Employment Law in Australia: Unfair Dismissal - Assignment Example

EMPLOYMENT LAW IN AUSTRALIA Name: Course: (University) Date of presentation: Lecturer: EMPLOYMENT LAW IN AUSTRALIA 1.0 Unfair Dismissal: A Case Study of ‘Just Loafin Around’ Bakeries 1.1 Unfair Dismissal and Small Businesses The first important factor would be to show and substantiate if the unfair dismissal applies to small businesses or not as per the Fair Work Act 2009 or not. The second then would be to establish if ‘Just Loafin Around’ Bakeries is a small business or not as per the number of employees. This then would help us deduce if Robert’s company would be exempted from paying the two apprentices he has dismissed (Bob and Crusty) especially the case of Crusty who may challenge his dismissal. Section 338 of the Act outlines the small business fair dismissal code. Subsection 2 (i) & (ii) of 338 states that “a person’s dismissal was consistent with the small business fair work dismissal code if: immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer, and the employer complied with the small business fair dismissal code in relation to dismissal”. Subsection 1 of 338 empowers a minister to declare these codes. This implies that unfair dismissal does not apply to small businesses. Section 23 of Fair Work Act 2009 defines what small business employer is. In this case, subsection 1 of section 23 of the Act states that a business organisation with less 15 employees is considered small employer. Subsection 2 (a) subject to (b) of the same subsection states that all employees employed on regular basis at that time are counted with the exclusion of casual ones. However, to avoid any confusion, the same subsection 2 (b) of section 23 provides that if that casual employee has been engaged by the employer on regular and systematic basis, then they are excluded from casual employee bracket and thus, considered full time workers. This late statement applies in the case of Roberts’s business whereby he has been engaging the 5 casual labourers on regular and systematic basis. This if taken into account it means the company has a total of 14 employees. From this perspective, then ‘Just Loafin Around’ Bakeries is considered a small business employer. The reason why 14 employees are arrived is based on the fact that apprentices can’t be considered to be employees. Section 15 of the Act defines the meaning of an ordinary employee, subsection (1) (b) of section 15 states that this does not include a person on vocational placement. In addition, section 13 and 14 which defines who national employee is excludes those who are in vocational training in their definition. The same then can then be extended to the four apprentices who include Bob and Crusty who were dismissed by their employer (Robert). Indeed this is affirmed by section 380 which adopts national employee as definition of those eligible for unfair dismissal. This shows that the unfair dismissal rule will not apply to his firm since he has employees lesser than 15 as per the time of dismissing the two apprentices. 1.2 Liability of Small Business in Unlawful dismissal Since we have already established that unlawful dismissal does not apply to small business in Australia, and we have established that Robert’s business ‘ Just Loafin Around’ is one of them, then it does not owe any one liability as a result of unlawful dismissal since section 388 of the Act exempts them. To understand if Robert is liable for the unfair dismissal and what would be hid liability if Crusty’s application were successful it would be important to look at two critical factors and discourses. The first is the law of tort concept and being owed responsibility or not. The second is the small business dismissal code in Australia. The concept of tort and coming of tortuous acts originate from the fact that one owes the other duty of care. The ultimate goal of tort law is to protect rights and compensate victim or his/ her next of kin so that they can be restored to their initial position (Caldwell, 2008, p.20).For court to award damage to the plaintiff based on the tort, the plaintiff has to prove that the defendant owes him or her duty of care (Caldwell, 2008, p.22). Apart from mere approval of being owed duty of care, there has to be an act of omission which is tied to negligence (Caldwell, 2008, p.39).This is not the case for small businesses in Australia since section 338 and small business dismissal code in Australia exempts them from that liability and thus, they owe no employee any responsibility in terms of unfair dismissal. Small business dismissal code in Australia is a legal tool since section 338 (1) empowers relevant ministry to formulate legislative instrument in relation to small businesses. From July 2009 when the code came into effect, it allows for employer to terminate the services of an employee without warning if the employer strongly believes the action of the employee sufficiently warranted immediate dismissal. This statement affirms the condition in which the two apprentices were dismissed since the employer had sufficient though not essential information to dismiss the two. Moreover, section 390 provides for remedies in situations where the employee is protected from unfair dismissal and was unfairly dismissed. The two are not since Crusty is not protected under unfair dismissal and he was not unfairly dismissed. In a nutshell, the employer has no liability to Crusty and the application would fail. Further, we can introduce the concept of common law and speculate that the employer is not liable for unfair dismissal based on the concept of appropriate work place behaviour and Sex Discrimination Act 1984 which forbids any kind of discrimination and harassment at work place. The reason behind this argument is based from the fact that the daughter to the owner is not ease with advancements of the two as outlined in the discourse provided. We can argue that one of the organisation’s success factors is tied on how well employees relate to each other (Compton, 2009, p.2). This calls for regulations that govern appropriate work place behaviour. In the absence of these regulations, anti social behaviours like sexual harassment are likely to emerge (Youssef and Luthans, 2007, p.776). Thus, to serve warning the two had to be dismissed and hence, no liability owed to Crusty. However, it is equally important to look at the employer’s liability if Crusty’s application goes through (this means the employer is not in small business category and unfairly dismissed the employee). The act provides for various remedies in the instance that the application by employee is found to be true that he or she was dismissed unfairly. The first liability that the employer (Robert) would have bore is to compensate Crusty if Crusty had made application under section 394 of Fair Work Act of 2009. However, this would only be applicable if the commission is satisfied that reinstating him would not provide the required solution. Section 391 outlines the procedure of restoring an employee who has been unfairly dismissed. The major precondition is to give him or her back the position held without any prejudice. Thus, the liability to be borne by the employer if the applicant is successful can include reinstatement and payment of ‘lost pay’ if applicable or compensation as stated in section 392. 1.3 Approach to be taken if Robert (Employer) wants to settle with Crusty (Employee) Settling the issue can be understood from two perspectives. The first is that the employer is found liable for unfair dismissal as formulated in section 396 of the Act. The remedy under this would two or three. The first would be to reinstate him and give him the lost pay if there is any as section 392 outlines. The second under the first option would be to award the employee for the damages incurred as result of unfair dismissal. Apart from the above, the second would be in house settlement between the two parties without engaging FWA or court of law. Since the issue here involves appropriate work place behaviour bordering sexual harassment, the best settling ground would be to have policies and serve warning to the offender. Under the later approach, it would be prudent to engage each other in a constructive manner without discrimination by formulating return to work formula before other referees. The formula would state the expected behaviours once return to work has been formalised or the agreed payment, terms and instalments if Crusty feels he does not need back that position. One important aspect if it is return to work formula is sexual harassment policy. Sabitha (2008, p.4) observes that there is need to familiarise employees with anti sexual harassment policy and other appropriate behaviours at work place. 2.0 Common Law and Concept of Control in Determination of an Employee Before we examine how the concept of control is conceptualised in common law, it is important to examine what common law is and what it entails so as to form the framework for discussion. When one talks of common law, the emerging though is what is commonly known as “judge made law”. In judge made law, the bench is free to deliver the justice depending on the argument presented by the two parties and the conviction the bench has (Merryman & Perez-Perdomo, 2007, p.92). What this implies is that when the court of law which operates under the framework of common law is discharged with the duty of determining who is an employee and who is not, they outcome can go two way. The first is based on the statutes and judges understanding they can affirm the same by invoking factors like control as parameter of showing that one is an employee. Secondly, judge (s) can refute the same argument by stating that control alone is not enough to substantiate that one was employed. Smith (2010, p.47) offers an entry point of understanding the importance of control or lack of it in determining who an employee is under common law. Apart from volunteering, organisations will acquire paid labour in the form of two arrangements. The first is traditional work force model where employees are engaged on full time basis. The second is having a blend. In this approach, the employer can have a mix of part time and full time employees, temporary employees and independent contractors. The extreme of the two in a continuum is full time employee or independent contractor. Determination of the status of individual or a group of employee is critical. They help during settling of disputes and payment of taxes among others. The relationship that employer and employee have will determine the kind of control that the employer will have over the employee (s). Smith (2010, p.47 & 48) explains what behavioural control is and its importance of determining whether one is an employee or independent contractor. She notes that “in an employee – employer relationship, the business has a right to direct and control how the worker does the task for which he or she was hired, and instructs the worker about how to do the work”. The common law consideration that Smith (2010, p.49 citing Perkin v. Regional Transporters and Moses v. Dioceses of Colorado) say is critical in differentiating between an independent contractor and an employee is “the right to control, not the fact of control”. “The right to control, not the fact of control” is equally affirmed by the bench consist of Wilson and Dawson JJ in the case involving Stevens v Brodribb sawmilling Co Pty Ltd (1986) 160. Smith (2010, p.49) goes ahead and list the conditions that substantiates that the relationship which the two party had was of employer- employee in nature. The control tests include how the service rendered is critical to the principal’s organisation and the extent of the organisation & operations. The emerging important factors in the observation are ‘direct,’ ‘control’ and instruct. These may imply determining where and when to work, tools to be used, those to be hired, where to acquire the necessary support factors, who performs what and the sequence in which they are to be performed. In addition, Smith (2010, p.48) adds the financial control factor in her definition as parameter of differentiating between independent contractor and an employee. From this perspective the determination would be, to show if employer has the obligation to direct the business aspect of the labourer. For instance, independent contractors mostly invest in the facilities they work with and can engage in unrelated economic opportunities. Ultimately, the tying point is that in financial control, independent contractor can make profit or income from the relation, but to employees this isn’t possible because they earn wages and are sure of payments. Away from academical literatures, there are various case laws that have proven that the ultimate test of establishing whether one was engaged as independent contractor or as an employee. While deliberating on the case of Stevens v Brodribb sawmilling Co Pty Ltd (1986) 160. Justice Wilson and Dawson JJ at paragraph 36 observed that in numerous occasions and if not almost all case the concept control is still critical. Their argument was anchored on the premise that this is still the real framework of establishing whether one is contracted labourer or employee. According to the bench handling the case of Swift Placements [2000] NSWIR 9 at paragraph 44, the control is not merely tied to the on-the-job condition or what is known as practical control, but on to the legal control what they also understand as ultimate control. The contextualise legal control as having bearing and directing how the individual who offers the labour should deliver his skills as he or she engages in the work prescribed. The power of ultimate or legal control is that it allows for employer to allocate, reallocate and end the engagement. In addition, precedent of establishing the holistic relationship of employer and employee has been embraced as way of defining who employee is in the common law framework of Australia. This kind of approach moves away from using the concept of control alone. The case of Hollis v. Vabu (2001) 207 CLR 21 at paragraph at 44 to 60 highlights the same. It notes that control alone cannot be used as the overriding factor in establishing the kind of relationship the employer and the labourer has. In the observation it is noted that it would be prudent also to consider other factors which shows that the employer has certain liability. In a nutshell, the emerging theme is that the concept of control is an important factor in defining or determining who an employee is and who an independent contract is. This makes it easier to determine issues by the courts of law in Australia during settlement of disputes between employer and employees. 3.0 Constitutional Corporation, Modern Award and Enterprise Agreement: A case of Ginninderra Apples Pty Ltd To advise Elizabeth about her dilemma and the offer her company has given plus other employees, a two tier approach can be adopted. The first is the general principle of agreement or precondition of establishing contractual relationship (in this context the enterprise agreement between them and the employer) and in the context of Fair Work Act of 2009 with the area of concentration being part 2.3 that deal with modern award and 2.4 that deals with enterprises agreement. The answers provided will to address her concern of termination, involvement of union and enjoyment of modern awards if FWA accepts the deal between them and their employer. Contract is said to have occurred when two parties have an agreement that is enforceable by law. For the contract to be legally binding there has to be offer and acceptance without threats or coercion. Contract law allows for the involved parties to define their level of engagement so long those rules do not surpass the established principles in the legislation (Andrews, 2011, p.36). Since we can assume this was outside the initial enterprise agreement that employer had with Elizabeth and her colleagues, then it has to be done in a constructive manner of willingness without coercion. Fair Workplace Act 2009 outlines the rights of an employee and since they have not engaged in any misconduct the employer should first engage them. Based on this principle then it would be prudent to reject this kind of arrangement since they are being forced to agree to terms they have not scrutinised and agreed on as employee and employer. This instance alone negates the preconditions that are required before one engages in an agreement. This alone should reduce their worry. 3.1 Termination of Employment in Absence of Individual Support Apart from academical perspective, we can now base our answers to Elizabeth’s concern on Fair Work Act of 2009. The first worry of Elizabeth is the content and possibility of termination of her services if she doesn’t agree with the propositions of her employers. The worry of termination only becomes a reality if the enterprise agreement being proposed is valid and applicable to them. Thus, it would be the onus of the paper to show the possibility or non possibility of the agreement being applicable. Before doing this, let’s examine some of the conditions that Ginninderra Apples Pty Ltd has proposed. The agreement will increase the weekly number of hours from 38 hours to 41 hours per week. This contradicts the minimum standards of 38 hours a week. The above observation alone raises the question of validity and applicability and thus Elizabeth should not worry of termination of her services. Section 55 (1) of the Fair Work Act stipulates that “a modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards”. This argument then can be connected with section 61 of the Act which outlines the minimum standards for employees. One of the standards is maximum weekly hour which is 38. Section 62 (1) states that “employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable”. Subsection (2) of the same section allows for employee to reject the extra hours if they are not reasonable. From the observation, the terms are not that reasonable. The closest the offer comes close to being reasonable is the pay 12% increase to be implemented in four phases. However, this is not over time payment, but an increase in payment. The second flaw in the proposition is the reduced leave period of 3 weeks yet section 87 provides for 4 weeks of unpaid leave. Leave is an important factor in rejuvenating employees’ vigour and should not be reduced. It seems that the aim of the company is to exploit maximum hours from the employees without looking at their welfare. This is a dangerous practice even from the human resource management perspective. From human resource management perspective, lack of work leave is seen as hindrance to performance. While on the other hand their mandate is to enhance productivity by aligning employees to organisation’s strategic plan. One of the important requirements in any organisation is human capital. Employees’ play a critical role of ensuring that organisation’s vision is attained (Jackson, Schuler & Werner, 2011, p.321). This is only possible if the top level management put in place personnel management mechanisms that aid in enhancing productivity. Section 186 (2) is also a good catch that offers support of reducing the fears that Elizabeth have about dismissal. The section states that “ FWA must be satisfied that: (a) if the agreement is not a greens field agreement – the agreement has been genuinely agreed by the employees covered by the agreement”. This is critical since she can argue her case out that the agreement was not done in good faith, full of coercion and exclusion and hence, defeating the concept of agreeability. 3.2 Involvement of Trade Union Representation is an important factor in collective agreements. While labour laws recognises that employees can bargain without representation, if the employees falls in the category of those who can join trade unions then they should be allowed. The concern of Elizabeth based on the fact that she has sought the assistance of her union in the negotiations, but has been told by Ginninderra Apples Pty Ltd that she cannot involve them in the negotiating of the proposed agreement is a valid one. the validity of her concern is based on the fact that how her employers are apply the law is null and void since it is done is selective manner. The hallmark of everything is that no one can be denied right of association and representation. Section 173 (1) of the Act entrenches the right of employees being represented by stating that employers who will be party to enterprise agreements that is not greenfields agreement must put in measures of ensuring employee representation through notices. (a) Of the said section categorically states the need to involve the representative of those who will be covered by the agreement. Indeed section 174 provides the procedure of giving notice of representation as per 171 (1). Moreover, in section 174 (2) the same agenda is over emphasised. It states, “The notice must specify that the employee may appoint a bargaining representative to represent the employee”. The question that one would then answer what is representation in bargaining and what is the role of trade unions in collective bargains. This would then answer the fears of Elizabeth that the declaration that she cannot use her trade union to engage the employers is absolute. This fact is narrowed on in section 176 (1) of the Fair Work Act 2009 which defines who are the bargaining representatives. Section 176 (1) (b) of the Fair Work Act 2009 indicates that “an employee organisation is a bargaining representative of an employee who will be covered by the agreement if: (i) the employee is a member of the organisation”. Thus, if Elizabeth is a member of the employee organisation which she wishes should represent her interest; she has the go ahead since the Act powers her to do so without being victimised by the employer. 3.3 Nexus between Modern Award and Enterprise Agreement The concern of Elizabeth about whether she will continue to enjoy the conditions in her modern award if the enterprise agreement was made and approved by Fair Work Australia takes a different twist. Once the enterprise agreement has been signed and agreed by the two parties and equally accepted by FWA then it would be binding and it will override modern award. Section 57 (1) indicates that “a modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment”. Hence, once the enterprise agreement is accepted and she was a signatory to the same it would imply that modern award will not apply. Indeed, section 51 affirms the seriousness in which this is perceived. It states that “person must not contravene a term of an enterprise agreement”. The only option of redress if there is a lose end is to invoke provisions in section 186. References Andrews, N. 2011. Contract Law. Cambridge: NY, Cambridge University Press. Australia Government, Fair Work Obudsman, 2011.Small Business Dismissal Code. Retrieved on 19 November, 2012 from: http://www.fairwork.gov.au/Templatesformschecklists/Small-Business-Fair- Dismissal-Code-2011.pdf. Australia Government. Fair Work Act 2009. Caldwell, R. (2008). Guide to the Law of Tort. London: Straight Forward Publishing. Compton, R. 2009. Towards an Integrated Model of Strategic Human Resource Management – An Australian Case Study, Research and Practice in Human Resource Management, 17(2), 81-93. Hollis v. Vabu (2001) 207 CLR 21 [2001] HCA 44; 2001 ATC 4508; (2001) 47 ATR 559. Jackson, S. E., Schuler, R. S. & Werner, S. 2011. Managing human resources. Mason, OH: Cengage Learning. Merryman, J. H. & Perez-Perdomo, R. 2007. The Civil Law Tradition: An Introduction to the Legal Systems of Western Europe and Latin America third edition. Stanford, California: Stanford University Press. Sabitha, M. (2008). Sexual harassment awareness training at workplace: Can it effect administrators’ perception?, JOAAG, Vol. 3. No.2, pp. 1-16. Smith, D. V. 2010. The common law employee versus the independent contractor: a legal premier. The Colorado Lawyer Vol. 39, No. 2, pp. 47- 50. Stevens v. Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16; [1986] HCA 1; (1986) 63 ALR 513. Swift Placements Pty Limited v. Workcover Authority of New South Wales [2000] NSWIRComm 9; (2000) 96 IR 69. Youssef, C. M. & Luthans, F. 2007. Positive organisational behaviour in the workplace: the impact of hope, optimism and resilience. Journal Management, Vol 33, No. 5, pp. 774-800 Read More