Unfair Dismissal Rules and the Business - Assignment Example

Name: Professor: Course Date Employment Law Unfair Dismissal Rules (a) Unfair dismissal rules and the business Based on a critical analysis of Just Loafin’ Around’ bakery, it can be argued that the unfair dismissal rules do not apply to it. Croissant’s business, which consists of a chain of three bakeries, has four apprentices, six bakers and three part-time administrative staff who do payroll and clerical work. Further, it has five casual employees. Towards this end, it can be professed that Croissant’s business has only 6 permanently employed laborers, and therefore falls within the Small Business Dismissal Code, under s.s.388(1). To explain this further, federal Laws specify that a dismissal is unfair when a worker is dismissed from work within a small and medium-sized enterprise because of valid reasons1. More clearly, the dismissal is classified as unfair when it us unreasonable, unjust or harsh. As provided by Fair Work Act s385, an individual is regarded as having been dismissed unfairly if the firing was inconsistent with the Small Business Dismissal Code, for businesses that have less than 15 workers. S388(2) of the FW Act 2009 stipulates that a worker’s termination is right after the dismissal the company was a small business2. In this case, whichever basis the applicant relies on to ascertain the failure of the employer to meet the terms with the code, the statutory provision still relies on s.387 of the Act, which include a valid dismissal reason as the court held in the case Seal Suppliers v Xu Pump Seal3. The except for these workers, as stipulated by s.643(3) WRA include those on contract, trainees, casual laborers probation (typically less than 3 months), or higher income earners. In determining whether the dismissal is unfair, Workplace Relations Act 2001 specifies that in determination of “unfair dismissal,” the size of the business or whether it has a functional human resource department should be considered. For instance in the case of Mander Dynamics Pty Limited v Liang, the AIRC gave the employer a consideration because of the size of his business and lack of a committed human resource specialist4. (b) Croissant’s Liability for Unfair Dismissal Croissant would not be liable for unfair dismissal of Crusty as Crusty is an apprentice with eight months of service at his company. First, it is critical to determine the meaning of dismissal under the FW Act. Section 387 of the Act defines dismissal as termination of a worker’s employment at the initiative of the employer, particularly in case where the worker’s conduct prompted the dismissal5. Courts have viewed dismissal as the exact opposite of resignation. In which case, the court considers a resignation as voluntary when the employee resigns out of free will and not due to the employer’s initiative, such as was held in the case Dick Smith Electronics v Mohazab6. On the present scenario where Croissant can be argued as not being liable for unfair dismissal, the reasoning is based on the period that Crusty has worked at the bakery and on whether an express employment contracts exists between him and Croissant, his employer. Section 385 of the FW Act implies that a worker is cushioned from unfair dismissal if he has finished the relevant employment period, for instance six months if the company has more than six employees and twelve months if the company has less than 15 employees. In the case of Crusty, from a critical outlook, the company has less than 15 employees. In addition, Crusty has worked for less than the 12 months specified by the Act as provided for in the Small Business Dismissal Code. In the present situation where Crusty and Bob were terminated, Crusty has six months of service at ‘Just Loafin’ Around,’ and can be termed as having no employment contract with the company. The law provides that if the contract is not a speculated period and if there was no express agreement on the notice of dismissal then the period of notice should be “reasonable.” The term reasonable notice is considered as significant by the law as it protects workers against sudden change by enabling them a period to find new employment of similar nature. With this regard, the “reasonable period” would be determined the duration of Crusty’s employment at the company. However, in establishing if a dismissal is unreasonable, unjust or harsh, certain factors are considered by the court, such as whether there had existed a valid reason for dismissal and if the dismissed worker was accorded a chance to respond. If the dismissal is related to conduct of the employee or performance, then each sections specified in Workplace Relations Act (as provided for by section 643(c) should be considered. These include whether the employees gave the worker prior warning concerning the nature of his work or conduct7. After the AW Act was enacted in 2012, Australian workers have been privileged to enjoy “safety net” notice with exceptions that the employees violate certain terms as set out in FW Act s117. Under s385 of the Act, an individual is argued to have been dismissed unfairly if he is dismissed unreasonably, unjustly and harshly. In determining this three condition, the term harsh means the circumstances under which he was dismissed are disproportionate to the seriousness of the offence, unjust when the worker was innocent of the alleged offence and un unreasonable when the dismissal arose under circumstances that could not have reasonable originated from the matter the employer claims, such as was in the case Australian Airlines v Byrne8. Conversely, while the aforementioned reasons may not relatively justify Croissant as having dismissed Crusty (or Bob) fairly, it is not expressly proper to draw general conclusions. On the contrary, Croissant might find himself liable for violating certain sections of FW Act on unfair dismissal. As provided by section 387 of the Act, the court can determine whether the dismissal was unfair if the conduct was less severe as implied by his employer and the company failed to follow its own disciplinary measures, other reasons include whether the dismissed worker was notified of the reason and whether he was allowed a chance to respond and whether there had been made a forewarning on the part of the performance9. FW Act s.386(2) also specifies that an apprentice has not been dismissed where their contract is terminated at the close of the training arrangement. However, it should be pointed out that item 1538 in Fair Work Bill’s Explanatory Memorandum specifies that Section 386(2) does not except an apprentice from seeking remedies when dismissed before the end of the training arrangement as had been established by the court in the case  J S Plumbing t/a Salmon Plumbing v Sharp10. c) Approaches Croissant would take to settle with Crusty There are several options that Croissant can take to settle with Crusty. In the present scenario, it can be concluded that appropriate dismissal and disciplinary measures were not pursued in dismissing Crusty and Bob. Even as the FWA Act generally provides that employers are not at liberty to dismiss employees at their free will, these employers can overcome the “unfair dismissal” claims if they are keen on considering certain alternatives for resolving disputes at workplace11. FW Act 2009 S.381(1) provides that the remedies and procedures as set out for unfair dismissals are designed to accord the employee as well as the employer ‘fair go all round.’ This principle was applied in the case Australian Workers’ Union v. Re Loty & Holloway12. In which case, the remedy would be beneficial to both Croissant and Crusty. In any case, to ensure that both Croissant and Crusty reach a mutual settlement, Croissant can still make Crusty aware of the allegations concerning his dismissal as well as permit him to respond to the claims. Next, the opportunity to allow Crusty an opportunity to defend himself would suggest that his employer would not ultimately uphold the decision to dismiss him if his defense is considered substantial. The severity of the supposed misconduct may however not necessarily be overridden by a certain procedural mistake13. Here, Croissant must have substantial grounds to make a report to the police whether the misconduct was severe, such as fraud, violence, theft or contravention of OHS procedures. Failure to justify existence of these would still prompt Croissant and Crusty to reach a settlement14. Here, Croissant might have to consider reinstating Crusty or offer him some form of monetary compensation. In addition, he may recommend Crusty to an alternative employment that cushions Crusty from economic deprivation due to unemployment15. (2) Considerable emphasis on the concept of control in determining employee status Much emphasis is still placed on the notion of control in determining who is an employee. In any case, these laws are recurrently inconclusive as to who is an ‘employee’ or what comprise ‘employment.’ Typically, common law views an ‘employee’ as a person who is employed by an ‘employer.’ In which case, the ‘employer’ exerts some level of control. If individuals who work are hence ‘employee,’ the common statutory definition for ‘employer’ or ‘employee’ would be sufficient. In this way, establishing the extent of these laws would be simple. As many regulatory working scenarios rely on status of the employee, the determination of the status depends on the manner in which the courts and tribunals opt to resolve their ambiguity16. In a typical unfair dismissal application, it may be daunting determining the status of an employee or employer, without invoking some level of control between the two. FW Act s.382 provides that an individual is regarded as an employee if the individual has completed at least a minimum period of employment with his employer. Thus determining who is an employee is crucial. The general principle applied by courts in determining an employee however goes beyond the minimum period of employment. Indeed, in the case Davey and others v Gothard and AFG17, the court held that in the situations where new employees are engaged by the employer in a company where several corporate entities other than partners particular, it was essential for those ‘controlling’ the company to choose which entity the employer work18. Conversely, on demonstrating the considerable emphasis placed on ‘control,’ the Fair Work Commission will in determining an employee, establish whether the supposed employer exercises some level of control of the way in which the putative ‘employee’ performs his duties at place of work. Indeed control of this nature is suggestive of an employer-employee relationship. The absence of such control indicates that the individual is not an employer but an independent contractor. However, this may not always apply in determining who is an independent contractor. In any case, in working scenarios where high levels of control exists over the time and the manner in which an individual performs work, then this significant suggests the individual as being an employee. This was demonstrated in the case Bearings Incorporated v Treloar19. In determination of an employee, the question will not be on whether the nature of work was conditioned by some level of control by a supervisor but whether decisive authority over the manner in which the work was performed, so that an individual was subject control. In some case however, it may not be appropriate to treat the level of control over the way in which an individual performs work, as it was in the case Federal Commissioner of Taxation v Queensland Stations Pty Ltd, where it was held that some level of authority over the manner in which an employee performed work could not translate into employment contract20. In determining who is an ‘employee,’ the rule that prevails has often been based on Blackstone’s master-servant approach, where the master is held as liable for the servant’s conduct subject to the master’s control. In this way, the courts emphasize on ‘right of control.’ In certain situations where the products of a company have been criticized for their poor quality, the employer has been to blame for failing to assume realistic means to supervise the worker21. For instance, the court has always declared some fault on the role of the employer’s controlling mechanism in supervising the nature of the work22. Originally, the ‘control test’ relied on perceptible comparison of the supervisory role of the employer and the worker’s independence. Court hardly ever elaborated the factual basis for arriving at a decision that an individual did experience some level of control over the outcome of his output. The decisions were simply aligned with analysis of facts that comprise any kind of specific instruction issued by the employer, indicating an opportunity to control. Incongruously, the emphasis on control as the basis for determining who is an employee and who should be liable for employee’s conduct has signaled the irrelevance of the master-servant approach. This control test has been largely viewed as being consistent with the subservient/dominant approach even as in the practical working scenario, control is inevitable due to the employment agreements or the extent to which one party may exercise some authority over the other. Initially, the ‘control test’ was applied to solely explain the liability of the employer on the negligence of the employee. In determining the level of control, as a way of demonstrating the relationship between the employer and the employee and their status, the fact that the employer has right to suspend or dismiss an individual who is engaged in some form of work also implies some level of control and who upholds that privilege. In addition, depending on whether the nature of work can be subcontracted, then it means the worker can delegate the work to others, then the worker may not be viewed as an employee but rather an independent contractor as the employment contract is personal in nature. This was demonstrated in the case Microsoft Corp v Vizcaino where the court, in determining ambiguity between an employer and an independent contractor, held that the decision by Microsoft to exclude a worker from pension and other benefits was improper23. Overall, in the scenario of determining an employee’s status, the law has been seen to encourage ambiguity. While the employers are viewed to exercise some level of control, it is not uncommon to sight supposed contractors or employees working side by side without any perceptible form of distinguishing attributes. Identification of the employees has often been on the part of the courts, statutory definitions such as FW Act s.382 might also offer means for the courts to pursue the means24. However, while the judges have constantly denoted the ‘common law’ in determining the employee status, they have generally failed to use any consistent test or rule. Rather, they have been instrumental in perpetuating an expandable list of factors that distinguish non-employees from 25employees. (3) Modern Awards and Enterprise Agreements The present scenario between Ginninderra Apples Pty Ltd (GA) v Elizabeth depict a situation where the modern awards should come to an end as the enterprise agreement takes effect. Technically, an enterprise agreement refers to a type of voluntary agreement that is negotiated between the worker and his employer. By nature, it is intended and tailored for a specific workplace. More clearly, these set of mutually approved employment conditions consist of how both the employer and the worker should conduct themselves at the workplace26. However, Elizabeth is concerned that if she fails to support the enterprise agreement, then GA might terminate her contract. Further, she has also attempted to consult her union by GA has been adamant that she cannot involve her union in negotiating the enterprise agreement. Next, she is also concerned that she may not be able to enjoy the conditions covered in the modern awards once Fair Work Australia approves the new enterprise agreement. Legally, Elizabeth has several alternatives to remedy her concerns. These forms of agreement are not just ambitious statements designed to control the conductors or workers or employers at the workplace, rather, they are legally binding statutory provisions that specify how the parties ‘must’ conduct themselves. In this case, it is important to note that the employee and the employer are committed and not merely involved. In which case, failure to satisfy the requirements in coming up with the enterprise agreement, or in eventually meeting the commitments can leave either party at liberty to claim for breach of the enterprise agreement27. The individual workers can enforce such breaches at the federal court for a remedy. In addition to enforcing pecuniary penalties, the court of law may also grant injunctions to stop enforcing the agreement28. The breaches may include failure to comply with the duty to consult and to pursue agreed procedures, as specified by FW Act s.50 thus attracting penalties as provided for by s539(2), such as was demonstrated in the case Drive Cam Pty v Fair Work Ombudsman29. On critical analysis of the enterprise agreement proposed by Ginninderra Apples Pty Ltd, it can be argued that it failed to satisfy certain requirements from the outset. For instance, the company failed to provide its employees with notice of their representation rights before starting off negotiating an enterprise agreement. It is also important to note that enterprise agreements do not supersede state laws that cover workers compensation, training arrangements, OHS and equality at workplace, which means that Elizabeth has a right to reject the agreement in favor of modern awards by not voting for it. This follows even as for the enterprise agreement to take effect, the workers in the company must approve it through a ballot process. In addition, Elizabeth can also seek the intervention of Fair Work Commission by raising her concerns to the commission. The commission can be effective in resolving disputes arising from the agreement as well as assess whether the company fulfilled all the requirements needed to propose the agreement. Indeed if Elizabeth’s contract is terminated, it would be termed as unfair dismissal, as it would contravene s.385 of the FW Act that protects workers from such terminations where it is “unjust, harsh and unreasonable’ basing on the fact that a the company fails to determine of a case of actual redundancy and that the worker cannot be said to be guilty of misconduct, as was demonstrated in the case Bostik Pty Limited v Gorgevvski30. Thus in establishing if a dismissal is unreasonable, unjust or harsh, certain factors are considered by the court, such as whether there had existed a valid reason for dismissal and if the dismissed worker was accorded a chance to respond. If the dismissal is related to conduct of the employee or performance, then each sections specified in Workplace Relations Act (as provided for by section 643(c)) should be considered. These include whether the employees gave the worker prior warning concerning the nature of his work or conduct. Serious misconducts with this regard include whether Elizabeth was involved in violence, fraud or theft or cases of serious violation of OHS procedures, in which case the company should have report any of such allegations to the police. Based on these assumptions, termination of Elizabeth by the company on grounds that she failed to support the proposed enterprise agreement would amount to unfair termination. In the case Wililo v Parmalat Food Products, the court established that a valid reason in terminating a worker is a key factor in determining the fairness of the termination31. Elizabeth should therefore be advised that her dismissal would depict absence of valid reason. In her case, there is no evidence of misconduct and would invariably be termed as having resulted from lack of well-founded and defensible claims but based on prejudice or spite. In this case, the possible remedies would include reinstatement with some form of financial compensation. In addition, according to FW Act 2009 Part 3-1, the enterprise agreement would be regarded as objectionable and unlawful when terms are not consistent with the provisions of the FW Act that protect workers against unfair dismissals. As enshrined in the FW Act 2009 Part 3-1, the enterprise can as well be regarded as objectionable and unlawful when the terms of agreements proposed are such that they would prompt an employee to cop out of the agreement’s coverage. This gives Elizabeth the grounds to seek remedial intervention from the Fair Work Commission. Elizabeth should also be advised that when employed under the enterprise agreement, het contract should be negotiated voluntarily without any pressure from the employer, her union of other employees. In which case, her company cannot forcefully impose the proposed enterprise on them, as the workers, or terminate her contract because of her contradictory views on the proposed arrangement32. Basically, it is important that she be informed that the enterprise agreement are basically meant to specific the minimum conditions of her engagement with her employer within her enterprise, the agreements may cover some or all of the areas covered by the previous modern awards. If she feels that some of the conditions are not fulfilled, then she is at liberty to reject the enterprise agreement. In addition, it is critical that Elizabeth understands that the enterprise agreement should abide by all the workplace laws and generally, the working conditions should not be worse compared to the previous modern awards, in any case if she feels that the new agreement is significantly deficient, then she has the right to reject it. In this way, it should have content that prevail award provisions, secondly, it must be in compliance with all the employment laws that call for minimal requirements to annual leave, maternal or long service leave. Next, it must be in written form, further, it must identify the employees it covers and lastly, it must set a term of less than three year, although it can continue beyond that period until it is terminated33. Towards this end, Elizabeth should be advised that the reasons she should be either support or reject the enterprise agreement is given its prospective benefits, including whether it addresses the needs of the business, whether the employment conditions or pay rates are not less than those specified in the modern award34. Whether it allows them as employees to be represented by a union in negotiation and lastly, whether terms of the enterprise are breached, thus a remedy for breach can be sought35. With regard to the enterprise agreement proposed by Ginninderra Apples Pty Ltd (GA), several conditions are seen to have been breached. First, the employees were not consulted before beginning to start negotiations of the proposed enterprise agreement. Secondly, the agreement has termed which expires after fours instead of the specified three years. Fourth, it does not allow employees to be represented by a union. In which case, Elizabeth can be advised to seek the remedial intervention of the Fair Works Commission. In conclusion, this paper adds to the ongoing debate about the complexity of unfair dismissal rights for workers in small and medium-sized enterprises36. This paper examines different case scenarios to weigh the legitimacy of the unfair dismissal in different work scenarios. Throughout the paper, different case laws are used to justify the approaches assumed. In the first scenario, it can be concluded that Croissant’s business does not fall within the Small Business Dismissal Code and that he is not liable for unfair dismissal of Crusty. In the second question, it can be argued that the emphasis on the concept of control is essential in determining the status of the employee, and in the last question, the Ginninderra Apples’ proposed enterprise agreement can be regarded as objectionable and unlawful as the terms are not consistent with the provisions of the FW Act that protect workers against unfair dismissals, as enshrined in the FW Act 2009 Part 3-1. Therefore Elizabeth can seek the remedy of breaches from the Fair Work Commission. Reference List Case Laws Byrne v Australian Airlines Ltd (1995) HCA 24 Dick Smith Electronics v Mohazab (1995) IRCA 265 Fair Work Ombudsman v. Drive Cam Pty [2011} Fmca 600 Gorgevvski v Bostik (Australia) Pty Limited [1991] FCA 436 Gothard and AFG Pty Limited v Davey and others [2010] FCA 1163 Queensland Stations Pty Ltd v Federal Commissioner of Taxation [1945] HCA 13 Re Loty& Holloway v Australian Workers’ Union [1971] AR (NSW) 95 Sharp v J S Plumbing t/a Salmon Plumbing [2011] FWA 7076.  Treloar v Bearings Incorporated (Australia) Pty Ltd [1999] AIRCFB 1537.  Parmalat Food Products Pty Ltd v Wililo [2011] FWAFB 1166 Xu v Pump Seal Supplies Pty Ltd [2011] FWA 6563. Books and Articles Dawson, J. “Managing Shiftwork: Not Just the Roster” The Journal of Occupational Health and Safety -Australian and New Zealand, 15(5) (1997): 411-13. Dowd, Nancy. “The Tehst of Employee Status: Economic Relations and Title VII.” William and Mary Law Review. Vol. 26 Issue 1 (1986) Fair Work Commission. Approval Process. 29 April 2013. Web. http://www.fwc.gov.au/index.cfm?pagename=agreementsapproval Fairw Work Commission. 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Ram, M. “Managing autonomy: Employment relations in small professional service firms,” International Small Business Journal, 17(2), (1999): pp. 13-3. Robbins, G. and Voll, J. Submission to inquiry into unfair dismissal policy Support in the small business sector. Senate Employment, Workplace Relations and Education Committee, May 2005. (2005a). Robbins, G. and Voll, J. (2005b). The case for unfair dismissal reform: A review of the evidence, Australian Bulletin of Labour, 31 (3), pp. 248 Vinnell, R. and Hamilton R. T. A historical perspective on small firm development, Entrepreneurship, Theory and Practice, 23 (4), (1999): pp. 5 – 18. UNSW Australia. Implied Duties & Obligations of Employer\Employee. June 2003. Web http://www.hr.unsw.edu.au/services/indrel/impliedduties.html Wyboirn, Jennifer. “Breach of agreement: the forgotten remedy?” The Sydney Morning Herald. 6 November 2012. Web. http://www.smh.com.au/national/public-service/breach-of-agreement-the-forgotten-remedy-20121105-28t0v.html Voll, Jerry. Case Studies in Unfair Dismissal. Charles Sturt University.(2005) Web.http://airaanz.econ.usyd.edu.au/papers/Voll.pdf Read More