US and Australian Employment Laws - Essay Example

US and Australian Employment Laws: Unlawful Termination of Employment Introduction A thorough knowledge of the laws involving employee terminationis an important management tool because this is a sensitive area where managers may find themselves in trouble. This is especially true when the national laws of a multinational employer are not similar to those of domestic laws. The US, for example, abides by the employment-at-will doctrine where employees can be terminated at anytime for any reason unless the termination falls under certain exceptions. However, not all states recognise all these exceptions. On the other hand, Australia does not recognise employment at-will, but subscribes to the more accepted just or legal cause of employee termination. Knowledge on what constitutes unfair or wrongful dismissal is particularly useful when drafting contracts or company handbooks and even in giving statements to potential employees during hiring interviews. US Employment Law of Unfair Dismissal In the US, employees can terminate their employment at any time for any reason, unless they are bound by an employment contract, because it abides by the employment-at-will doctrine. The downside is that employers have also a parallel right to terminate employees at any time and for whatever reason. This has been the underpinning principle of US employment since the second half of the 19th century, and most employments in the US is covered by this doctrine. During the last 20th century, however, this common law doctrine has evolved to admit certain restrictions that could be used by employees to challenge their termination and recover damages from their employers (Perritt 2006). Table 1 Recognition of at-will Exceptions (Muhl 2001) Legend: PPE=Public Policy Exception; ICE=Implied Contract Exception GF=Covenant of Good Faith and Fair Dealing Today, the employment-at-will doctrine in the US is subject to the following exceptions: the public policy exception; the implied contract exception, and; the covenant-of-good faith exception. Table 1 shows that of the 50 states and the District of Columbia (D.C.), 43 recognise the public policy exception, 38 allow the implied contract exception, but only 11 states honor the covenant-of-good-faith exception. The public policy exception makes the termination of an employee wrongful despite the employment-at-will doctrine if such termination violates an express and well-established public policy. It is commonly held that public policy can be found on a state constitution, statute or administrative rule. In Petermann v International Brotherhood of Teamsters 174 Cal App.2d 184 (1959), an employee was summarily discharged after working for ten years with the Teamsters Union the day after he defied his superior’s order to make false statements in a legislative hearing investigating corruption in his workplace. The Court declared the termination a wrongful discharge because it breached public policy, which covered acts that had a “tendency to be injurious to the public or against the public good” (Muhl 2001). On the other hand, the implied contract exception is attended by three elements: a promise of employment security by the employer; consideration or acceptance by the employee, and; the employer violated the promise (Peritt 2006). Employee handbooks are often the source of implied contracts, unless they include clauses that disclaim the creation of contract rights. Toussaint v Blue Cross & Blue Shield of Michigan 408 Mich. 579, 292 N.W.2d 880 (1980), is the leading case in the implied contract exception. In this case, an employee was told during the hiring interview that he would remain employed by the company so long as he continues doing his job well. He was also handed an employee handbook where it was stated that employees will be terminated only for just cause. Five years later, the plaintiff was terminated. The Court ruled that there was wrongful dismissal because the termination was not for a just cause despite the fact that there was no express contract of employment. The relevant handbook clause, in addition, to the promise made during the hiring created an implied contract of employment that protected the plaintiff from a termination without justification (Muhl 2001). Finally, the covenant-of-good-faith and fair dealing exception is the broadest exception to the at-will employment because it is perceived to be implied in all employment contracts and is underpinned by the universal principle of fairness. Thus, an employee can challenge his termination, although he is covered by at-will employment, upon proof that it was made unfairly or in bad faith (Pritt 2006). California was again the pioneering state in recognizing this exception with Lawrence M Cleary v American Airlines 111 Cal.App.3d 443 (1980). The Court held that the termination of an employee, who has worked for 18 years with the company, without legal cause violates the tenet of fairness and good faith (Muhl 2001). Australian Employment Law on Unfair Dismissal Termination of employment in Australia is governed by the Work Relations Act 2005 (WRA 2005 hereafter), also known as Work Choices, which amended the earlier Work Relations Act 1966. The WRA 2005 exclusively covers this aspect of employment and excluded state legislation from applying where incorporated private sector employers are concerned, unless expressly not covered by federal law such as “employers who are not ‘trading or financial corporations’, employers operating businesses in international trade or commerce, or employers in the Territories or Victoria” (Riley et al 2006). Employment can be terminated in any of the following ways: by prearrangement by the parties; mutual agreement; abandonment of work by the employee; operation of the law, and; unilateral exercise of termination by a party (Stewart 2008). Under the WRA 2006, an employee can either file for unlawful dismissal or protection from dismissal that is “harsh, unjust or unreasonable.” Section 659 of the law lays down the grounds for unlawful dismissal, which include: temporary absence due to illness or injury; participation or non-participation in a trade union; retaliation for filing a complaint or participating in an action against the employer; discriminatory grounds; refusal to participate, in any way, in a Workplace Agreement; absence due to maternity or paternity leave, and; temporary absence due to voluntary emergency management activity. Victoria v Commonwealth [1996] 187 CLR 416 justified federal unlawful dismissal protection as a valid exercise of the external affairs power (Riley 2006). The WRA 2005 brought changes to the Australian unfair dismissal legal system. First, the law introduced exemption to the unfair dismissal rule by exempting employers who employ 100 or less workers, when the termination is made on the basis of genuine operational reason and when the employee is hired on a seasonal basis. Secondly, the law excluded certain types of employees from resorting to state unfair dismissal laws. It is assessed that the law has caused the preclusion of about 4.6 million employees from unfair protection coverage (Forsyth and Stewart 2009). Conclusion There are stark differences between the manner between an employee can be terminated under US and under Australian employment laws, but there are underpinning similarities, nevertheless. Although the US subscribes to the at-will employment where an employer can terminate an employee at anytime, unless the employment is covered by a contract, without consequential liabilities and Australian employment law does not; nonetheless, both employment laws on are evidently grounded on the universal principles of fairness. Both jurisdictions allow terminated employees recourse to the courts for reasons of wrongful or unfair termination and recovery for the same. Moreover, the grounds for such actions are most often grounded on principles of fairness, justice and good faith, which are oftentimes incorporated on non-discriminatory laws and other public policy laws. A good manager must familiarise himself with both the differences and the similarities of employment laws in both countries. References: Forsyth A and Stewart A 2009. Fair Work: The New Workplace Laws and the Work Choices Legacy Federation Press. . Lawrence M Cleary v American Airlines 111 Cal.App.3d 443 (1980). Muhl C 2001. The Employment-at-will Doctrine: Three Exceptions Monthly Labor Review. . Perritt H 2006. Employee Dismissal Law and Practice 5th Edition Aspen Publishers Online. Petermann v International Brotherhood of Teamsters 174 Cal App.2d 184 (1959). Riley J 2006. ‘Australia.’ Industrial Labor Organization. < http://www.ilo.org/public/english/dialogue/ifpdial/info/termination/countries/australia.htm> Stewart A 2008. Stewarts Guide to Employment Law Federation Press. Toussaint v Blue Cross & Blue Shield of Michigan 408 Mich. 579, 292 N.W.2d 880 (1980). Victoria v Commonwealth [1996] 187 CLR 416. Read More