MESSAGE FROM THE EDITOR
With the release of the 2014/1025 Federal Government Budget in
mid-May, the government's attention turned away from
non-financial matters and, most relevantly for us, industrial
relations. Accordingly, there has been little to report in the way
of impending changes in industrial and employment law, although the
Attorney-General did foreshadow potential changes to certain
aspects of the Fair Work Act 2009 (Cth) that could arise
out of an upcoming Australian Law Reform Commission Report.
There have, however, been some interesting decisions of the Courts
over the past month. In particular, in this Edition we consider a
recent Federal Court decision regarding the incorporation of
company policies into employment contracts and make some
suggestions on best practice in this regard. We also consider a
decision regarding the right of employers to be legally represented
in proceedings before the Fair Work Commission. Thankfully, the
decision provides more scope for employers to be legally
represented, particularly if the employer's HR representative
lacks the skills to take carriage of the matter.
Finally, we report on the recent fall in the national unemployment
rate to 5.8% and the Federal Government's proposed
clarification of the changes to the rate of superannuation payable
to employees, which will be increased to 9.5% as of 1 July 2014 but
be capped at that rate till 2018, then ramping up to 12% by
2023.
Adam Salter, Partner
IN THE PIPELINE—HIGHLIGHTING CHANGES OF INTEREST TO EMPLOYERS IN AUSTRALIA
Legislative changes to relieve the burden upon employers
On 23 May 2014, Attorney-General George Brandis published the
terms of reference for an inquiry to be undertaken by the
Australian Law Reform Commission, identifying laws that limit
rights and freedoms of the individual and proposing reforms to them
where appropriate. One of the areas of focus is workplace relations
laws, in particular laws reversing the onus of proof, such as those
in the Fair Work Act 2009 (Cth) obliging an employer to
prove it did not take adverse action against an
employee.
The Commission will invite submissions from business and take
these into account in formulating its recommendations to
Government. An interim report is due in December of this year, with
the final report due to be published in December 2015.
Progress on Fair Work Amendment Bill 2014 (Cth)
The Fair Work Amendment Bill 2014 (Cth) has been
referred to the Senate's Education and Employment Committee
which is due to publish its report on 5 June 2014. That report will
be tabled in the Senate, the Bill amended according to its
recommendations and returned to the House of Representatives for
approval. If the amendments are accepted, the Bill is expected to
become law before the end of the year.
As you might recall from our
March Update, the Bill seeks to balance rights of employers
against those of unions, amongst other things limiting the
circumstances in which union officials may enter workplaces,
empowering the Fair Work Commission to dismiss claims that have no
prospect of success without hearing them and prohibiting the use of
industrial action to force employers to bargain.
HOT OFF THE BENCH—DECISIONS OF INTEREST FROM THE AUSTRALIAN COURTS
Trouble on the high seas: employment policy not a term of the contract
Romero v Farstad Shipping (Indian Pacific) Pty Ltd
[2014] FCA 439is the latest decision of the Federal Court of
Australia on the incorporation of employment policies into
contracts of employment. Farstad Shipping employed Lisa Romero as a
sailor on vessels commanded by Captain Martin. As a result of
incidents on those vessels, Ms Romero claimed that Martin had
bullied her contrary to the Sex Discrimination Act 1984
(Cth) and Farstad was vicariously liable for such actions. The
claim failed as the captain's conduct was not attributable to
Ms Romero's gender.
The sailor also complained that Farstad breached its contract of
employment with her by failing to comply with its Workplace
Harassment Policy in the course of its incident investigation by
poorly documenting it and questioning her competence in an
interview about the incident. Alternatively, the sailor claimed
that those actions amounted to a breach of the implied term of
"mutual trust and confidence" within that contract.
The issue of whether a breach of the policy constituted a breach
of contract is answered through two inquiries: whether the policy
was incorporated into the contract and, if it was, whether it was
breached. The answer to the first question turned on an examination
of the language of those aspects of the policy said to be
contractual and analysing their context. The answer to the second
question turned on the standard to which the investigation was to
be held.
Marshall J held that the terms of the policy were not incorporated
into the contract. Although the policy stated that Farstad
"will" perform certain acts, that language was
insufficiently specific to be contractual. Further, those remarks
were placed in the context of aspirational statements. Finally, the
policy was neither expressly nor impliedly incorporated into the
contract. It did not matter to Marshall J that employees were
required to sign the policy. There was no breach of these
provisions in any event as Farstad was required to conduct its
investigation merely in a "practical manner", not
"like a judicial hearing". Similarly, Marshall J rejected
the claim based on "mutual trust and confidence": the
breaches did not strike at "something fundamental" to the
employment relationship.
Lessons for Employers
There are three important points for employers to take away from
this decision. Firstly, if the employer does not wish itself to be
bound by procedures set out in workplace policies (for instance,
workplace harassment policies), then the employee's employment
contracts should contain entire agreement clauses expressly
excluding the policies from incorporation into the contract.
Secondly, employers should draft procedural guidance for the
conduct of incident interviews, confining the interview to the
incident and excluding other matters. Here, discussion of the
sailor's future career and pending approval of finance for
further study caused problems. Thirdly, unless and until the High
Court decides otherwise, the Federal Court will continue to accept
the existence of an implied duty of "mutual trust and
confidence" in employment contracts.
A new school of thought on legal representation at the Fair Work Commission?
The decision of the Fair Work Commission in Oratis v
Melbourne School of Business [2014] FWC 2838 indicates a
change in attitude of the Commission to legal representation. Emily
Oratis sued the Melbourne School of Business (MSB)
for unfair dismissal in the Fair Work Commission.
Self-representation is the normal course at the Commission unless
there is an application for the appointment of a lawyer or agent
that is granted at the discretion of the Commissioner: s 596
Fair Work Act 2009 (Cth). MSB made such an
application.
MSB advanced two arguments on the basis of s 596 for permission to
appoint legal representation. Firstly, the complexity of the
jurisdictional and evidentiary issues required the appointment of
representation in order to efficiently resolve the matter.
Secondly, self-representation would be unfair to the employer: the
HR manager representing MSB was also a witness and there was no
other suitable representative on staff.
Only one of those arguments succeeded: that the complexity of the
evidentiary issues required the appointment of legal
representatives. The jurisdictional argument failed as the issue
was primarily factual. The second argument failed because the
Commissioner held that there is no conflict in an individual acting
as a witness and a representative. To hold otherwise would create
an automatic right to representation, contrary to the
statute.
Lessons for Employers
Employers should be aware that the decision does not entitle them
to legal representation in the Fair Work Commission. However, it
indicates that the Commission has somewhat relaxed its approach on
this issue. Whether the employer is obliged to represent itself
seems now to be a question of whether the HR manager tasked with
appearing can efficiently address the matters raised. Raising
issues that require specialist legal knowledge may therefore
necessitate the Commission permitting the use of legal
representatives. Importantly, in deciding whether MSB could
represent itself, the Commissioner refused to take into account the
skills of employees other than the HR manager.
BREAKING NEWS
Springtime for the economy: green shoots in autumn unemployment figures
Unemployment figures announced for April show the national unemployment rate sitting at 5.8%, lower than the 5.9% expected to be announced by the Australian Bureau of Statistics. The figure was attributable to an increase in the number of individuals engaged in full time employment and a decrease in the participation rate. Employment figures have increased every month this calendar year, following a record drop in the unemployment rate from 6.1% to 5.8% in March 2014. Importantly, this means that economic activity on the east coast of Australia is increasing and mining is no longer the primary driver of employment growth in the Australian economy.
Superannuation Guarantee Freeze to Ease Business Uncertainty
The Federal Government has announced that it will raise the
superannuation guarantee from 9.25% to 9.5% on 1 July of this year
and freeze it at that level until 30 June 2018. Despite this, the
government still intends to increase the guarantee to 12% by 2023
through 0.5% increases each year from 1 July 2018.
The government hopes that this change will provide certainty for
business as to the amount under the guarantee. Up until now there
has been confusion over whether the current rate of 9.25% would be
payable, as previously announced, or the legislated 9.5%. The move
coincides with the proposed amendments to the age pension: the
eligibility age will rise to 70 and it will be indexed against CPI
instead of wages. These changes are in line with the stated
intention of the Abbott government to encourage self-funded
retirement.
Whilst other elements of the Federal Government's annual
budget (one of the most austere budgets in the past 20 years) may
not pass through both Houses of Parliament, it is expected that
this measure will pass.
ACKNOWLEDGMENTS
Thanks to Andrew Berriman (Associate) for his assistance in the preparation of this Update.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.