General Protections / Adverse Action

Before hiring a new worker, the first step in the process is to determine whether they will be engaged as an employee or contractor. The distinction is important because:

• It affects tax, superannuation and other financial obligations to the worker, such as employee entitlements, and
• Penalties are severe for incorrectly classifying workers or attempting to disguise employees as independent contractors.

Penalties can include up to $18,780.00 for individuals and $93,900.00 for companies per contravention. Further, these provisions are “civil remedy provisions”, meaning company Directors can be held personally liable for incorrectly classifying a worker’s relationship with the business.

As the Federal Court of Australia said in the decision of Re Porter; Re Transport Workers Union of Australia (1989) 34 IR 179, 184:

“The parties cannot create something which has every feature of a rooster, call it a duck and insist that everybody else recognise it as a duck.”

Independent Contractor

Independent contracting has emerged as an alternative to a traditional employee and employer relationship. An independent contractor can be engaged as a natural person or an incorporated entity. A clear advantage in using contracted labour is the flexibility to turn labour on and off quickly. An independent contractor relationship has commonly been described as a ‘contract for services’ in comparison to an employment relationship being a ‘contract of service’.

Determining if a worker is an Employee or Independent Contractor

There are more than 15 indicia which are considered when determining if a worker is an employee or contractor. Courts will always look towards the totality of the relationship when determining the status of a worker’s engagement. Some of the indicia include:

• Does the worker have control over the way they perform the task?
• Are they paid according to task completion, rather than receiving wages based on time worked?
• Does the worker have PAYG tax deducted from their pay?
• Do they receive paid holidays or sick leave?
• Are tax invoices rendered for payment on completion of tasks?

Recently, the High Court of Australia handed down the decisions of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations & Anor V Jamsek & Ors [2022] HCA 2. These decisions placed further emphasis on the contractual documents of the parties to determine the nature of the relationship. Given the importance of the contract terms on a Court’s determination of the nature of the relationship, expertly drafted independent contractor agreements are vital to protect your business and you from a claim of sham contracting.

Best Practices for Employers

• Seek advice from one of our Employment Lawyers should you ever be in doubt in relation to the classification of your workers.
• Speak with one of our Employment Lawyers in relation to the engagement of your workers and their obligations based on their classification.
• Review your engagement of workers periodically to ensure they are correctly classified.

Employee entitlements can vary dependent upon the classification of an employee.

An employee can be:

• Full-time,
• Part-time,
• Casual,
• Fixed term or fixed task,
• Shift workers,
• Daily hire and weekly hire,
• Apprentices and Trainees, or
• Outworkers.

Employment relationships and classifications often evolve over time as business needs either expand or contract. There are subtle differences between the above classifications of employment, and it is critical to ensure that your employees are correctly classified.

Confusion or incorrect classification of employees can expose your business to significant penalties and claims from employees seeking owed wages and entitlements that the employer had not anticipated.

Incorrect classification of employees will likely be a breach of the National Employment Standards and can result in penalties under the Fair Work Act 2009 of up to $18,780.00 for individuals and $93,900.00 for corporations per contravention. These provisions are “civil remedy provisions”, meaning company Directors can be held personally liable for a contravention by the company.

Best Practices for Employers

• Review your employees’ classifications regularly and ensure employment contracts or agreements adequately reflect their roles.
• Consult with one of our Employment Lawyers should you be in any doubt over the remuneration, entitlements or classification of an employee.
• Refer to our Employee Engagement Flowchart for a best practice procedure for hiring a new employee.

Download a copy of our Employee Engagement Best Practice Flowchart, here.

The purpose of an employment contract or agreement is to cover the working relationship between an employer and an employee. While there is no requirement under law to have a written contract of employment, it is best practice to have a formal contract in place with every employee.

Why you need Employment Contracts

A well drafted employment contract provides both parties with a clear understanding of their obligations and terms of employment. It provides certainty and removes ambiguity especially where there is a breakdown in the relationship between the employer and employee.

A verbal or poorly drafted contract invites disputes in relation to the terms and conditions of employment that can have unforeseen consequences for your business.

For example, where there is no written contract there will likely be no clauses dealing with confidentiality or restraints of trade. This could expose your business to significant losses and damages with no contractual provisions to rely upon to protect your business from potentially irreversible damage.

Employment Contract Content

Amongst other things, your employment contracts should provide a clear outline of the employee’s classification, duties, responsibilities, remuneration, leave entitlements and other important matters including:

• Confidentiality,
• Ownership of intellectual property created during employment, and
• Post-employment restraints of trade and non-solicitation of clients and customers.

Employment contracts should not include clauses that are contrary to industrial laws or instruments, as these will be unenforceable.

Employment contracts may also refer to a Modern Award or Enterprise Bargaining Agreement.

The Fair Work Act 2009 (Cth) expressly prohibits the inclusion of contractual clauses that seek to limit employees disclosing their remuneration.

Where an employee discloses their remuneration (or asks about an employee’s remuneration), this will be a ‘workplace right’ for the purposes of the general protections provisions of the Fair Work Act 2009 (Cth).

Separately, amendments to the Fair Work Act 2009 (Cth) have been made to limit the use of rolling fixed term contracts. There are now prohibitions against engaging employees on fixed-term contracts (subject to some exceptions):

• Spanning for a period of two (2) or more years (including extensions), or
• That are extended more than once.

Should a dispute arise in relation to a fixed-term contract, the Fair Work Commission (FWC) will have the ability to conciliate or, if both parties agree, conduct an arbitration.

Modern Awards

Modern Awards are legal documents that apply to over 100 industries that outline minimum rates of pay and conditions of employment. Employers cannot contract out of provisions of Modern Awards as they are minimum employment conditions, nor can a Modern Award offer terms less favourable than the National Employment Standards.

National Employment Standards

The National Employment Standards (NES) are minimum entitlements that cannot be contracted out of by employers and there are significant penalties for contraventions of them.

An enterprise agreement is between one or more national system employers and their employees. These agreements are negotiated by parties through collective bargaining in good faith, mainly at an enterprise level.

An enterprise is defined under the Fair Work Act 2009 (Cth) to include any kind of business, undertaking, project or activity. Enterprise bargaining agreements have been one of the biggest talking points of the 2022 amendments to the Fair Work Act 2009 (Cth).

A single enterprise agreement is made between one employer and employees employed at the time the agreement is made. A single interest employer includes employers that are in a joint venture or common enterprise (including related corporations).

In comparison, a multi-enterprise agreement is made between two (2) or more employers (that are not all single interest employers).

Large enterprises like McDonalds will typically utilise an enterprise bargaining agreement as they can tailor the terms and conditions of the employment relationship to best suit their business.

Resolving Bargaining Disputes

Where a dispute arises during the bargaining of an enterprise agreement, the FWC has powers to make an intractable bargaining declaration if it is satisfied there is no reasonable prospect of the bargaining powers reaching an agreement.

If the declaration is made, the FWC will consider whether to exercise its discretion and provide parties a further negotiation period. Should the negotiations remain unsuccessful, the FWC will have the power to make a workplace determination and resolve the dispute.

Changes to the Better Off Overall Test

Before any enterprise agreement can be approved by the FWC, it must satisfy the Better Off Overall Test (BOOT). The FWC will be satisfied, if it can be shown that employees will be better off under the agreement than any applicable award or previous agreement. Recent changes to the BOOT include:

• The FWC must consider views expressed by all parties in relation to the BOOT,
• Clarifying that the BOOT is assessed collectively (and not line by line),
• In undertaking the BOOT, the FWC may only have regard to patterns of work, or types of employment, if they are reasonably foreseeable at the time,
• Giving the FWC the power to amend an agreement to allow it to pass the BOOT (instead of a new application), and
• Allowing the FWC to reconsider the application if there is a material change in working conditions that were not considered initially.

Termination of enterprise agreements after nominal expiry dates

Enterprise agreements can be terminated after they have passed their nominal expiry date when the FWC is satisfied that:

• Its continued operation would be unfair for employees covered under it, or
• The agreement does not, and is not likely to, cover any employees, or
• The following occurs:
  • The continued operation would pose a significant threat to the viability of a business carried on by the employer, and
  • The termination of the agreement would likely reduce the potential terminations of employment, and
  • The agreement contains terms providing entitlements relating to termination of employees’ employment – each employer covered under the agreement has given a guarantee to the FWC that the more beneficial entitlements will be honoured.

Best Practices for Employers

• Ensure your contracts or agreements are drafted with clarity and precision, including the inclusion of well drafted confidentiality and restraints of trade clauses.
• Seek advice from a specialist Employment Lawyer when issues arise, including for overpayments and the management of staff behaviour and conduct.
• Understand the significant changes to Enterprise Bargaining Agreements since the creation of the Fair Work Act 2009 (Cth).
• Regularly review and update your employment contracts or agreements.

The National Employment Standards (“NES”) are a list of 11 minimum entitlements to which all Australian employees are entitled.

The NES and the national minimum wage outline the minimum entitlements afforded to all Australian employees. These include:

1. Working a maximum of 38 weekly hours of work (unless additional hours are reasonable),
2. Making requests for flexible working arrangements if employed with the same employer for at least 12 months. These include changes to hours, patterns or locations of work,
3. Parental leave and related entitlements,
4. Offers and requests to convert from casual to permanent employment,
5. Annual leave of four (4) weeks per year based on their ordinary hours of work,
6. Personal/carer’s leave, compassionate leave, unpaid family leave and domestic violence leave,
7. Community service leave for activities such as voluntary emergency management services or jury duty,
8. Long service leave (discussed in depth below) as applicable based on the relevant State based legislation,
9. Public holiday rates if required to work,
10. Notice of termination periods and redundancy payments, and
11. Compulsory receipt of The Fair Work Information Statement upon commencement of employment.

It is important to remember that any modern award, enterprise agreement or contract of employment cannot exclude the NES or provide an entitlement that is less than the NES. Contravention of the NES can result in penalties of up to $13,320.00 for an individual and $66,600.00 for a company per offence.

Long Service Leave

Employee entitlements to long service leave are contained within state-based legislation and are not included in the Fair Work Act 2009 (Cth) or the National Employment Standards. In NSW, all employees are covered by the Long Service Leave Act 1955 (NSW) regardless of whether they are fulltime, part-time or casual. The Long Service Leave Act 1955 (NSW) provides that:

• If employees are employed by the same employer for 10 years, they are entitled to two (2) months (8.67 weeks) paid leave, and
• After 10 years, an employee is entitled to an additional one (1) month (4.33 weeks) of leave for every additional five (5) years worked for the employer.

The leave will be calculated at the employee’s ordinary gross weekly wage. The ordinary gross weekly wage is the employee’s base rate of pay for their usual hours of work and does not include:

• Overtime,
• Bonuses,
• Allowances,
• Shift loadings, or
• Penalties.

As an employer, it is important to be aware of an employee’s entitlement to pro-rata long service leave. An employee will be entitled to a pro-rata payment of long service leave if they have been employed by the same employer for at least five (5) years and:

• The employee terminates their employment on account of illness, incapacity or other pressing necessity, or by reason of the death of the worker, or
• The employer terminates the employee’s employment for any reason other than the worker’s serious and wilful misconduct.

Best Practices for Employers

• Understand and know the NES.
• Ensure that you are aware of each of your employee’s employment status and which NES entitlements are applicable.
• Review your contracts and employment documents regularly.
• Monitor the duration of your employee’s employment with your business and begin to account for a pro-rata entitlement upon completion of five (5) years’ service.
• Before terminating employees who have been employed for five (5) years or more, understand their entitlements under the Long Service Leave Act 1955 (NSW).
• When buying a business, be aware of transferring employees and their entitlement to long service leave.
• Understand your obligations when an employee resigns for one of the above-mentioned reasons and they are looking to claim their pro-rata payment.

As an employer, you need to remain careful when offering or making representations to new employees. Section 31 of The Australian Consumer Law states that in relation to employment, a person must not engage in conduct that is liable to mislead a perspective employee as to:

• The availability, nature, terms or conditions of the employment, or
• Any other matters relating to the employment.

Whilst recruitment is undoubtedly one of the most difficult processes undertaken by employers, it is critical to not overstate themselves to “win over” a prospective candidate. By overstating the employer’s position or terms and conditions of employment, employers can expose themselves to a significant risk of litigation from prospective employees due to conduct that occurred during the recruitment process.

Common examples of this include misleading employees in relation to remuneration, quick career progression, non-financial benefits, the length of the employment period or potential incentive schemes offered to the employee.

Significant financial penalties may apply if the business is found to have engaged in misleading and deceptive conduct in connection with the person’s employment.

Best Practices for Employers

• Ensure that all statements or representations made to the employee at all stages of the recruitment process are not misleading or overstated to entice the prospective employee to join your business.
• Undertake a detailed review of all job advertisements and marketing to confirm that statements made about the business are an accurate reflection of the conditions that can be offered by the business.
• Include an entire agreement clause in any contract of employment offered to the employee.

A well drafted restraint of trade clause is the most effective way an employer can prevent a former employee from working for a direct competitor, poaching their clients or staff and using its confidential information.

While there are common law duties that seek to protect your business’ confidential information from past employees (which can be relied upon even if you do not have restraint clauses in your employment contracts), these duties can be more difficult to enforce and may not be as robust as a well drafted restraint of trade clause.

An employer needs to consider whether the “restraint” is reasonably necessary to genuinely protect the employer’s goodwill and legitimate interests.

Any provision which imposes restrictions on an individual’s freedom to trade or be employed will likely be held to be illegal and unenforceable, unless it is proven that the restriction is reasonable having regard to both parties’ interests and the overarching public interest.

Update & Review

To ensure that your business interests are protected, it is vital that your restraint of trade clauses are effective and enforceable.

Your employment contracts should be reviewed periodically and updated when necessary to ensure the changing nature of your employee’s roles are reflected in the restraints of trade.

In particular, should you decide to promote an employee, you should also consider the introduction of more substantial restraints to reflect the promotion and access to clients/customers and confidential business information.

Failing to update restraints of trade clauses could impact your business’ success in any Court proceedings for injunctive relief or damages if the employee breaches their restraint of trade.

Best Practices for Employers

• Closely monitor employees who have left your business and are subject to restraints of trade and consult with one of our Employment Lawyers immediately if an ex-employee is in breach of their post-employment obligations. Timing is key to limit damage.
• Ensure that all employment contracts have enforceable restraint of trade clauses, including a “cascading restraint clause” where appropriate.
• Reassess the restraint of trade clause on a regular basis, and particularly on the promotion of an employee.

Tortious interference occurs when a person intentionally damages someone else’s contractual relationship with a third party and that damage causes economic harm. This occurs quite frequently in employment situations where a new employer is aware of a new employee’s restraint of trade obligations with their old employer, however, induces them to breach their restraint of trade regardless.

As an employer, you should ensure that you do not induce any new employee to breach their restraints with an old employer.

Best Practices for Employers

• Seek advice from one of our Employment Lawyers and issue prompt demands should a restraint of trade be breached.
• Get advice from one of our Employment Lawyers about seeking injunctive relief without delay.
• Monitor employee’s restraints of trades and expiry dates.

Workplace policies and procedures are the moral compass for your business. They are dynamic and evolving documents that present a vision of your organisation’s culture, values, systems and processes. Drafted correctly, the policies and procedures form the backbone of the expected behaviours of your employees.

Policies help educate staff on; acceptable and unacceptable standards and conduct, how to maintain a safe workplace, how to protect employees from risks or injuries, how to protect employers from liability for non-compliance with legislation, how to manage employee performance and justify disciplinary actions.

Policies and procedures that should be implemented by your business include, but are not limited to:

• Alcohol & Drugs Policy,
• Anti-Bullying & Anti-Harassment Policy,
• Code of Conduct,
• Discipline & Termination Policy,
• Equal Employment Opportunity & Anti-Discrimination Policy,
• Emergency Evacuation Procedure,
• Grievance Policy,
• Internet Policy,
• Key Performance Indicators,
• Leave Policy,
• Parental Leave,
• Social Media Policy,
• Work Health & Safety Policy, and
• Working from Home Policy.

Best Practices for Employers

• Develop clear policies and procedures and ensure all staff have been trained and inducted on them.
• Ensure employees have acknowledged they have read and understand the policies. For example, have employees sign individual policies.
• Include a provision in the contract of employment that states policies and procedures may be varied from time-to-time.
• Review periodically as businesses and laws change/evolve.

Some employees who have worked for the same employer (for at least 12 months) can request a flexible working arrangement. An example of flexible working arrangements includes alterations or amendments to:

• Hours of work (for example, start and finish times).
• Patterns of work (for example, splitting shifts or sharing a shift).
• Locations of work (for example, working remotely or from home).

Employees (other than a casual employee) who have worked with the same employer for at least 12 months can request a flexible working arrangement if they:

• Are the parent, or have primary responsibility for the care of a child who is school-aged or younger, or
• Are a carer (under the Carer Recognition Act 2010), or
• Have a disability, or
• Are 55 years or older, or
• Are experiencing violence from a member of the employee’s family, or
• Provide care or support to a member of their household or immediate family requires care or support because that person is experiencing violence from the family, or
• Are pregnant.

When a flexible working request is made, a refusal of the request will only be possible where the refusal is based on reasonable business grounds.

If a request cannot be agreed upon reasonable business grounds, an employer must make a genuine effort to identify an alternative arrangement and must provide a detailed written explanation of the particular business grounds relied upon.

Also, the employer must identify any changes they are willing to make to accommodate the employee’s personal circumstances and the availability of a dispute resolution request.

Where a request is refused or not responded to within 21 days, an employee will be able to have the refusal dealt with by the FWC by way of a non-binding dispute resolution.

Where the FWC form the view that an employer has not provided an adequate response, it has the power to Order the employer to take further specified steps to grant the request or make alternative arrangements to the employee’s working conditions to accommodate their flexible working request.

Best Practices for Employers

• A flexible working request must be acknowledged and responded to within 21 days.
• Speak with one of our Employment Lawyers as to how to manage the request and whether there are reasonable business grounds to decline the request.
• Consider the flexible working request based on your employee’s underlying circumstances and ensure deadlines are met under the Fair Work Act 2009 (Cth).

All workers (which include both employees and contractors) should be able to attend their workplace without being bullied or harassed.

Employers have obligations under the Work Health and Safety Act 2011 (NSW) to provide a safe workplace.

Employers also owe a common law duty of care to employees to maintain their health and wellbeing whilst attending the workplace, including the freedom against being harassed (including sexual harassment) or bullied. A failure to uphold these obligations can have significant consequences for both your business and your employees.

Sexual harassment involves unwelcome sexual advances, unwelcome requests for sexual favours or other unwelcome conduct of a sexual nature in relation to another person. Sexual harassment is also a form of serious misconduct and can lead to dismissal without notice.

There is a positive duty on employers and persons conducting a business or undertaking to eliminate workplace sexual harassment, sex discrimination and sex-based harassment.

The onus is on an employer to actively prevent workplace sexual harassment and discrimination (rather than simply respond to it).

Workplace Bullying

A worker is bullied at work if a person or group of people repeatedly act unreasonably towards them, or a group of workers and the behaviour creates a risk to health and safety.

Examples of bullying can include:

• Behaving aggressively,
• Unwanted or unsolicited messages outside the workplace,
• Teasing and practical jokes,
• Pressuring someone to behave inappropriately,
• Exclusion from work-related events or functions, and
• Unreasonable workplace demands.

The FWC has the power to deal with workplace harassment and bullying disputes, including the power to make Orders to stop sexual harassment and unacceptable conduct in the workplace as well as award damages to workers in certain circumstances. The FWC can either:

• Conciliate the matter,
• Mediate the matter,
• Arbitrate the matter, or
• Make a recommendation or express an opinion.

As the bullying and harassment provisions/Orders are “civil remedy provisions” under the Fair Work Act 2009 (Cth), company Directors can be held personally liable for contraventions by the company.

A worker is protected from any adverse actions being made against them for raising a bullying or harassment complaint due to the General Protections provisions of the Fair Work Act 2009 (Cth).

Bullying and harassment in the workplace can have a significant impact on workers. These include:

• Decreased productivity,
• Feelings of anxiousness and stress in the workplace,
• Deliberately avoiding work,
• A breakdown of trust between the worker and the employer, and
• A toll on relationships outside the workplace.

Best Practices for Employers

• Develop a Bullying & Harassment Policy that provides a clear pathway and guideline for workers who raise complaints of bullying or harassment.
• Ensure any bullying or harassment complaint is dealt with expeditiously and with due care and skill.
• Speak with one of our Employment Lawyers should you be in doubt over your obligations under the Fair Work Act 2009 (Cth) or Work Health and Safety Act 2011 (NSW).

Ensuring employees remain productive and are performing to the best of their abilities is paramount to the overall success of a business. Performance management can include a variety of things such as ongoing mentoring and support, as well as procedures to address under performance and to hold employees accountable for minimum standards associated with their roles.

There is no hard and fast rule on the number or frequency of performance management meetings to be held with an employee prior to termination.

Employers must ensure that procedural fairness is offered to their employees in a termination process, particularly as the FWC will consider any internal policies and whether your business followed the policy should an employee bring an Unfair Dismissal Application.

Managing Poor Performance

Where an employee’s performance is not at a satisfactory level it is important to:

• Identify the issues and the behaviour that needs to improve,
• Assess the issues and consider the implications of failing to rectify the issues,
• Arrange a meeting with your employee, inform the employee of the purpose of the conference and that they are entitled to a support person to be present and explore possible resolutions with the employee,
• Document requirements for the employee to improve performance within a set period of time,
• Arrange a follow up conference with the employee and assess their performance in line with the agreed requirements, and
• Monitor the performance and keep records of the agreed objectives between the parties. If the performance has improved then the business can carry on as normal, however, if inadequate improvements have been made then the employer may consider termination of the employee’s employment.

Clear and open communication with an employee is the most effective mechanism to managing poor performance.

A successful performance management program can have significant benefits for a business. It allows for any tension or dispute to be resolved with minimal disruption to the business and minimises the risk of an employee lodging an unfair dismissal claim.

Performance management may not be necessary if the employee has engaged in serious misconduct.

Best Practices for Employers

• Seek advice from one of our Employment Lawyers prior to commencing any performance management processes.
• Ensure you have policies, procedures, contracts and detailed job descriptions that clearly outline expected standards.
• Refer to our Performance Based Dismissal Flowchart for a best practice procedure.

Download a copy of our Performance Based Dismissal Best Practice Flowchart, here.

Workplace investigations are becoming increasingly common. Allegations involving discrimination, fraud, misconduct, bullying and harassment can be highly personal and involve multiple people within the business.

It is important to understand that employee’s rights to procedural fairness are paramount and thorough investigations should take place if allegations in relation to any of the above-mentioned topics occur. Thorough investigations allow for the appropriate disciplinary action to be taken and means decisions are not rushed.

A workplace investigation generally involves the collation of evidence, interviewing of witnesses and providing recommendations or findings to the employer by a third party, engaged by the employer.

An independent workplace investigator should be used if there are any issues or concerns in relation to the transparency or independence of an employer to undertake the investigation without a conflict of interest.

We regularly assist businesses undertake workplace investigations and also assist individuals in handling workplace investigation disputes. We can provide advice in relation to the investigation process and recommend appropriate disciplinary steps if required.

Best Practices for Employers

• Ensure that your employees are afforded procedural fairness in relation to any allegations of misconduct.
• Be transparent and independent in your investigation process.
• Engage an external third party to undertake the investigation if you cannot be independent or transparent.

It is critical for all parties to a sale of business transaction to understand their legal rights and obligations in relation to existing employees of the business and the financial cost of termination and/or transferring of employment.

The Fair Work Act 2009 (Cth) deems a transfer of business between one entity (old employer) to another (new employer) if:

• The employment of an employee of the old employer is terminated, and
• Within three (3) months after the termination, the employee is employed by the new employer, and
• The work the employee performs for the new employer is the same, or substantially the same as the work the employee performed for the old employer, and
• Either:
  • The assets of the business are sold,
  • The employers are associated entities, or
  • The previous employer outsources the work of its employees to the new employer.

When a business is sold, the purchaser has three (3) options for dealing with each employee:

• Not to offer them employment,
• To offer employment, but without recognition of their prior service (although there are certain prior services that must be recognised), or
• To offer employment with recognition of their prior service.

Each of these scenarios have different financial consequences and legal obligations that need to be considered, and potential adjustments to the purchase price made on completion of the sale.

If there is not a transfer of business as defined in Section 311 of the Fair Work Act 2009 (Cth), an employee’s period of service with the old employer will not count as service with the new employer.

As such, the old employer would deal with the accrued entitlements as if it were an ordinary redundancy situation and the new employer would not need to recognise the employee’s previous service.

Best Practices for Employers

• Review warranties in the sale contract in relation to employees of the business and their accrued entitlements and period of employment.
• Undertake due diligence and obtain legal advice in relation to the sale (or purchase) of a business.
• Ensure appropriate adjustments with regard to employee entitlements are made on settlement.

Unfair dismissal is when an employee is dismissed from their job and the dismissal was harsh, unjust or unreasonable.

Ultimately, it will be the FWC who decides whether a dismissal is unfair.

To protect themselves against such claims, an employer should have adequate employment contracts, policies and procedures that provide clear disciplinary rules and procedures for termination of employment.

If a dismissal is found to be unfair, employees can seek compensation of up to six (6) months’ salary or half the high-income threshold (whichever is lower).

A person has been unfairly dismissed if the FWC is satisfied that:

• The employee has been dismissed from their employment,
• The dismissal was harsh, unjust or unreasonable,
• In the case of a business with less than 15 employees (based on head count), the dismissal was not consistent with the Small Business Fair Dismissal Code, and
• The dismissal was not a case of a genuine redundancy.

An employee has 21 days from the date the dismissal takes effect to bring an application for unfair dismissal. Any application made outside this timeframe will need to show exceptional reasons as to why the application was not made within the 21-day timeframe.

There are certain instances where an employer can object to an employee making an unfair dismissal application on a jurisdictional ground. This means that the dismissed employee does not have the right to bring an unfair dismissal application in the FWC. These objections include:

• The unfair dismissal application has been made outside the 21-day timeframe,
• The employee had not served the minimum employment period (six (6) months or 12 months for a small business),
• The employee earned above the high-income threshold and was not employed by a Modern Award or Enterprise Agreement,
• The employee was not an employee,
• The employer was not a national system employer,
• The employee was not dismissed or had resigned voluntarily, and
• The dismissal was a genuine redundancy.

Whether the employee has engaged in serious misconduct will also need to be considered by the employer.

Best Practices for Employers

• Have clear policies and procedures in place in relation to performance management and termination of your employees.
• Speak with one of our Employment Lawyers before you dismiss or take disciplinary action against any employee to minimise the risk of an unfair dismissal application being made.
• Should an employee make an unfair dismissal application in the FWC, speak with one of our Employment Lawyers immediately.

It is common practice for employers to include an initial period at the start of a permanent employee’s employment (probationary period) during which time the employer takes the opportunity to assess whether their new employee is capable, reliable and suitable for the job.

This should be detailed in their written employment contract. If the employee is not suited to the role, there are less obstacles and risks associated with terminating the employee during this period.

‘Probation’ is not a term used or defined under the Fair Work Act 2009. The Fair Work Act 2009 (Cth) refers to a Minimum Employment Period. The minimum employment period is the minimum period that an employee must be employed by the business before they may have access to an unfair dismissal claim if you terminate their employment.

For a small business with less than 15 employees this is 12 months, otherwise it is six (6) months.

Can You Terminate An Employee During Their Probation Period?

During the probation period an employee may be terminated subject to written notice in accordance with the relevant provisions of the NES, the applicable industrial instrument or their employment contract.

Best Practices for Employers

• Use a probation review checklist at every probationary meeting to record objectives and track performance.
• As an employer you should still consider any adverse action claim that an employee may have available to them.
• Take action to dismiss an employee or extend the probationary period before the probationary period expires.
• See our best practice procedure for employers to review and/or terminate employees during their probationary period.

Download a copy of our Probation Review and/or Dismissal Best Practice Flowchart, here.

Serious misconduct is defined in the Fair Work Regulations and includes conduct that is wilful or deliberate and that is inconsistent with the continuation of the employment contract. This conduct may also include behaviour that causes serious and imminent risk to the health and safety of a person or to the reputation, viability or profitability of the business. Examples of this behaviour include fraud, theft, intoxication at work and the refusal to carry out a lawful and reasonable direction.

When dismissed for serious misconduct, an employee receives no payment of their notice period (but will receive any annual leave and/or long service leave).

It is critical that employers understand the gravity of serious misconduct and should not use it as a mechanism to avoid paying employee’s their notice period or as justification for the lack of procedural fairness offered to employees.

When dismissing for serious misconduct, employers should satisfy themselves of the Briginshaw principle which requires a higher level of evidence for more serious allegations of misconduct.

Best Practices for Employers

• Refer to our Serious Misconduct Dismissal Flowchart for a best practice procedure.
• If you are considering dismissing an employee for serious misconduct consult with one of our Employment Lawyers for assistance, including the assessment of whether the dismissal will satisfy the Briginshaw principle.
• Refer to our Probation Dismissal Flowchart for a best practice procedure if the employee is still within their minimum employment period.

Download a copy of our Serious Misconduct Dismissal Best Practice Flowchart, here.

The general protections provisions of the Fair Work Act 2009 (Cth) aim to eliminate workplace discrimination and protect workplace rights of employees (including casual employees).

What is adverse action?

Adverse action includes doing, threatening, or organising any of the following:

• Dismissing an employee, injuring them in their employment, altering their position to their detriment, or discriminating between them and other employees,
• Refusing to employ a prospective employee or discriminating against them in the terms and conditions they are offered, and
• Terminating a contract with an independent contractor, injuring them or altering the position to their detriment, refusing to use their services or to supply goods and services to them, or discriminating against them in the terms and conditions they are offered to be engaged upon.

What is a workplace right?

A workplace right exists where a person:

• Is entitled to a benefit or has a role or responsibility under a workplace law, workplace instrument or an Order made by an industrial body,
• Is able to initiate or participate in a process or proceedings under a workplace law or workplace instrument,
• Has the capacity under a workplace law to make a complaint or enquiry to a person to seek compliance with that workplace law or workplace instrument or,
• If the person is an employee, to make a complaint or enquiry in relation to their employment.

How to deal with General Protections Applications

General protections applications are dealt with initially by the FWC by way of application from an affected employee or contractor.

If the adverse action resulted in termination of employment, an application must be lodged within 21 days of the termination taking effect. Leave may be sought in special circumstances for the filing of a late application.

If an employer receives such an application, they must file a response with the FWC within 14 days. The matter is subsequently referred to conciliation and if not resolved the FWC will issue a certificate under Section 368 of the Fair Work Act 2009 (Cth) if satisfied that all reasonable attempts to resolve the dispute have failed.

There is a reverse onus of proof in relation to general protections applications that requires the employer or Principal Contractor to prove that any action taken by them was not because of an employee exercising a workplace right or due to the employer discriminating against the employee.

Best Practices for Employers

• Understand your employee’s protected workplace rights and anti-discrimination laws.
• When making decisions with respect to employees, contractors, and employment/contractual arrangements consider whether those persons have previously sought to exercise any right or entitlement which could be a workplace right under legislation or an industrial instrument.
• Ensure compliance with your business’ policies and procedures.

The national minimum wage for a 38-hour week (subject to applicable taxation) is reviewed every 12 months by the FWC. Casual employees who are covered by the national minimum wage will also receive a 25% casual loading on top of the national minimum wage.

Modern Award

Where an employee is covered by a modern award, their rate of pay will be calculated by reference to the relevant award they are employed under. However, it is important to consider that employees may also be entitled to:

• Penalty rates,
• Allowances, and
• Overtime.

Should your business pay employees above the national minimum wage, and they are covered under a modern award you may wish to include an “absorption or set off clause” in your employment contracts.

This will allow you to “set off” the above award rates against any payable overtime or penalty rates to the employee. The failure to have one of these clauses can lead to employees being underpaid and a potential “wage theft” claim being made.

Wage theft is an extremely topical point of conversation in today’s employment landscape.

Failure to remunerate employees correctly can lead to significant scrutiny and expensive fines from the Fair Work Ombudsman. This can become an increasingly difficult exercise as employees become more experienced within your business and are entitled to increased remuneration.

As an employer, the obligation is on you to ensure that you are always remunerating your employees correctly.

Underpayment claims and breaches of modern awards are civil remedy provisions of the Fair Work Act 2009 (Cth), meaning company Directors can be held personally liable for contraventions by the company.

Further, a worker is protected from any adverse actions being made against them for raising an underpayment claim by the General Protections provision of the Fair Work Act 2009 (Cth).

Best Practices for Employers

• Understand your obligations under all relevant modern awards and keep up-to-date with all wage increases.
• Ensure you review your employees’ roles and responsibilities regularly in comparison to their level of seniority and duties performed.
• Speak with one of our Employment Lawyers immediately if an underpayment or “wage theft” claim is made.
• Where applicable, include an “absorption or set off clause” in your employment contracts.

As an employer and a business owner, it is your client relationships, employee relationships, confidential information, trade secrets and know how that set you apart from your competitors.

If these intangible assets walk out the door with an existing or former employee and straight into the hands of a rival, the consequences can be catastrophic.

It is critical that your business has proper protections in place and ensures your employees understand what they can do whilst employed by you and are aware of their obligations upon leaving their employment.

An employee’s obligations relating to client relationships, fellow employees, confidential information, trade secrets and know how, obtained during their employment can arise from:

• Express and implied terms in the employee’s contract of employment such as restraint of trade clauses,
• An implied fiduciary duty to not misuse an employer’s confidential information, and
• The equitable doctrine of confidence.

Whilst implied terms or equitable doctrines may provide some relief to employers, it is strongly recommended to have express terms in your employee’s contracts of employment, the provision of which act as a deterrent themselves.

Where there is a breach of contract, employers can be entitled to urgent injunctive relief, damages against the employee or potentially the new employer for tortious interference.

It is important that you seek legal advice as soon as you become aware of a breach of a former employee’s employment contract. This is due to the requirement that a party seeking urgent injunctive relief to do so without delay.

The failure to act urgently may result in the injunction being declined resulting in the employer being required to commence a claim for damages, and exposure to further loss.

Best Practices for Employers

• Include specific clauses relevant to individual roles in employment contracts that deal with restraint of trade and confidential information post-employment.
• Speak with one of our Employment Lawyers without delay if you are concerned in relation to a former employee’s conduct.

There are a number of provisions within the Fair Work Act 2009 (Cth) that are identified as civil remedy provisions. Breaches of a civil remedy provision can expose an employer to significant penalties, particularly where a serious contravention is established.

Civil remedy provisions include:

• Obligations to comply with the National Employment Standards, Modern Awards and Enterprise Agreements,
• General Protection Claims, and
• Sham Contracting provisions.

Quite alarmingly for corporations, Section 550 of the Fair Work Act 2009 (Cth) provides “a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision”. The effect of this is that an individual can be held responsible if they have aided, abetted, counselled or procured any contravention.

Further, the Courts may, on application, make an Order for a person to pay a pecuniary penalty considered appropriate if satisfied that the person has contravened a civil remedy provision. These penalties are derived from Section 539 of the Fair Work Act 2009 (Cth).

Best Practices for Employers

• If you are a manager or senior employee, ensure you are aware and compliant with all civil remedy provisions in the Fair Work Act 2009 (Cth).
• Ensure employee complaints are dealt with, with sufficient care and skill.
• Seek advice from one of our Employment Lawyers should your company be in breach of civil remedy provisions without delay.

An employee’s position is genuinely made redundant when:

• The employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise, and
• The employer has complied with any obligation imposed by any applicable modern award or enterprise agreement to consult with the employee in relation to the redundancy.

Genuine Redundancy

An employee may still be genuinely made redundant where there are aspects of the employee’s duties still being performed by other employees.

The test is whether the previous job is still in existence, rather than a question as to whether the duties have survived in some form.

A redundancy will not be a genuine redundancy if it would have been reasonable in all the circumstances to redeploy the person within:

• The employer’s enterprise, or
• The enterprise of an associated entity of the employer.

An employer who fails to comply with the legislation in relation to redundancies can face an unfair dismissal application from employees who have been made redundant.

Where the FWC finds that an employer has not complied with Section 389 of the Fair Work Act 2009 (Cth) in relation to a redundancy, a termination may be found to be unfair and reinstatement or financial compensation can be ordered.

Where an employee is made redundant, they are entitled to redundancy pay based upon their years of service. However, there are exemptions to this which include:

• The employee has not completed at least 12 months’ continuous service,
• The employee was terminated for serious misconduct,
• Casual employees,
• Trainees or apprentices, and
• Employees of Small Businesses (less than 15 employees).

There are also circumstances when an employer can make an application to the FWC seeking an Order to vary the redundancy pay that is payable to an employee. Such applications can be made when:

• The employer can satisfy the FWC that it is not financially competent or possessed of the necessary funds to make the payment, and has no reasonable source of funds, or
• The employer obtains other acceptable employment for the employee.

Best Practices for Employers

• Seek advice from one of our Employment Lawyers when considering redundancies and obtain advice as to whether an exception to redundancy pay will apply to your business.
• Consider sourcing alternative employment for employees prior to making them redundant in order to make an application to the FWC to vary redundancy pay.
• Consult with any of your employees if required under a Modern Award or Enterprise Bargaining Agreement with regards to workplace change.
• Refer to our Redundancy Dismissal Flowchart for a best practice procedure.

Download a copy of our Redundancy Dismissal Best Practice Flowchart, here.