The New Workplace Montage - Unfair Dismissal, Redundancy, Adverse Action and Bargaining Representatives ⁽ⁱ⁾

The end of 2011 bears witness to the fact that all private sector Australian workplaces are now regulated by the Fair Work Act (the “Act”), with a hefty proportion of employees in those workplaces covered by modern awards. The Act has been in place since July 2009, with some extra items kicking in on January 1, 2010 which happened to coincide with the (then) NSW government’s referral of remaining employers, not then covered by the Act, into the federal system (entities such as partnerships, charities, many aged care providers, sole traders and the like). Councils and public sector employers have remained within the State IR system.

For some employers the Act’s provisions and regulations are still proving difficult to navigate. Questions still float around about things like: are all our employees, including the managing director, entitled to the National Employment Standards? Does a modern award cover my previously award free workplace? Do I need to give three warnings before I dismiss an underperforming staff member? Is my contractor really an employee? Do I need to start bargaining with my employees even if I do not think the workplace needs an enterprise agreement? and, can I dismiss an employee who has been on extended sick leave or workers compensation and who cannot perform the inherent requirements of the job?

This update answers some of those questions.

Unfair dismissal & redundancy

The Act allows an employee to bring a claim for unfair dismissal before Fair Work Australia if the employee is: covered by a modern award or enterprise agreement; earning less than $118,100; and, has completed a minimum period of employment. For small employers (less than 15 employees including those in any associated or related entities) the period is 12 months. For all other employers it is six months.

A period of casual service can, in some circumstances, also be used for the purpose of calculating the length of service. This is an important consideration for employers who are thinking of allowing an employee to convert from casual to part or full time employment.

The Act covers situations of constructive dismissal when an employee perceives that he or she has been forced to leave the employment under cover of resignation but argues that the circumstances at the time meant there was no real choice but to resign under express or implied threat of being fired.

A person has been unfairly dismissed if Fair Work Australia is convinced that either: the dismissal was harsh, unjust or unreasonable; was not consistent with the small business dismissal code; or, was not a case of genuine redundancy.

A redundancy is not genuine and therefore potentially deemed unfair if: the job the person was doing is still required to be done by others in the workplace (the job re-shuffle); the employer has not complied with any modern award requirement to consult about the redundancy (assuming a modern award applies); or, it would have been reasonable for the employer to redeploy the employee in the business or any associated business (even if it meant a change in status, for example full to part time and/or reduced pay) and the employer did not consider the reasonable redeployment opportunities.

Under the National Employment Standards a severance payment is not required to be made if, at the time of the redundancy, the employee had been employed for less than 12 months or the employer employs less than 15 people. This should not be confused with the entitlement to bring an unfair dismissal claim. If the employee suspects the redundancy was not genuine, he or she can bring an unfair dismissal claim under the Act if he/she has been employed for at least six months and the employer employs more than 15 people. He/she will not, however, be entitled to a redundancy payment unless employed for at least 12 months.

If the employer employs less than 15 people then there is no right to bring an unfair dismissal until at least 12 months continuous service has been performed and there is no requirement to make a severance payment regardless of the period of service.

Reinstatement and/or compensation (up to $59,050) are orders Fair Work Australia can make in a successful prosecution of an unfair dismissal claim. The compensation part of any order cannot include a component for shock, distress or humiliation. These factors can, however, make up part of any compensation ordered by the Federal Court in a successful claim that an employer has engaged in adverse action because an employee has exercised a workplace right. Additionally, there is no cap on the amount of compensation/general damages that can be awarded by the Federal Court.

Adverse action

Our August 2011 update covered many of the potential consequences of the new (and evolving) workplace rights of employees and the potential adverse conduct of employers set out in the General Protections provisions of the Act.

Many of our clients have confirmed our opinion that adverse action claims lodged under the Act may well, over the next 12 months, overtake the number of applications filed for unfair dismissal.

The problem for employers is that the protections could be used in some cases to maintain a status quo in the face of repeated performance reviews which the employee believes will ultimately support an unfavourable decision. The protections also have the potential to dilute an employer’s prerogative about how best the business should be run in a very challenging and uncertain economic climate.

The General Protections are ubiquitous in that the ‘workplace rights’ can be found in: the benefits, roles or responsibility under a workplace law (read Fair Work Act, NSW OH&S Act, Independent Contractors Act, NSW IR Act) or instrument (read an instrument made under those laws such as a modern award or enterprise agreement); being able to initiate or participate in a process under a workplace law (such as a bargaining representative) or instrument; or, is able to make a complaint in relation to his or her employment.

The process can include: making an enterprise agreement (see below); making a request for flexible working arrangements; a dispute settlement or steps leading to a dispute settlement procedure; protected industrial action; or, any other process or proceedings under a workplace instrument.

Of important note is that prospective employees are taken to also have some workplace rights that require protection even before they have become employed in the workplace.

Bargaining representatives

When the Act commenced, the restrictions on bargaining agenda imposed by Work Choices under the heading ‘prohibited content’, such as renegotiation clauses, restrictions on the use of contractors or labour hire, or, granting rights relating to termination of employment, were removed. The consequences of that decision are evident in the most recent disputes in aviation, transport, mining and the waterfront.

The Greens have recently been agitating various forums asking that the Act be amended to give Fair Work Australia the power to consider job security (read use of contractors or off-shoring job functions) when arbitrating issues during enterprise bargaining disputes. The Greens are also seeking limits on the use of lock outs by employers during bargaining disputes. Unions are seeking fewer restrictions on what can form agreement content.

Whatever the outcome of the government’s review of the Act and its enterprise bargaining rules, the right of employees to seek representation during negotiations will remain a cornerstone of the Act’s bargaining system.

Our October 2011 update dealt with enterprise bargaining under the Act and looked at the right of employees to ask someone to represent their rights during negotiations for an enterprise bargain, or, to ask the employer to start negotiations for an agreement. A ‘no’ response could mean the employer being forced to bargain if the employees or their representative could show there was majority support for an agreement and Fair Work Australia agreed.

Some employers have been negotiating agreements directly with their staff that have chosen an employee representative without any union affiliation.

We predict that specialist negotiators, for both employers and employees, will start to roam the countryside like Japanese ronin seeking work in assisting one or the other party through the bargaining process under the Act.

The Act states at section 176 (1) (c) that a “person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative for the agreement”.

In some cases this right could allow a group of employees in a particular work area, or, a majority of employees in a workplace, to nominate one person to be their representative for an agreement. The employees’ nomination would effectively remove a trade union with coverage rights from the process insofar as those employees are concerned, or, confine the union representative to a minority role during the bargaining process.

The Full Bench of Fair Work Australia in a recent decision ⁽ⁱⁱ⁾ left open the possibility of uber-experienced union officials being able to be appointed in their personal capacity to represent employees in a business who are seeking an enterprise agreement. The proposed agreement might be a single issue agenda item such as the limited use of contractors, or, wage focused (including increased super contributions) without any form of productivity funding. HR will need to be ready for these sorts of developments and can draw good examples from some recent New Zealand bargaining tactics ⁽ⁱⁱⁱ⁾.

Conclusion

The Act continues to present challenges and opportunities for the workplace. In our opinion the Act demands a more strategic workplace focus than under Work Choices. This shift in thinking means that HR needs to be on top of the game when it comes to enterprise bargaining, HR policy development and performance management. The old rules have been completely swept aside and, in some respects, herald a return to the pre-Work Choices days when IR strategy was on every Board’s monthly agenda.

More information If you are interested in more information about the developments discussed in this e-bulletin, please contact:

Brad Swebeck, Partner, Workplace Relations Phone +61 2 9293 5450 Fax +61 2 9293 5250 Mobile +61 (0) 411 234 063 Email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Sarah Jones, Partner Phone +61 2 9293 5420 Fax +61 2 9293 5220 Mobile +61 (0) 421 051 299 Email This e-mail address is being protected from spambots. You need JavaScript enabled to view it       Justine Matthews, Partner Phone +61 2 4907 5600 Fax +61 2 4907 5633 Mobile +61 (0) 434 476 320 Email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

⁽ⁱ⁾ There is nothing as deceptive as an obvious fact – Sir Arthur Conan Doyle.
⁽ⁱⁱ⁾ Technip Oceania v W Tracey [2011] FWAB 6551.
⁽ⁱⁱⁱ⁾ There are many truths of which the full meaning cannot be realised until personal experience has brought it home – John Stuart Mill.

This publication represents a brief summary of the law relating to the issues raised and should not be relied on as a substitute for professional advice. Specific legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred as a result of reliance on this document by those relying solely on this document.