There are a variety of legal challenges in dealing with employees. Stephen Price reveals the common reasons behind why employers get sued and details how to minimise the risk of litigation
1. Act in haste, repent at leisure
When an employer decides to terminate the employment of an employee, it often wants to do so immediately. The problem with effecting such decisions immediately is that termination of employment is far more likely to result in legal action that’s difficult to defend. A dismissal implemented quickly will often come as a shock to an employee and the employee will be more likely to commence litigation, whether that be in the context of dismissal for performance or redundancy. Ultimately, it can be counterproductive because an employee who wins an unfair dismissal case can be reinstated. For those in NSW, a hasty decision can prove to be very expensive bearing in mind the unfair contracts jurisdiction in place in this State.
In some cases, an incident will occur in relation to an employee that is the ‘last straw’ as far as the employer is concerned and they’ll subsequently move to sack the employee. However in many cases, the previous issues will not have been raised with the employee and, as a consequence, the employer will have difficulty relying upon this history in order to defend any legal action commenced by the employee.
2. Turning a blind eye
If you are aware of practices in your workplace contrary to workplace regulation such as discrimination laws or laws pertaining to OHS, you should take action, regardless of whether there’s been a complaint. Two recent cases relating to bullying have emphasised this.
In one case, an employer was found to be in breach of its obligations under relevant OHS legislation and subsequently fined for failing to deal with a bully at its workplace in circumstances where the employer knew about the bully’s actions, but failed to act. Another case resulted in an employer being found liable and penalised under OHS legislation in relation to the actions of its employees who engaged in a violent initiation ceremony for a new recruit. More importantly, however, a manager who turned a blind eye to the initiation ceremony despite his prior knowledge of it was also found liable and penalised under the legislation.
3. Sweeping it under the carpet
If an employer receives a complaint about circumstances involving a potential breach of the law or circumstances leading to a claim or a performance management issue, an employer should ensure that the matter’s investigated properly and completely. You may have heard this a number of times previously but it’s worth repeating. Judging from recent court and tribunal decisions relating to employment matters, this is a common mistake.
Effective management of complaints and problems includes questioning all relevant parties, giving employees an opportunity to address issues that are raised in relation to their conduct, reporting back to the relevant parties and actively seeking to resolve issues in a timely manner. It shouldn’t be assumed that a matter has been resolved simply because the complainant has gone quiet.
4. Bad policies
In many cases, a bad policy can be as costly to an employer as not having a policy at all. Employers should regularly review their policies and procedures to ensure that they’re adequate and relevant. There are different requirements for each policy. Policies relating to OHS must be detailed and employers should ensure that they cover an employer’s obligations under the law and will best assist the employer to protect the safety of their employees and assist the employer if prosecuted. On the other hand, policies relating to termination can sometimes be too prescriptive – employers should ensure that the policy does not create a rod for its own back by providing too many procedural steps that are bound to trip up even the most diligent of line managers.
Employers may also try to rely on a breach of a bad policy by employees in order to terminate employment. This is also problematic in terms of establishing a valid reason for termination in the event that the decision to terminate is challenged by the employee.
5. Failure to stick to policy
Once you’ve gone to the trouble of putting a policy in place, make sure you stick to it. This is particularly important given that policies can form part of the employment contract. Recent cases involving employees with carer’s responsibilities who’ve successfully relied on policies promising work/life balance have demonstrated that employers must comply with the terms of their own policies or risk repudiating the employment contract.
An employer’s failure to comply with a termination policy may also result in a finding that the employer failed to afford the employee procedural fairness in the context of an action for unfair dismissal. If an employer fails to comply with its own policies in discrimination matters, this is likely to exacerbate the penalty for the employer.
6. Unequal treatment of employees
When making decisions concerning employees, an employer should always be aware of issues of inequality. The issues mightn’t always be obvious. Relevant discrimination laws relate to not only direct discrimination but indirect discrimination. This involves the imposition of a requirement on employees which, while non-discriminatory on face value, is discriminatory in the way it’s applied to a certain class of employee. In the past, for example, a redundancy policy applied on a ‘last on, first off basis’ was held to be discriminatory in workplaces in which the majority of employees recently hired were women.
The legislation relating to discrimination is not only important to bear in mind in this context but also the provisions in the Workplace Relations Act prohibiting unfair treatment of union members, the breach of which carries a monetary penalty for individuals and employers.
7. Restructuring
Whether a company is purchasing or selling a business, rearranging its corporate structure or proposing to outsource a part of its business, transmission of business issues are a trap for the unwary.
Many corporate restructures will result in an employer having to terminate the employment of many in its workforce. This will usually lead to redundancy payments for employees. However recent decisions have found that even when an employee retains their job but transfers from one employer to another, an employee will still be entitled to redundancy payments. In one case, an employer restructured its organisation, resulting in a change of employer from one entity to another within the same group. The employees whose employer had changed were entitled to severance payments because of the wording of the applicable certified agreement, even though the only aspect that had changed was the name of the employing entity.
8. Flexible working for carers
Employers need to carefully consider requests for job share or part-time work for employees returning from maternity leave or who have responsibilities as a carer. Each employee’s request should be considered on an individual basis. If an employer has a blanket policy that certain positions don’t lend themselves to part-time work, there is a strong risk that a tribunal or court will find that the policy is discriminatory. This is particularly true if the employer hasn’t evaluated each individual proposal for part-time work and does not have a sound business case to support the refusal for part-time work.
A recent case found that whilst an employer did not discriminate against an employee by refusing to allow her to resume in her previous position on a part-time basis, the employer indirectly discriminated against the employee by not offering her another part-time position that was available.
9.Contractors versus employees
It’s important that employers and labour hire companies consider the relationship they have with their workers. Courts are inclined to look behind the labels employers or hirers give their workplace relationships and examine the way the relationship works to determine the true nature of the relationship. The major issue courts will look at is the degree of control exercised over the employee/contractor. However, other factors such as how remuneration is paid and whether tasks can be delegated will also be relevant.
The importance of this is that if an “employer” considers that a person is a contractor but a court finds that he or she is actually an employee, this can result in a number of additional payments such as annual leave, severance pay, pay in lieu of notice and claims for unpaid tax.
10. Sacking an injured worker
In Australia, an employer cannot terminate an injured employee (where that injury is one for which the employee is entitled to workers compensation) within six to 12 months (varying between the states) of the employee being injured, unless the employer can prove that the employee is permanently incapacitated.
If an employer terminates an employee’s employment because of the injury, the employer opens themselves up to unfair dismissal, unlawful termination or discrimination claims. For this reason, employers should not consider terminating the employment of an employee before carefully considering the inherent requirements of the injured worker’s position and their ability to carry out those requirements. Failure to do so will almost certainly result in a successful claim against the employer. If the employee is unable to carry out the inherent requirements of the position, the employer may also have to consider whether services can be provided to the employee that will assist him or her to carry out the requirements of position.
Stephen Price is a partner and leader of the Workplace Relations Practice Group at Corrs Chambers Westgarth. Tel: 02 9210 6236
