The Law of Employment in Australia - Case Study Example

Law of Employment Student’s Name: Course: Tutor’s Name: Date: Table of Contents Table of Contents 2 Introduction 3 The cases 4 What is the area of this kind of problem? 4 Why the case is important 4 Facts of the case 5 Issues in Andrea’s case 5 Issues in Peter’s Case 6 Explanation of the tests that can be used in this case 6 Fact and law: Comparisons in Andrea’s Case 7 Fact and law: Comparisons in Peter’s Case 10 Suggested solutions 13 Conclusion 13 References 14 Introduction The law of employment in Australia contains state and federal laws, which stipulate the obligations that employers have towards their employees as well as the rights and entitlements that workers have. The fact that workers’ employment is governed by different legal instruments such as legislative minimum standards, enterprise agreement and industry-specific awards makes it quite complex. To make distinctions between laws that are applicable on state and federal levels, the framers of the law placed workers employed in business enterprises, non-governmental organisations or financial institutions under the federal system. Employees working in the public service through employment by state authorities, local councils or state governments are on the other hand under the state law system (Levy, 2010, p. 1). The distinction of the state and federal law systems is important since one gets to know where to seek redress in case they feel that their rights or entitlements have been denied. According to Levy (2010), employees covered by the federal law system seek assistance from Fair Work Australia, while their counterparts who are covered by the state law system are assisted by Safework SA Agency. Overall, the law of employment in Australia contains legal requirements such as fair dismissal, good practice relating to dismissal procedures, and compensation for unfair dismissal. Under the law, employers cannot prevent their employees from labour union membership, and they are required to contribute to the employees’ pension through the superannuation scheme. The law also states that employees are entitled to redundancy pay, which may vary from one company to another. Additionally, the law prohibits the discrimination of employees based on grounds such as gender, sexual orientation, disability, religion and race. There are also working time regulations which stipulate the amount of hours that each employee should work. Extra hours are subject to overtime pay. The cases Two employees (i.e. Andrea Castle and Peter) of Sage Direct Marketing Pty Limited have been dismissed from the jobs in what appears like unfair circumstances. In Andrea’s case, the decision by her employer to dismiss her seems too harsh for her purported offence, while in Peter’s case, it appears like a simple case of unfair termination (Australian Government, n.d). Both employees want to know the rights they are entitled to under employment law, including the possibility of reinstatement, and if not, if they are entitled to damages. What is the area of this kind of problem? Both Andrea’s and Peter’s cases are covered by the federal laws of employment since their employer; Sage Direct Marketing Pty Limited is a business enterprise. While Andrea’s problem can be addressed adequately by FWA since she is employed under an Enterprise Agreement, Peter’s problem would have to be dealt with under Common Law considering that he did not have any formal contract with his employer, and his remuneration is well above the $108,300 mark, which is admissible under FWA rules. Why the case is important The case is important because, just like every employee in Australia and elsewhere in the world, Andrea and Peter deserve justice. Specifically, they need the conditions surrounding their dismissal from work to be evaluated in order to determine if indeed their rights and entitlements as stipulated in the law were breached. In case it is proven that they were indeed dismissed in an unfair manner, FWA (in Andrea’s case) or Courts of Law (in Peter’s case) will award them damages in order to cushion them from shocks of sudden employment termination, and in order to discourage their employer from treating employees unfairly and improperly. Another reason why the case is important is that employees do not have the individual capacity to seek justice from employers outside the law. Hence, engaging the law is one way of ensuring that employers treat their employees with all due consideration, and that the employees are not dismissed without due cause in the law. Facts of the case Issues in Andrea’s case The case study reveals a situation where Andrea Castle is dismissed from her job for purportedly contravening the Internet Email Policy (IEP) through an email circulated through out the organisation. In a warning to her fellow employees against leaving their valuables near unlocked doors, Andrea had described how she had seen a “coloured arm” grab a handbag in an apparent act of theft. While the email was not related to her official duties in Sage, this did not seem to bother her employer; rather, it is her reference to the “coloured arm” that was the subject of her dismissal. By stating that the email was in contravention of the laid down IEP policy, Andrea’s employer was specifically referring to the section that indicates that a person should not “display or transmit... email communications that may contain ethnic slurs or anything that may be construed as harassment or discredit to others based on their race, national origin...”. Andrea was employed under an Enterprise Agreement. Her case raises several questions; first, did she indeed contravene the IEP policy as alleged by her employer? Second, even if she had contravened the IEP, was dismissal justifiable under the law? Issues in Peter’s Case In the second scenario, Peter, an employee who has risen through the ranks in Sage was working as the Chief Financial Officer in the company before his dismissal. In all his 15 years of work in the company, he was not covered by any formal employment agreement. A year and four months after a new Chief Executive Officer who had an apparent dislike for Peter took office, he was dismissed on grounds of poor performance. He was aged 58 years, meaning that he was already an older Australian, who would find it hard to secure new employment when compared to the younger and vibrant job seekers. Peter’s case raises several issues under law; first, although Peter did not have any form of formal employment contract, is he covered by the common law employment contracts; secondly, was his dismissal lawful; and thirdly, does he have any recourse under the law? Explanation of the tests that can be used in this case In specifications set out by the Australian Government (2009, p.2), the “harsh, unjust or unreasonable” test applicable in Andrea’s and Peter’s dismissal would seek to establish if the two were in deed dismissed, whether the dismissal was unreasonable, unjust or harsh; and whether Peter’s case qualified as a genuine case of redundancy. In order to establish whether the dismissal in each individual case was harsh, unreasonable or unfair, one would then need to consider whether the reason given for the dismissal was valid enough. Specifically, Australian Government (2009, p. 2) states that determining whether one’s capacity or conduct had any effect on the “safety and welfare of other employees” would be an essential part of determining whether the dismissal was “harsh, unfair or unreasonable”. Other considerations would include whether Andrea and Peter were notified of the reasons beforehand; whether they were given any opportunities to respond to the allegations; and whether the employer gave them an opportunity to have a support person when discussing the dismissal. In Peter’s case, investigations conducted under Common Law would probably seek to establish whether he was warned about his purported poor performance before the dismissal, and whether he was issued with reasonable notice concerning his employer’s decisions to terminate his employment. Fact and law: Comparisons in Andrea’s Case In Andrea’s case, she can seek redress for the wrongs she feels were committed against her by filing an unfair dismissal charge through Fair Work Australia (FWA) or at Common Law under the Fair Work Act (Cth) (Government of South Australia, 2011). After filing the charge, the authorities responsible for investigating her case would then seek to determine if indeed the allegations made by her employer were true. In an interpretation of the proportionate principle, the High Court stated that “burdens should be distributed and meted out with regard to, and commensurate with, a person’s merit or blame” (Mirko, 2005, p.7). Pursuant to the Workplace Relations Act 1996, summary dismissal should be considered where an “employee is guilty of serious misconduct, that is, misconduct of such nature that it would be unreasonable to require the employer to continue the employment of the employee” (Workplace Relations Act, 1996 170CM (1). This means that for Andrea’s action to warrant summary dismissal, it must be proven that she had engaged in serious misconduct under the WRA to constitute a repudiation of her employment contract under the enterprise agreement. In other words, he conduct needed to be “so seriously in breach of the contract that by standards of fairness and justice that the employer should not be bound to continue the employment” (North v Television Corp Ltd (1976) 11 ALR 599). Formally, only very high levels of employee misconduct justify summary termination like the one issued to Andrea. In Concut Pty Ltd vs. Worrell (2000) 75 ALRJ 312 it was stated that It is only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to isolated acts of negligence, incompetence, or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. While Andrea could have gone against express instructions issued in relation to workplace email policy, it is also worth noting that her conduct is can be seen as non-objectionable, especially considering that she did not expressly make racist slurs. Hence, and following the precedence set in Saric V Pacific Ocean (2003), S.170CE it could be ruled that termination of employment is a disproportionate penalty even where the email policy had been breached. In the ruling, the applicant who was contesting being summarily dismissed for allegedly viewing sexually explicit material in workplace was awarded damages in addition to being reinstated to her job. The judge stated that he did not ... Accept that there was a valid reason for the applicant’s termination. It may be [that] the applicant warranted a warning, or her access to the computer could have been suspended for a time, or some other disciplinary action could have been invoked, but termination in [my] view was too harsh a penalty. According to Australian Human Rights Commission (n.d.), the law strikes a balance between utterances “done reasonably and in good faith” while considering whether something could instigate racial hatred. The fact that her email was circulated to all employees at Sage could be presented as further testimony that she just intended to inform all employees regarding the risk of losing their valuables if they left them unattended near open doors. If indeed she wanted statements that undermined people of “coloured skin” tones, she would perhaps included other phrases that were more specific to those people. For example, she could have warned her fellow employees to be extra careful about leaving their valuables near open entrances when visiting neighbourhoods that have a high population in “coloured” people. Moreover, one could argue that she could have been selective while sending her email, thus leaving out people of “colour” from her recipient’s list. Further in Andrea’s case, FWA would need to be satisfied that she was indeed dismissed from work; that her dismissal was met the “harsh, unjust or unreasonable” criteria; and that her dismissal was not based on redundancy (Australian Government, 2009, p. 2). Regarding the “harsh, unjust or unreasonable” criteria, FWA would further consider whether the alleged mistake that Andrea had committed affected the security and wellbeing of other employees, especially those of coloured complexion. Other considerations that FWA would make include whether Sage notified Andrea of her purported mistake before dismissing her; whether she was given enough time to respond to the allegations; and whether Andrea was allowed to bring a person who would have assisted her in discussing the matter with the employer before she was dismissed. Andrea’s wish to be reinstated in her former position may be granted by FWA if the agency is satisfied that she was indeed dismissed unfairly. In such an event, FWA would issue a reinstatement order to her employer ordering her re-appointment to the position she held immediately before she was dismissed. Alternatively, she could be appointed to a different position provided the terms and conditions of that position are not inferior to her previous position. In section 391 (1A) of Fair Work Act 2009 (2011), it is stated that the agency can apply to an entity associated to a “person’s previous employer where the person’s position no longer exists with the original employer but that position or an equivalent position, is available in an associated entity” (Australian Government, 2009, p. 9). Hence, even if Andrea will not get her previous employment position back, she can expect to get a similar or equivalent position in the same firm or an associated firm, where she will work under similar terms and conditions as her immediate former position. Andrea can also be awarded compensatory damages if FWA deems reinstatement as inappropriate. According to Australian Government (2010), FWA considers the entire environment where the dismissal took place before the dismissal. Should FWA deem compensation as more appropriate than compensation, they would then consider the length of service that Andrea had offered Sage, her remunerations, and any other benefits that the agency may deem important in determining the amount of compensation she is entitled to. Fact and law: Comparisons in Peter’s Case Common Law employment contracts exist even where no formal written agreements are in place. In Peter’s case, such seems to be the situation especially considering that Peter had worked for Sage PTY ltd for 15 years. Regardless of his lack of a formal written contract, Peter can still lodge a claim contesting his wrongful dismissal under common law. According to Riley (2006), employees who are not covered by the WRA due to their high income (above $108,300) or because they are not employed under contracts can seek remedies under Common Law. In Peter’s case for example, he can argue that his employer had made representations to suggest that he had already attained secure and long-term employment. He can also argue that the employer (i.e. the new CEO) had tried on several occasions to push him to resignation by ignoring him and by dressing him down in front of other employees ostensibly for his poor performance. According to the Australian Government (2009), such actions are practically the same as constructive dismissal since the employer indirectly or directly forces the employee to resign. Notably, Australia’s common law requires that even where an employer rightfully dismisses an employee for incompetence, a reasonable notice should be given (Zyngier, 2011, p.2). Additionally, the employer must consider the employee’s age, qualifications, and length of service (Riley, 2006; Zyngier, 2011). Other considerations include age, seniority, experience, and prospects for future employment. Although Common Law does not specifically state the length of notice that an employee should get regarding the employer’s decision to terminate their employment, a long-serving employee like Peter, who is also skilled considering that he had gone back to school and acquired the necessary skills during his tenure at Sage, and in his position as a senior employee (considering that he held the position of chief financial officer), should have been given at least 12 months notice (or more). Assuming that Peter was indeed not performing his duties in a satisfactory manner as claimed by his employer, such a notice would have cushioned him from the sudden ‘shock’ of unexpected dismissal, and would also have given him enough room to obtain employment in another company or adjust his life to meet his upcoming non-employed status. Going by the decisions made in Macauslane v. Fisher & Paykel Finance Pty Ltd (2003), and in Taske v. Occupational & Medical Innovations Limited (2007), it is likely that Peter’s would be awarded substantial damage following the suite. It is however difficult to tell whether the judges would be willing to reinstate him in his previous position especially considering that he was dismissed for alleged non-performance. In Macauslane v. Fisher & Paykel Finance Pty Ltd (2003), the petitioner was in his mid-30s when his employer terminated his employment as a financial controller without any notice. The petitioner had worked in the position for three years. In the ruling, the Court of Appeal awarded him damages equivalent to what he would have earned in nine months. In Taske v. Occupational & Medical Innovations Limited [2007] QSC 118, the plaintiff Keith Cliffton Taske was 66 years of age and a CEO with a high-level payment package. He had the experience and qualifications needed to hold the CEO position. By the time his employment was terminated, he had worked with the company for one year. In the ruling, the Supreme Court awarded him damages equivalent to what he would have earned in nine months. In the concluding statement, the presiding Supreme Court judge stated that the petitioner “had limited prospect of obtaining an equivalent position in a company conducting a business of the kind conducted by the defendant” (Taske v. Occupational [2007] 150). Gauging Peter’s situation in reference to the two discussed rulings, it is likely that he (Peter) would be entitled to awards of not less than the equivalent of 12 months pay. If Peter is intent on getting his job back, he would need to provide proof to the court that he had accomplished his job competently and hence prove that the poor-performance allegations were not justified. This would be a hard undertaking to do especially because measuring performance would be a difficult undertaking to accomplish in common law. As such, the writer would advice Peter to consider seeking damages for nonprocedural dismissal especially considering that he was neither issued with a warning to improve his performance, nor was he issued with a reasonable notice for termination. The probability of Peter being awarded for damages due to summary dismissal without notice are higher than his probability of getting his job back especially if one was to consider the legal precedent set in Rankin v. Marine Power International PTY Ltd [2001] VSC 150 where the presiding Supreme Judge ruled that there is no rule that can adequately define the degree of professional misconduct that justifies an employer from dismissing employees without giving them reasonable notice. Suggested solutions Solutions in both Andrea’s and Peter’s case can be found in FWA and at Common Law respectively. The most important step in both cases is for the affected people to realise that their respective dismissals were unfair and hence they have room for recourse under the law (A Whole New Approach Pty Ltd., n.d.) As argued elsewhere in this paper, Andrea’s problem can be resolved in several ways, which include her reinstatement to her immediate former position, her re-appointment to a similar position, her appointment in an entity associated with her employer organisation, or compensatory damages where FWA deems reappointment or re-appoint as inappropriate. In Peter’s case, compensation rather than reinstatement seems like the most suitable alternative especially considering that it would be hard to prove that the poor performance allegations made against him were not factual. The fact that he had been castigated for offering the CEO poor advice could be used as proof that he was indeed not performing his duties as expected. Conclusion The law of employment in Australia has arguably given employees adequate protection against unfair, unjust and unreasonable termination. In the case study, Andrea’s case seems like a case of harsh or unreasonable termination which can be addressed under FWA, while Peter’s case seems like a case of the unfair dismissal especially considering that he was not issued with a reasonable notice regarding his employer’s decision to terminate his employment despite having worked for the company for 15 years. Regardless of their different circumstances, it is worth noting that both employees have a platform to contest their employer’s decision under Australian employment law. References A Whole New Approach Pty Ltd. (n.d.) ‘Lodging an unfair dismissal or unlawful dismissal claim’, viewed 21 October, 2011, < http://www.awna.com.au/industrial-relations-unfair-dismissal-melbourne.htm> Australian Government (2009) ‘Unfair dismissal –employees’, pp. 1-17. Australian Government (2010) ‘Unfair dismissal’, Fair Work Ombudsman, viewed October 21, 2011, < http://www.fairwork.gov.au/termination/unfair-dismissal/pages/default.aspx> Australian Government (n.d.), ‘Termination’, Fair Work Ombudsman, Viewed November 05, 2011, < http://www.fairwork.gov.au/termination/pages/default.aspx> Australian Human Rights Commission (n.d.) ‘Know your rights: racial discrimination and vilification’, viewed 21 October, 2011, < http://www.hreoc.gov.au/racial_discrimination/guide_to_rda/index.html> Fair Work Act 2009 (2011) ‘Fair Work Act 2009’, Act no. 28 of 2009 as amended, viewed 21 October, 2011 Government of South Australia (2011) ‘Unfair dismissal and unlawful termination’, Equal Opportunity Commission, viewed 21 October, 2011, < http://www.eoc.sa.gov.au/eo-you/workers/leaving-work/dismissal/unfair-dismissal-and-unlawful-termination> Levy, N. (2010) ‘Employment and income: employment law’, Young Workers Legal Service, pp. 1-9. Macauslane v. Fisher & Paykel Finance Pty Ltd [2003] 1 QDR 503 Mirko, B. (2005). "Time to curtail summary dismissal in Australia".  Labour Law Journal 56(1), 30-46. Rankin v. Marine Power International PTY Ltd [2001] VSC 150 Riley, J (2003), ‘Australia’, International Labour Organisation -Industrial and Employment Relations Department , viewed 21 October, 2011, < http://www.ilo.org/public/english/dialogue/ifpdial/info/termination/countries/australia.htm> Taske v Occupational & Medical Innovations Ltd [2007] QSC 118, viewed October 22, 2011 < http://archive.sclqld.org.au/qjudgment/2007/QSC07-118.pdf> Zyngier, J (2011) ‘The future of unreasonable doubt’, Law Institute of Victoria, pp. 1-5. Saric V Pacific Ocean (2003), S.170CE reference PR926488 Concut Pty Ltd vs. Worrell (2000) 75 ALRJ 312 at para 51. North v Television Corp Ltd (1976) 11 ALR 599 Read More