Workplace Relations Update: Prepare Now for 2010 – The Modern Awards And The NES Are Coming!

In this issue:

• Prepare Now for 2010 – The Modern Awards And The NES Are Coming!
  It is critical that employers begin their preparation now for the start of the new modern awards and the National Employment Standards on 1 January 2010.

• Discrimination Is Expensive - Ensure You Are Dealing Appropriately With Sexual Harassment Complaints
  Employers should be aware that courts are willing to award significant damages to employees who are the victims of discrimination and sexual harassment, especially where employers do not properly investigate or deal with complaints of unacceptable behaviour in the workplace. 
• Unenforceable Restraint Of Trade Clause For Real Estate Agency
  In the recent case of Marlov Pty Ltd v Murat Col  & Anor [2009] NSWSC 50, the New South Wales Supreme Court held parts of a restraint of trade clause in a real estate agent's employment contract unenforceable.

PREPARE NOW FOR 2010 – THE MODERN AWARDS AND THE NES ARE COMING!

by Steven Troeth and Gisella D'Costa

It is critical that employers begin their preparation now for the start of the new modern awards and the National Employment Standards on 1 January 2010.

From 1 January 2010 the following rules will apply:

• the main terms and conditions of employment for employees will be contained in the National Employment Standards and in most cases a modern award.  A number of modern awards have been finalised and published.  However, the modernisation process will continue up until December 2009 
• it will be a breach of the Fair Work Act to contravene the National Employment Standards or a modern award with a maximum penalty of $33,000 for each contravention 
• an existing pre-reform certified agreement (made before 27 March 2006) will prevail over the terms of the modern award to the extent only of any inconsistency
• if there is any uncertainty or difficulty regarding the interaction between a pre-reform certified agreement (made before 27 March 2006) and a modern award, an application may be made to Fair Work Australia to vary the agreement to resolve the uncertainty or inconsistency 
• a term of a pre-reform certified agreement (made before 27 March 2006) will be of no effect if it is detrimental to an employee, in any respect, when compared to the National Employment Standards 
• an existing collective agreement (made after 27 March 2006) will prevail over the terms of the modern award however the rate of pay must be no less than under the modern award
• a term of a collective agreement (made after 27 March 2006) will be of no effect if it is detrimental to an employee, in any respect, when compared to the National Employment Standards  
• if there is any uncertainty or difficulty regarding the interaction between a collective agreement and the National Employment Standards an application may be made to Fair Work Australia to resolve the uncertainty or difficulty or to make the agreement operate effectively with the NES. 

Implications For Employers

Preparation should include:

Employment Contracts

• a detailed review and audit of your current employment contracts or letters of appointment (including employment and HR policies) to ensure that they will comply with the relevant modern awards and the National Employment Standards
• updating your employment contracts
• updating your employment and HR policies. 

Collective/Certified Agreements

• a detailed review and audit of your collective agreements to identify any inconsistency with the modern awards
• a detailed review and audit of your collective agreements and pre-reform certified agreements to identify if they are, in any respect, detrimental to an employee when compared with the National Employment Standards
• considering whether any application should be made to Fair Work Australia to resolve any uncertainty, inconsistency or difficulty. 

Gadens Lawyers' Workplace Relations team is able to help with your review and guide you through the process.

DISCRIMINATION IS EXPENSIVE - ENSURE YOU ARE DEALING APPROPRIATELY WITH SEXUAL HARASSMENT COMPLAINTS

by Nadine Zets

Employers should be aware that courts are willing to award significant damages to employees who are the victims of discrimination and sexual harassment, especially where employers do not properly investigate or deal with complaints of unacceptable behaviour in the workplace. 

In the recent case of Poniatowska v Hickinbotham [2009] FCA 680, an employer was found to have discriminated against an employee on the basis of sex by terminating her employment after she complained of sexual harassment.  The employer was ordered to pay the employee$466,000 in damages. 

The Facts And Findings

Ms Poniatowska started work as a building consultant in January 2005.  From about May 2005, Ms Poniatowska was subjected to a range of inappropriate conduct including a work colleague sending her emails and text messages sexually propositioning her, and another work colleague sending her a sexually explicit image on her mobile phone and harassing her for sex.  Ms Poniatowska complained to her supervisor and the managing director about the conduct. 

Within a short time after Ms Poniatowska made the complaints, her employer began to closely monitor her performance.  Her employment was terminated for unsatisfactory performance in February 2006 after she was issued with three warning letters and then a suspension letter. 

The court found that the employer did not deal with Ms Poniatowska's complaints adequately.  In particular, the employer did not investigate the conduct complained of in any meaningful way, treated Ms Poniatowska unsympathetically "as a problem to be dealt with" and took no sincere measures to discipline the individuals involved in the conduct.  The court further found that the reason given for the termination of her employment was not genuine, but rather arose as a result of the fact that Ms Poniatowska did not "fit" into the work environment because she was a female who would not tolerate sexual harassment and a robust work environment.  As such, the court found that the termination of Ms Poniatowska's employment constituted unlawful sex discrimination. 

Ms Poniatowska was awarded $466,000 in damages for lost remuneration, pain and suffering and medical expenses. 

Implications For Employers

Employers should:

• be familiar with their legal obligations in relation to discrimination, harassment, occupational health and safety
• ensure that appropriate policies and procedures are in place to deal with sexual harassment complaints and ensure compliance with them
• educate employees through induction, training, and by promulgating policies that address conduct that will not be tolerated in the workplace
• investigate complaints and take action where necessary (for example, counselling or disciplinary action).

UNENFORCEABLE RESTRAINT OF TRADE CLAUSE FOR REAL ESTATE AGENCY

by Nicole Linton

In the recent case of Marlov Pty Ltd v Murat Col  & Anor [2009] NSWSC 50, the New South Wales Supreme Court held parts of a restraint of trade clause in a real estate agent's employment contract unenforceable. The case serves as a reminder that restraints of trade in employment contracts will usually be considered unlawful and invalid on public interest grounds, unless they can be justified.

The Facts And Findings

On 28 May 2009, Mr Col started working for the real estate agency (the agency).  His employment agreement contained a restraint of trade clause that, amongst other things, prevented him, for a period of 6 months from the date of termination of employment and within 7.5km from the agency, from:

• inducing, encouraging or soliciting any customers, clients or suppliers of the agency with whom he had contact in the preceding 12 months, to end or restrict their trade relationship with the agency (solicitation restraint)
• carrying on or being engaged or interested in any business which competes with the agency (competition restraint).

On his resignation from the agency, Mr Col commenced working for another real estate agent located 4.5 km away from the agency. 

The agency brought proceedings against Mr Col alleging that Mr Col had acted in breach of the solicitation and competition restraints and sought declarations to that effect.  It also sought orders restraining Mr Col from acting in breach of these restraints.

The court restated the general principles in relation to restraints, in particular that "any contractual restraint of trade is prima facie unlawful and invalid" and that "a restriction on a person's ability to trade will be justified only if it is reasonable in reference to the interests of the parties concerned and reasonable in reference to the interests of the public...".  The court confirmed that "a distinction must be drawn between, on the one hand, a covenant that restrains an employee from disclosing confidential information or from soliciting customers of his former employer and, on the other, a covenant that simply restricts competition."

Solicitation Restraint

The court did not make any finding in relation to the validity of the solicitation restraint as it found that there was no evidence to suggest that Mr Col had solicited any customers and therefore, he had not breached his obligations. 

The court stated that the solicitation restraint may have been reasonable as it was limited to a period of 6 months and did not seek to prevent contact with all customers or clients (but only to some customers with whom Mr Col dealt).

Competition Restraint

The court found that the competition restraint was invalid as it was simply directed at restricting competition within the area in which the agency conducted its business.  It also found that this was not a case where it was proper to restrain a former employee from competing directly with an employer because:

• while the agency had a number of recurring customers, the greater number of its clients were persons who deal only once with it, and there was no suggestion that Mr Col dealt with recurring customers or that he had established any special relationship with any clients
• given that Mr Col was one of 6 employees and had only been employed by the agency for 7 months, there was no evidence that Mr Col had been instrumental in establishing the goodwill of the business
• very little of the agency's business was confidential
• while it is reasonable that the agency seek protection from the possibility of losing business due to the personal knowledge and influence that Mr Col might have acquired during his employment, the business of a real estate agency could be distinguished from other kinds of businesses "where there is a real interest in preserving the relationship with a customer" or professions such as law and accounting where clients returned for advice.

The court held that the competition restraint was clearly a burden to Mr Col and did not protect any legitimate interest of the agency in its business connection or goodwill. Since the restraint clauses could not be read down so as to be valid, it was "void against public policy and unenforceable".

Implications For Employers

When including restraints of trade in employment contracts or considering their enforceability it is important to:

• consider what interests the business legitimately needs to protect and why
• tailor the restraint to the individual position
• consider factors such the employee's relationship with employees, clients, customers, suppliers, the nature of the work performed and competitor businesses.

If you have any questions about the enforceability of a restraint of trade or would like help in relation to including them in your employment contracts, please contact the Gadens Lawyers' Workplace Relations team.

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.