Employment Law in Australia - Assignment Example

Employment law in Australia Student’s name Course code+ name Professor’s name University name City, state Date of submission Question 1 Introduction The Fair Work Act 2009 considers an employee to be unfairly dismissed where the employee has been dismissed, where such dismissal was harsh, unjust or unreasonable and where the dismissal does not form part of a genuine redundancy1. The dismissal must have been contrary to the provisions of the law for the affected employee to claim unfair dismissal. The dismissal of an employee may also be considered to be unfair where such dismissal is inconsistent with the provisions of the Small Business Fair Dismissal Code. An employee will not be considered to have been unfairly dismissed where during the termination of the employment the employer complied with the provisions of the Small Business Fair Dismissal Code. A person is considered to be dismissed where the employment with his employer has been terminated. This therefore means that a person cannot claim to have been dismissed while still being under employment with the same employer2. (a) Do the unfair dismissal rules apply to his business? He heard something about small businesses being exempt, but does this apply? A small business under the Fair Work Act is defined as a business where the employer has employed less than 15 employees3. When determining the number of employees in the business, one must take account of all employees in the business with the exception of casual employees who are not employed on a regular and systematic basis4. In this case, the bakery business has employed 4 apprentices, 6 bakers and 3 part time administrative staff. The business also has 5 casual employees who only help out when the other employees are sick or during busy periods. To determine whether the business is a small business we will have to evaluate whether the casual employees are employed on a regular and systematic basis as required by the Act. The fact that these casual employees help out during busy periods and when the other employees are sick gives rise to an employment on a regular and systematic basis. The times that the casual employees help out are set out and are constant. When an employee is sick the casual employees are engaged and the same happens when the business is experiencing a busy season. (Harding, 2002) The Fair Work Commission has held that for a casual employee to be considered to be employed on a regular and systematic basis, the employee must have been offered regular work when available and the employee came to expect such work. (Mr Cori Ponce v DJT Staff Management Services Property Ltd T/A Daly’s Traffic (U2009/5092)) The casual employees came to expect that work would be available during busy periods and when any of the employees was sick. The number of the employees, inclusive of the casual employees exceeds 15 hence it is not a small business. Unfair dismissal rules still apply to small businesses. An employee under a small business is protected from unfair dismissal where such employee has completed a period of one year under the employer before the dismissal5. (b) Is he liable for the unfair dismissal and what would be his potential liability if Crusty’s application were successful? The bakery business as discussed above is not a small business. This means that different provisions, from those applicable to small businesses, apply. Under the Fair Work Act, the persons protected from unfair dismissal in regard to employees in businesses other than small businesses are those that have completed a period of six months with the employer. The period completed may either be at the time notice of dismissal is given or immediately before the employee is dismissed6. In this case Crusty has been an employee in the bakery business for 8 months. This, according to the provisions of the Fair Work Act, means that he is protected from unfair dismissal since the period of employment exceeds 6 months. If Crusty is protected from unfair dismissal, we then proceed to find out whether he was unfairly dismissed. An employee will be considered to have been unfairly dismissed where such dismissal is harsh, unjust or unreasonable7. The dismissal of an employee will not be considered to be harsh, unjust or unreasonable where there is a valid basis for the dismissal relating to the conduct of the employee or his capacity that has an effect on the safety and welfare of the other employees8. Crusty was dismissed for having sexual relations with the daughter of the employer who was also an employee of the business. The daughter was a teenager hence issues of sexual harassment arise from the conduct of Crusty. This is a valid reason for dismissal. The employee must be notified of the reason for the dismissal9. The employer did not inform Crusty of the reason for the dismissal but instead terminated his employment once he learnt of the sexual relations. This means that no opportunity was availed to Crusty to respond to the reason for dismissal which related to his conduct. There were no discussions held in regard to Crusty’s conduct that would allow him to bring in a support person before being dismissed10. The act of the employer to dismiss Crusty without adhering to the requirements of the law means that he is liable for unfair dismissal. Crusty is already protected under the Fair Work Act form any form of unfair dismissal hence the employer’s move to dismiss him is in contravention with the requirements of the act. The conduct of the employer in dismissing Crusty was therefore harsh, unjust and unreasonable. Once it is established that the employer is liable for unfair dismissal, Crusty would be able to seek remedies from the court for the unfair dismissal. In such a case, the employer will be required to reinstate Crusty or else pay him compensation11. Remedies for unfair dismissal will be granted where it is established Crusty was protected from unfair dismissal and that he was unfairly dismissed. Under the Fair Work Act12 an order to compensate the employee for unfair dismissal will be made where it is established that it is inappropriate to reinstate the employee. Such an order will also be made where such an order for compensation is the most appropriate. Robert, the employer finds it inappropriate to reinstate Crusty due to his conduct hence in the circumstances of the case, payment of compensation is the most suitable remedy. (c) What approach should he take if he wants to settle with Crusty? The courts allow the parties to a dispute to apply alternative dispute settlement procedures. In this case if Robert intends to have an out of court settlement then he would have to make such intention known to Crusty. This would require that the parties apply the alternative dispute methods, for example conciliation where the parties would agree on the solution to the dispute. The parties would then proceed to agree on the outcome of their discussions and where they decide that certain payments be made for the termination of the employment then that would settle the matter between them (d) Is there anything else he should be worried about? The Fair Work Act requires that the employer should give notice of termination of employment to the employee concerned before termination is effected. The notice of termination should be in written form and must indicate the date which the termination takes effect13. The employer did not give Crusty any notice of employment hence did not comply with the requirements of the Act. Section 117(3) requires that Robert should have given Crusty one week notice of termination of employment. This was not done but instead Robert went ahead to dismiss both Crusty and Bob. Where the employer has not given notice of termination to the affected employee, the employer is expected to make payment in lieu of notice. Payment in lieu of notice is the amount the employer would have paid to the employee for the time he would have worked if the employment lasted to the end of the period of notice14. Robert ought to have given notice of termination of employment to Crusty and Bob before terminating their employment. However if based on their conduct it was not possible to give notice, he ought to have made payment in lieu of notice to Crusty. This means that Robert may still be liable to Crusty for that payment. Question 2 The common law in determining who is an employee still places considerable emphasis on the concept of control. ”Analyse and discuss. The question of who is an employee is a complex one especially because of the rights that accrue to a person who is considered an employee under law. In this regard common law applies several tests to determine whether or not a person is an employee. These tests include, the control test, the integration test, the multiple factor test, the economic reality test and the substitution test. These tests have been applied in courts in different cases to determine whether or not a worker is an employee. The integration test asks whether the worker is part of the business and whether the work done forms an integral part of the business. Where this is the case, the worker is considered an employee. The multiple factor test looks at various factors to assess whether a worker is an employee. These factors include; who makes the profit or risks the risk of loss, the provision of tools for the work, method of tax and national insurance and also control. The substitution test asks the question whether the worker is allowed to bring in another person in his place when he is not available. Substitution is generally inconsistent with a contract of employment15. The control test attempts to answer the question of how much control is being exercised over the worker in question by the employer. This is based on the concept of command and subordination where the employer issues commands to the worker who responds to them by acting as instructed. The more control is exercised on a worker by the employer the more the likelihood that the worker is an employee. This indicates that the amount of control that an employer is able to exercise upon a worker is a determinant of whether the worker is actually an employee. (Stewart, 2008) The basis for the need to identify whether or not a worker is an employee arises from the rights that are statutorily guaranteed to all employees. Employment law generally is based on the protection of an employee. An employee is under a contract of service while an independent contractor is under a contract for services. A worker who is under a contract for services does not enjoy the rights guaranteed under the employment law. The concept of control is therefore applied to distinguish a worker who is under a contract of service with the one under a contract for services. In Yemens v Noakes16 the court introduced the concept of control and stated that a servant is any person who is subject to the command of his master in regard to the way in which he shall do his work. This decision elaborated on the fact that for a worker to be an employee it is a requirement that the employer be able to give instructions which are obeyed and followed by the worker. The development in industrialisation posed a challenge on the applicability of the control test. This is because an employer would find it difficult to exercise direct control over a professional or an expert. This did not however negate the use of the concept of control in determining who is an employee. In Walker v Crystal Palace EC17 the court acknowledged that an employer is in business to make profit while the employee is bound by the terms of the contract of employment18. The employee is required to adhere to all instructions as given to him by the employer. The above court cases show the courts leaning towards the application of the control concept in determining the existence of a contract of employment. The determining factor in assessing whether a worker is an employee, among all other factors, is the nature and degree of control exercised by the employer over the person. (Performing Rights Society Ltd v Mitchell and Booker [1924] K.B. 762) The courts have established other factors to be considered, apart from that of control, when determining whether or not a worker is an employee. However, even with the development of these other factors the courts continue to apply the concept of control as determinant factor in assessing the status of employment. In Lane v Shire Roofing Company19 the plaintiff was injured when carrying out building works. He sought compensation from the employer alleging that he was an employee. The court held that the question of who lays down the work to be done, the way in which it is to be done, the means to be done and the time when it is to be done is important in establishing whether a worker is an employee. The application of the concept of control in this case rendered the worker as not an employee. The development in employment law has however shifted the focus from the concept of control. The courts now consider that the question whether or not a person is an employee is to be answered by looking at a variety of factors including, but not limited to, the concept of control. Other than the concept of control, consideration for the work done and the fact that the terms of the employment are consistent with those of a contract of service will be considered20. The Employment Tribunal of UK has developed other factors surrounding the issue of control that are considered in determining whether or not a person is an employee. This shows that despite the need to widen the scope of the determinant factors of establishing the existence of an employment relationship, the Tribunal still pays regard to the concept of control. In applying the control test the Tribunal looks at factors such as the ability of the employee to obey orders and the number of working hours. Where the employer determines the number of working hours, the worker is most probably an employee. The tribunal also considers if the worker obeys the commands of the employer. The control test will also look at the time, location of the work carried out and manner of the work. This is all based on the fact that an independent contractor, unlike an employee, is able to carry out the work allocated in a self-sufficient manner. An employee on the other hand will depend on the employer for provision of tools and the issuing of instructions on how the work is to be done including the location of the work21. The concept of control is always considered in determining the whether a worker is an employee. Though this factor is no longer the sole test being applied, the courts still considers it as an important factor. In the Market Investigations v Minister for Social Security22 Cooke J stated that although the control test can no longer be considered as the only test, it will however always have to be considered when determining whether or not a worker is an employee. This means that even with the development of other factors and tests to be applied in establishing whether a contract of employment exists, the concept of control still gets considerable emphasis. Question 3 In Australia, a modern award provides for minimum employment standards which apply to a specific industry or occupation and which must be consistent with the National Employment Standards. A modern award must not contradict the provisions of the Fair Work Act on the National Employment Standards. A modern award which relates to a certain industry covers all the employees and the employer in that sector. Enterprise agreements on the other hand are entered in to between an employer and a group of employees at one or more places of work. The enterprise agreements provide for the conditions of employment for the employees concerned. These agreements, like the modern awards, must be consistent with the National Employment Standards. It is a requirement that an enterprise agreement must provide more benefits to the employees when the conditions in the agreement are compared to those of a modern award. An enterprise agreement will therefore not apply where the conditions of employment set there in are a detriment on the part of the employee. An enterprise agreement that does not meet the ‘better off overall test’ is not approved by the Fair Work Australia. An enterprise agreement must state the people that are covered by the agreement, that is, the specific employer and the employees. The agreement must also state how the agreement is to apply including when the agreement comes in to force. An enterprise agreement cannot last for more than four years23. This means that once the agreement is made it must state the expiry date of the agreement which must not be more than four years from when it is approved by Fair Work Australia. It is also important that the agreement contains a consultation term that requires the employer to consult with the employees in case he wants to make changes in the agreement. In the event that an employer is desirous of entering in to an enterprise agreement with the employees, the employer must first give a Notice of Employee Representational Rights to every employee who will be bound by the agreement24. The notice of the making of the enterprise agreement must be made not later than 14 days after the decision is made to begin negotiations25. The failure by the employer to give the notice of employment representational rights means that the enterprise agreement will not be approved by the Fair Work Australia until the employer complies with the requirements under the Act. After bargaining comes to an end and a draft agreement is made then the agreement is put to a vote26. All the employees concerned must be notified of the voting of the agreement. The employer has to make sure that the employees understand the terms of the agreement before it can be put to a vote. The passing of the draft through voting by the employees does not mean that the agreement comes into force. Once the draft agreement passes the voting stage the employer has to apply for approval27 from the Fair Work Australia within 14 days of the making of the agreement. The agreement shall only be approved where the agreement has satisfied all the requirements set out in the Fair Work Act and that it passes the ‘better off overall test’28. The agreement must be understandable to all the affected employees and the Fair Work Australia must be convinced that all the employees entered the agreement voluntarily. In the case involving the making of an enterprise agreement between Ginninderra Apples Property Limited (‘GA’) and its employees several issues arise that justifies the concerns by Elizabeth. GA approaches its employees and proposes an enterprise agreement to replace the modern award that was at the time binding upon them. GA does not give notice of the employee’s representation rights to all the concerned employees before the start of the negotiations for the enterprise agreement. This is inconsistent with the provisions of the Fair Work Act29 which makes it mandatory for such notice to be given. The terms of the proposed agreement touch on various issues including an increase in the employees’ salaries, the reduction of the casual load, the increase of working hours and the reduction of the annual leave for the employees. Elizabeth is concerned about the contents of this enterprise agreement. This is attributed to the fact that the agreement, in its provisions shows inconsistency with the National Employment Standards as provided under the Fair Work Act 2009. GA proposes to increase the weekly number of hours for the employees from 38 to 41 hours. According to the National Employment Standards, the number of weekly hours for employees cannot exceed 38 hours. Section 62 of the Fair Work Act prohibits an employer from increasing the number of weekly working hours for employees above 38 hours unless such increase is reasonable. In assessing whether the increase in the number of working hours is reasonable, the employee’s role and responsibility in the place of employment will be considered30. In this case this is not in issue because GA proposes to increase the number of weekly working hours for all the employees. There are no reasons indicated that could make the increase of the weekly working hours to be regarded as reasonable. Such increase in the number of working hours is therefore unreasonable and hence inconsistent with the National Employment standards. The enterprise agreement further intends to provide the employees with three weeks annual leave. Under the Fair Work Act31, an employee is entitled to four weeks of paid annual leave or five weeks where the employee is a shift worker. This means that the employees under GA are entitled to four weeks of paid annual leave which cannot be reduced. The enterprise agreement intends to reduce the annual leave to three weeks. This is inconsistent with the requirements of the act. For an enterprise agreement to be approved so that its application commences it must have complied with the requirements set out under the act and be consistent with the National Employment Standards. An enterprise agreement cannot last for more than four years32. GA proposes that the enterprise agreement will last until 2020 which would be past the four years’ time limit set under the Fair Work Act. This is an unlawful term in the enterprise agreement. Fair Work Australia will not approve of an enterprise agreement with an unlawful term including a provision for an expiry date that exceeds the four years set out in the Act33. Section 186(2)(d) requires that for an enterprise agreement to be approved by the Fair Work Australia, the agreement has to pass the better of overall test. This means that the agreement when interpreted as a whole benefits the employee more than the existing modern award. The enterprise agreement will be considered against the modern award that binds the employer and the employee. Where the enterprise agreement confers more benefits to the employees than the existing modern award then the agreement will be approved. However where the agreement takes away the benefits that were guaranteed to the employees under the modern award then the agreement will not be approved. This agreement takes away the benefits guaranteed to the employees under the modern award hence it does not pass the ‘better off overall test’. Elizabeth is concerned that if the enterprise agreement passes that she will not continue to enjoy the conditions in the modern award. Where the agreement covers all employees, unless it is specifically stated that Elizabeth or some employees are not bound, then the agreement will replace the modern award. Elizabeth may therefore not be able to enjoy the conditions of the modern award. Elizabeth should not be dismissed for opposing the enterprise agreement. This is because such an agreement is made out of negotiations between the employer and the employees. This means that if the employees reject the agreement then it cannot pass. GA does not want the involvement of Elizabeth’s union in the making of the agreement. The Notice of employee representational rights34 allows the employee to engage a bargaining representative in the bargaining process of the enterprise agreement. The bargaining representative may include an employee’s trade union. Elizabeth intends to involve her trade union in this capacity but GA is not willing to respond to the union. The trade union may therefore proceed to carry out an industrial action to force GA to agree to allow negotiations. Section 408 of the Fair Work Act provides that an industrial action is protected if it involves an employee claiming action for the enterprise agreement. This is where a bargaining representative who would be bound under the agreement organises an industrial action against an employer covered under the agreement35. The trade union is therefore protected under the Fair Work Act to proceed against the employer through an industrial action in relation to the enterprise agreement. References Harding, D. 2002. The effect of unfair dismissal laws on small and medium sized businesses. Hall, R. 2006. ‘Australian industrial relations in 2005-The Workchoices revolution’. Journal of Industrial Relations, 48(3), 291-303. Creighton, W.B, Stewart, A 2005, Labour law, (pp. 105-108), Sydney: Federation Press. Stewart, A 2008, ‘Stewart’s guide to employment law (Vol. 3)’ Federation Press. Stevens, G.M 1939, ‘The Test of the Employment Relation’, Michigan Law Review, 188-204 Sykes, E.I, & Yerbury, D 1980, ‘Labour Law in Australia: Individual Aspects (Vol. 1), Butterworth-Heinemann. The Australian Fair Work Act 2009. 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