wide range of casual employees. The indicators identified by FWA include:

• an employee with a clear pattern, roster of hours or agreed arrangements is more likely to be found to be engaged on a regular and systematic basis
• if the employer regularly offers work when available and the employee generally makes themselves available for work, the employee is more likely to be found to be engaged on a regular and systematic basis
• if work is offered and accepted sufficiently often the employee is more likely to be found to be engaged on a regular and systematic basis
• if the hours of a casual employee meet or exceed 38 hours a week, the employee is more likely to be found to be engaged on a regular and systematic basis.

Key lessons for employers

Employers should ensure, when terminating the employment of a casual employee, that they assess whether the employee's employment is regular and systematic having regard to the indicators set out above. If so, the unfair dismissal remedy regime will potentially apply, and employers must be careful to ensure any termination is carried out in a manner which would not constitute an unfair dismissal.

Stand down and disciplining a union delegate was not adverse action

By Michael Cooper of Gadens Lawyers, Sydney

The Federal Court of Australia, in its first decision dealing with an application alleging that an employer had taken adverse action against an employee under the Fair Work Act 2009 (Cth) (FW Act) has found in the employer's favour.

Mr Barclay is employed at the Bendigo Institute of TAFE (TAFE) as a senior teacher. He was also the sub-branch president of the Australian Education Union (AEU). In late January 2010, Mr Barclay sent an email to all members of the AEU employed at the TAFE alleging that a number of employees of the TAFE had been asked to take part in producing false or fraudulent documents in relation to an audit of the TAFE that was being undertaken.

Management of the TAFE became aware of the email and asked Mr Barclay to disclose who had been involved in the false or fraudulent activity, or alternatively which members of the AEU had been asked to be involved in the false or fraudulent activity. Mr Barclay declined to provide the information. The TAFE subsequently suspended Mr Barclay (on full pay) and started disciplinary proceedings in relation to the following issues:

• the manner in which Mr Barclay had raised the allegations of false or fraudulent activity
• Mr Barclay's failure to report the instances of alleged improper conduct to his manager
• Mr Barclay's refusal to provide further information in relation to the allegations.

Mr Barclay and the AEU started proceedings in the Federal Court alleging that the TAFE had contravened the FW Act in that:

• the TAFE had taken adverse action against Mr Barclay (by suspending his employment, internet access and access to TAFE's premises and commencing disciplinary action)
• the adverse action was taken against Mr Barclay because:

1. he was an officer of the AEU;
2. he engaged in certain industrial activities; and
3. he had exercised certain workplace rights.

Importantly, under the FW Act, if adverse action is taken against an employee for reasons that include a prohibited reason, the adverse action is in contravention of the FW Act. Further, under the FW Act it is presumed that the adverse action has been taken for the reasons alleged, and the alleged perpetrator of the adverse action must prove that this is not the case.

TAFE conceded that it had taken adverse action against Mr Barclay (however it did not concede that the decision to commence a disciplinary inquiry was adverse action), but denied that the adverse action was taken for a reason prohibited by the FW Act. Instead, TAFE claimed that it had taken the action because Mr Barclay had failed to bring serious allegations to the attention of senior managers of the TAFE, and had instead proceeded to cast aspersions and innuendo upon Mr Barclay's colleagues by way of a widely circulated email, in breach of TAFE's code of conduct and Mr Barclay's obligations as an employee.

The court accepted the evidence of TAFE that the reasons for the adverse action were not those that were prohibited by the FW Act, and dismissed Mr Barclay's claim.

Key lessons for employers

Employers should ensure that they are familiar with the new adverse action provisions of the FW Act, and should ensure that they do not take adverse action against an employee in contravention of those provisions. Employers should also ensure that when they are taking adverse action against an employee or prospective employee (be it disciplinary or otherwise), that they are able to substantiate the reasons that the action is taken due to the presumption that they have acted in contravention of the FW Act.

Take home pay orders - they have arrived!

By Mark Sant of Gadens Lawyers, Sydney

With the start of modern awards on 1 January 2010 there has been scope for some employees to experience a reduction in take home pay. Take the situation where an employee was entitled to a particular allowance before the start of an applicable modern award under a NAPSA in circumstances where the modern award does not provide for that allowance. In this case, the employee may experience a reduction in take home pay if the employer stops paying the allowance without the employee's take home pay increasing for another reason, for example, through an increase in base rates.

The Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) provides that if an employee suffers a reduction in take home pay because of the application of a modern award, the employee, or their union, can make an application to Fair Work Australia (FWA) for an order for the payment of amounts to the employee that FWA considers appropriate to remedy the situation. An application is available to cover an entire class of affected employees and not just an individual employee.

In determining whether an employee has suffered a reduction in take home pay, FWA is required to compare the employee's take home pay for working particular hours under the modern award to the take home pay of the employee before the start of the modern award. FWA must take into account the pay an employee actually receives, including wages and incentive based payments and additional amounts such as allowances and overtime. FWA cannot make a take home pay order if FWA is satisfied that the employee has been adequately compensated in other ways for the reduction or it considers the reduction minor or insignificant.

The Australian Nurses Federation (ANF) has launched the first major test case on take home pay orders having made an application to FWA for about 5,000 aged care nurses in New South Wales and Queensland who the ANF claims have experienced a reduction in take home pay as a consequence of the start of the Nurses Award 2010. The ANF has contacted a larger number of aged care operators seeking assurances that their employees will not suffer a reduction in take home pay.

Key lessons for employers

Employers should be aware of the scope for the take home pay of employees to be reduced as a consequence of the operation of modern awards and should consider how they can appropriately address these reductions to minimise the risk of take home pay orders through the use of over award payments, conducting periodic reconciliations or other similar arrangements.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.