Improve employee relations and avoid problems by making effective Employment Contracts. The contract should clearly set our parties rights, obligations and protect your confidential information, clients lists, Intellectual Property and trade secrets from rogue employees
An employment contract or agreement fundamentally covers the working relationship of an employer and an employee. A well drafted employment contract provides all parties with a clear understanding of their obligations and the terms of employment. It may sound surprising, but there is no obligation under the law to have a written contract of employment.
However, a well drafted written employment contract or agreement provides certainty and removes ambiguity if there is a breakdown in the relationship between the employer and employee. A verbal or poorly drafted document invites disputes in relation to the terms and conditions of employment that can have unforeseen consequences for your business. For example, where there is no written contract there will likely be no clauses dealing with confidentiality or restraint of trade which could expose your business to significant losses and damages with no contractual provisions to rely upon.
Choosing what to include and what to leave out of an employment contract can be a tricky exercise. Amongst other things, it should provide a clear outline of the employee’s classification, duties and responsibilities, remuneration, leave entitlements and may also deal with certain other important matters including:
Employment contracts must not include clauses that are contrary to industrial laws or instruments as these will be unenforceable. The National Employment Standards and minimum entitlements cannot be contracted out of by employers and there are significant penalties for contraventions.
Your employment contract may also refer to a Modern Award or Enterprise Bargaining Agreement. Modern Awards are legal documents that apply to over 100 industries that outline minimum rates of pay and conditions of employment. Employers cannot contract out of provisions of Modern Awards as they are minimum employment conditions nor can a Modern Award offer terms less favourable than the National Employment Standards.
A well drafted restraint of trade clause is the most effective way an employer can prevent a former employee from poaching their clients or staff, and using its confidential information. However, an employer needs to consider whether the “restraint” is reasonable to genuinely protect the employer’s goodwill and legitimate interests.
Any provision which imposes restrictions on an individual’s freedom to trade or be employed will likely be held to be illegal and unenforceable, unless it is proven that the restriction is reasonable having regard to both parties’ interests and the overarching public interest.
To ensure that your business interests are protected, it is vital that your restraint of trade clauses are effective and enforceable. Your employment contracts should be reviewed periodically and updated when necessary to ensure the changing nature of your employee’s roles are reflected in the restraints of trade. In particular, should you decide to promote an employee, you should also consider the introduction of more substantial restraints to reflect the promotion and access to clients/customers and confidential business information.
Find out how your business can better manage employment issues, and minimise the risk of employment disputes.
We help Employers to protect their interests and Employees to enforce their rights.
Our Employment Lawyers assist both employers and employees in a broad range of workplace issues. We understand and value the importance our clients place on establishing and maintaining cohesive, constructive employment relationships.
In an area of law that is constantly changing we will ensure that we provide you with clear, concise, timely legal advice to enable you to make informed commercial decisions.
Employment and industrial relations issues are for some businesses the trickiest and most time-consuming problems they will face. The sheer task of managing humans can be a minefield without proper legal support.
At Roberts Legal we advise our clients and act on an endless range of employment and industrial relations issues focusing on preventative measures and dispute methods. We believe that adversarial resolution should be the last resort for any employment related dispute. We pride ourselves on balancing sensitivity and tact with patience and reliability.
Our approach is to provide common sense advice that deals with the root of the problem and delivers workable solutions to get your business back on track so you can focus on what you do best.
Our specialist Employment Law team is a safe pair of hands for employers who need to resolve workplace issues quickly, efficiently and with limited disruption to their business.
Find out how your business can better manage employment issues, and minimise the risk of employment disputes.
We are no strangers to the Fair Work Commission, Federal Circuit and Family Court of Australia and state-based tribunals. We know the ins and outs and ups and downs of commercial employment issues such as post-employment restraints, injunctions, shareholder agreement disputes and associated litigation.
We are skilled in drafting employment contracts and other workplace policies. We can assist you with unfair dismissal claims, investigating workplace disputes, mediating and litigating if required. We review arrangements with industrial associations, labour hire companies and contractors and can develop and ensure approval of Enterprise agreements as well as providing advice on award coverage and industrial disputes.
We support employers to navigate issues with regard to injured workers including policies and procedures, inherent assessment requirements, return to work plans, termination of employment and industrial and regulatory compliance.
In cases of restructuring, selling a business or transitioning for retirement, we can assist you by assessing issues and implications in relation to your employees. This can include providing you with advice in relation to potential redundancy entitlements, transferring of employee entitlements and continuity of service issues.
As an employer, there are many legal obligations that you are required to uphold to ensure that your business is trading legally, and your employees and staff work in a safe and secure environment. These obligations include:
A failure to uphold these obligations can have significant consequences for your business. Consequences include back pay to employees, compensation, damages claims, litigation costs, fines and penalties against the business and individuals involved in its management.
The onus is upon an employer to ensure that employees and workers are treated correctly and are receiving their minimum statutory rights and entitlements. As an employer, creating a legally compliant, supportive and safe work environment will also lead to increased business growth, maximising staff efficiency and engagement.
Legislation and Industrial Instruments that govern workplace relationships include, but are not limited to the:
It is critical as an employer that you are continually aware of your employee’s rights and your obligations. Further, it is important to understand what rights you have as an employer under any legislation or industrial instruments.
Workplace policies and procedures are the moral compass for your business. They are dynamic and evolving documents that present a vision of your organisation’s culture, values, systems and processes. Drafted correctly, the policies and procedures form the backbone of your expected behaviours of your employees.
Policies help educate staff on; acceptable and unacceptable standards and conduct, maintain a safe workplace, protect employees from risks or injuries, protect employers from liability for non-compliance with legislation, manage employee performance and justify disciplinary actions. Policies and procedures that should be implemented by your business include, but are not limited to:
An employment contract or agreement fundamentally covers the working relationship between an employer and an employee. A well drafted employment contract provides all parties with a clear understanding of their obligations and understanding of the terms of employment. It may sound surprising, but there is no obligation under law to have a written contract of employment.
However, a well written employment contract or agreement provides certainty and removes ambiguity if there is a breakdown in the relationship between the employer and employee. A verbal or poorly drafted document invites disputes in relation to the terms and conditions of employment that can have unforeseen consequences for your business. For example, where there is no written contract there will likely be no clauses dealing with confidentiality, notice required to be given by employees if they wish to resign or restraints of trade which could expose your business to significant losses and damages with no contractual provisions to rely upon.
Choosing what to include and what to leave out of an employment contract can be a tricky exercise. Amongst other things, it should provide a clear outline of the employee’s classification, duties and responsibilities, remuneration, leave entitlements and may also deal with certain other important matters including:
Employment contracts must not include clauses that are contrary to industrial laws or instruments, as these will be unenforceable. The National Employment Standards are minimum entitlements that cannot be contracted out of by employers and there are significant penalties for contraventions of them.
Your employment contract may also refer to a Modern Award or Enterprise Bargaining Agreement.
Modern Awards
Modern Awards are legal documents that apply to over 100 industries that outline minimum rates of pay and conditions of employment. Employers cannot contract out of provisions of Modern Awards as they are minimum employment conditions, nor can a Modern Award offer terms less favourable than the National Employment Standards.
Enterprise Bargaining Agreements
For large corporate entities, terms and conditions of employment may also be governed by an Enterprise Bargaining Agreement. These types of agreements are most common to cover specific circumstances or conditions relevant to that employer. Enterprise Bargaining Agreements are not allowed to offer conditions that are less than base standards contained in the National Employment Standards.
Employee entitlements can vary dependent upon the classification of an employee.
An employee can be:
Employment relationships and classifications often evolve over time as business needs either expand or contract. There are subtle differences between the above classifications of employment, and it is critical to ensure that your employees are correctly classified.
Confusion can expose your business to significant penalties and claims from employees seeking owed wages and entitlements that the employer had not anticipated. Incorrect classification of employees will likely be a breach of the National Employment Standards and can result in penalties under the Fair Work Act 2009 of up to $13,320.00 for individuals and $66,600.00 for corporations per contravention. These provisions are “civil remedy provisions”, meaning company Directors can be held personally liable for a contravention by the company.
Contracting has emerged as an alternative to a traditional employee and employer relationship. An independent contractor can be engaged as a natural person or an incorporated entity. A clear advantage in using contracted labour is the flexibility to turn labour on and off quickly.
Further, there are instances where parties may wish to be engaged as an independent contractor, particularly where they are available to service multiple businesses and not be limited to just being engaged by one business. The freedom to be engaged by multiple businesses and the liberty to choose their own hours are just some of the main benefits of being an independent contractor.
When dealing with potential requests by individuals to be engaged as independent contractors, it is critical for a worker to be correctly classified as an employee or independent contractor by your business. The Fair Work Act 2009 provides serious penalties for misclassification of an employment relationship. Penalties can include up to $13,320.00 for individuals and $66,600.00 for companies per contravention. Further, these provisions are “civil remedy provisions”, meaning company Directors can be held personally liable for incorrectly classifying a worker’s relationship with the business.
As the Federal Court of Australia said in the decision of Re Porter; Re Transport Workers Union of Australia (1989) 34 IR 179, 184:
“The parties cannot create something which has every feature of a rooster, call it a duck and insist that everybody else recognise it as a duck.”
Before hiring a new worker, the first step in the process is to determine whether they will be engaged as an employee or contractor. The distinction is important because:
There are in excess of 15 indicia which are considered when determining if a worker is an employee or contractor. Courts will always look towards the totality of the relationship when determining the status of a worker’s engagement, with one factor no more important than the other. Some of the indicia include:
A well drafted restraint of trade clause is the most effective way an employer can prevent a former employee from poaching their clients or staff and using its confidential information. However, an employer needs to consider whether the “restraint” is reasonably necessary to genuinely protect the employer’s goodwill and legitimate interests.
Any provision which imposes restrictions on an individual’s freedom to trade or be employed will likely be held to be illegal and unenforceable, unless it is proven that the restriction is reasonable having regard to both parties’ interests and the overarching public interest.
To ensure that your business interests are protected, it is vital that your restraint of trade clauses are effective and enforceable. Your employment contracts should be reviewed periodically and updated when necessary to ensure the changing nature of your employee’s roles are reflected in the restraints of trade. In particular, should you decide to promote an employee, you should also consider the introduction of more substantial restraints to reflect the promotion and access to clients/customers and confidential business information.
The National Employment Standards (“NES”) are a list of 11 minimum entitlements to which all Australian employees are entitled. The NES and the national minimum wage outline the minimum entitlements afforded to all Australian employees. These include:
It is important to remember that any modern award, enterprise agreement or contract of employment cannot exclude the NES or provide an entitlement that
is less than the NES. Contravention of the NES can result in penalties of up to $13,320.00 for an individual and $66,600.00 for a company per offence.
Employee entitlements to long service leave are contained within state-based legislation and are not included in the Fair Work Act 2009 (Cth) or the National Employment Standards. In NSW, all employees are covered by the Long Service Leave Act 1955 regardless of whether they are fulltime, part-time or casual. The Long
Service Leave Act provides that:
The leave will be calculated at the employee’s ordinary gross weekly wage. The ordinary gross weekly wage is the employee’s base rate of pay for their usual hours of work and does not include:
As an employer, it is important to be aware of an employee’s entitlement to pro-rata long service leave. An employee will be entitled to a prorata payment of long service leave if they have been employed by the same employer for at least five (5) years and:
Ensuring employees remain productive and are performing to the best of their abilities is paramount to the overall success of a business. Performance management can include a variety of things such as ongoing mentoring and support, as well as procedures to address under performance and to hold employees accountable for minimum standards associated with their roles.
Performance management may not be necessary if the employee has engaged in serious misconduct. There is no hard and fast rule on the number/frequency of performance management meetings to be held with an employee, however, procedural fairness and following any internal policies will be considered by the Fair Work Commission should an employee bring an Unfair Dismissal Application.
Clear and open communication with an employee is the most effective mechanism to managing poor performance. Where an employee’s performance is not at a satisfactory level it is important to:
A successful performance management program can have significant benefits for a business. It allows for any tension or dispute to be resolved with minimal disruption to the business and prevents any decisions in relation to termination that may lead to employees lodging an unfair dismissal claim with the Fair Work Commission.
Unfair dismissal is when an employee is dismissed from their job and the dismissal was harsh, unjust or unreasonable. Ultimately, it will be the Fair Work Commission who decides whether a dismissal is unfair.
To protect themselves against such claims, an employer should have adequate employment contracts, policies and procedures that provide clear disciplinary rules and procedures for termination of employment.
If a dismissal is found to be unfair, employees can seek compensation of up to the lower of six (6) months’ salary or half the high-income threshold (whichever is lower).
A person has been unfairly dismissed if the Fair Work Commission is satisfied that:
An employee has 21 days from the date the dismissal takes effect to bring an application for unfair dismissal. Any application made outside this timeframe will need to show exceptional reasons as to why the application was not made within the 21 day timeframe.
There are certain instances where an employer can object to an employee making an unfair dismissal application on a jurisdictional ground. This means that the dismissed employee does not have the right to bring an unfair dismissal application in the Fair Work Commission. These objections include:
Whether the employee has engaged in serious misconduct will also need to be considered by the employer. Serious misconduct is defined in the Fair Work Regulations and involves an employee deliberately behaving in a manner that is inconsistent with the continuation of their employment and will allow an employer to terminate the employee’s employment without notice.
The general protections provisions of the Fair Work Act 2009 aim to eliminate workplace discrimination and protect workplace rights of employees (including casuals). An employer contravenes the general protections provisions of the Fair Work Act 2009 if they take an adverse action because of the general protections that are afforded to an employee.
Adverse action includes doing, threatening, or organising any of the following:
A workplace right exists where a person:
General protections applications are dealt with initially by the Fair Work Commission by way of application from an affected employee or contractor.
If the adverse action resulted in termination of employment, an application must be lodged within 21 days of the termination taking effect. Leave however, may be sought in special circumstances for the filing of a late application.
If an employer receives such an application, they must file a response with the Fair Work Commission within 14 days. The matter is subsequently referred to conciliation and if not resolved the Fair Work Commission will issue a certificate under Section 368 of the Fair Work Act if satisfied that all reasonable attempts to resolve the dispute have failed.
There is a reverse onus of proof in relation to general protections applications that requires the employer or Principal Contractor to prove that any action taken by them was not as a result of the exercise of a workplace right or due to discrimination by them.
An employee’s position is genuinely made redundant when:
An employee may still be genuinely made redundant where there are aspects of the employee’s duties still being performed by other employees. The test is whether the previous job is still in existence, rather than a question as to whether the duties have survived in some form.
A redundancy will not be a genuine redundancy if it would have been reasonable in all the circumstances to redeploy the person within:
An employer who fails to comply with the legislation in relation to redundancies can face an unfair dismissal application from employees who have been made redundant. Where the Fair Work Commission finds that an employer has not complied with Section 389 of the Fair Work Act 2009 (Cth) in relation to a redundancy, a termination may be found to be unfair and reinstatement or financial compensation can be ordered.
Where an employee is made redundant, they are entitled to redundancy pay based upon their years of service. However, there are exemptions to this which include:
There are also circumstances when an employer can make an application to the Fair Work Commission seeking an order to vary the redundancy pay that is payable to an employee. Such applications can be made when:
All workers should be able to attend their workplace without being bullied or harassed (including sexual harassment).
The recent Respect at Work Amendments to the Fair Work Act 2009 (Cth) have expanded the powers of the Fair Work Commission to also make orders to stop sexual harassment in the workplace.
Sexual harassment involves unwelcome sexual advances, unwelcome requests for sexual favours or other unwelcome conduct of a sexual nature in relation to another person. Sexual harassment is also a form of serious misconduct and can lead to dismissal without notice.
A worker is bullied at work if a person or group of people repeatedly act unreasonably towards them, or a group of workers and the behaviour creates a risk to health and safety.
Examples of bullying can include:
Bullying and harassment in the workplace can have a significant impact on workers. These include:
As an employer, you have obligations under the Work Health and Safety Act 2011 (NSW) to provide a safe workplace. Further, a duty of care is owed to workers for their health and wellbeing whilst attending the workplace. A failure to uphold these obligations can have dire consequences for both your business and your employees.
Should a bullying or harassment issue in the workplace not be resolved, workers can make an application to the Fair Work Commission for an order to stop bullying. This process can involve mediation or a hearing where penalties ordered by the Fair Work Commission can be extremely serious if substantiated.
The bullying and harassment provisions/orders are “civil remedy provisions” of the Fair Work Act 2009 meaning company Directors can be held personally liable for contraventions by the company. Further, a worker is protected from any adverse actions being made against them for raising a bullying or harassment complaint due to the General Protections provisions of the Fair Work Act 2009.
Workplace investigations are becoming increasingly common in employer’s responses to handling allegations and disputes. Allegations involving discrimination, fraud, misconduct, harassment and bullying can be highly personal and involve multiple people within the business. It is important to understand that employee’s rights to procedural fairness are paramount and that thorough investigations should take place if allegations in relation to any of the above mentioned topics occur. Thorough investigations allow for the appropriate disciplinary action to be taken and means decisions are not rushed.
A workplace investigation generally involves the collation of evidence, interviewing of witnesses and providing recommendations or findings to an employer. In particular, an external workplace investigator should be used if there are any issues or concerns in relation to the transparency or independence of an employer to undertake the investigation without a conflict of interest.
We regularly assist businesses undertake workplace investigations and also assist individuals in handling workplace investigation disputes. We are able to provide advice in relation to the investigation process and recommend appropriate disciplinary steps if required.
Best Practices
The national minimum wage for a 38-hour week (subject to applicable taxation) is reviewed every 12 months by the Fair Work Commission. Casual employees who are covered by the national minimum wage will also receive a 25% casual loading on top of the national minimum wage.
Where an employee is covered by a modern award, their rate of pay will be calculated by reference to the relevant award they are employed under. However, it is important to consider that employees may also be entitled to:
Should your business pay employees above the national minimum wage and they are covered under a modern award you may wish to include an “absorption clause” in your employment contracts. This will allow you to “set off” the above award rates against any payable overtime or penalty rates to the employee. However, the failure to have one of these clauses can lead to employees being underpaid and a potential “wage theft” claim being made.
Wage theft is an extremely topical point of conversation in today’s employment landscape. Failure to remunerate workers correctly can lead to significant scrutiny and expensive fines from the Fair Work Ombudsman. This can become an increasingly difficult exercise as employees become more experienced within your business and are entitled to increased remuneration.
As an employer, the obligation is on you to ensure that you are always remunerating your employees correctly.
Underpayment claims and breaches of modern awards are civil remedy provisions of the Fair Work Act 2009, meaning company Directors can be held personally liable for contraventions by the company. Further, a worker is protected from any adverse actions being made against them for raising an underpayment claim due to the General Protections provision of the Fair Work Act 2009.
It is critical for all parties to a sale of business transaction to understand their legal rights and obligations in relation to existing employees of the business and the financial cost of termination and/or transferring of employment.
The Fair Work Act 2009 (Cth) defines when a transfer of business occurs. A transfer of business occurs when buying and selling a business if:
When a business is sold, the purchaser will need to determine the ongoing needs and demands of the business and decide whether to:
Each of these scenarios have different financial consequences and legal obligations that should be considered in settlement adjustments prior to completion of the sale.
If there is not a transfer of business as defined in Section 311 of the Fair Work Act 2009 (Cth), an employee’s period of service with the old employer will not count as service with the new employer. As such, the old employer would deal with the accrued entitlements as if it were an ordinary redundancy situation and the new employer would not need to recognise the employee’s previous service.
As an employer and a business owner, it is your client relationships, employee relationships, confidential information, trade secrets and know how that set you apart from your competitors. If these intangible assets walk out the door with an existing or former employee and straight into the hands of a rival, the consequences can be catastrophic. As such, it is critical that your business has significant protections in place to ensure it is clear to your employees what they can do whilst employed by you and also are well aware of their obligations upon leaving their employment.
An employee’s obligations relating to client relationships, fellow employees, confidential information, trade secrets and know how, obtained during their employment can arise from:
Whilst implied terms or equitable doctrines may provide some relief to employers, it is strongly recommended to have express terms in your employee’s contracts of employment, the provision of which act as a deterrent themselves.
Where there’s a breach of contract, employers can be entitled to urgent injunctive relief, damages against the employee or potentially the new employer for tortious interference.
Best Practices
Tortious interference occurs when a person intentionally damages someone else’s contractual relationship with a third party and that damage causes economic harm. This occurs quite frequently in employment situations where a new employer is aware of a new employee’s restraint of trade obligations with their old employer, however, induces them to breach their restraint of trade regardless.
As an employer, should you be offering employment to new employees, you should ensure you are aware if they have any active restraint of trade clauses and ensure that you do not induce the employee to breach their restraints.
There are a number of provisions within the Fair Work Act 2009 that are identified as civil remedy provisions. Breaches of a civil remedy provision can expose an employer to penalties of up to $63,000.00 per conviction for a corporation.
Quite alarmingly for corporations, Section 550 of the Fair Work Act 2009 provides “a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision”. The effect of this is that an individual can be held responsible if they have aided, abetted, counselled or procured any contravention.
Further, the Courts may, on application, make an order for a person to pay a pecuniary penalty considered appropriate if satisfied that the person has contravened a civil remedy provision. These penalties are derived from Section 539 of the Fair Work Act 2009 (Cth).
As an employer, you need to remain careful when offering or making representations to new employees. Section 31 of The Australian Consumer Law states that in relation to employment, a person must not engage in conduct that is liable to mislead a perspective employee as to:
Whilst recruitment is undoubtedly one of the most difficult processes undertaken by employers, it is critical to not overstate themselves to “win over” a prospective candidate. By overstating the employer’s position or terms and conditions of employment, employers can expose themselves to a significant risk of litigation from prospective employees due to conduct that occurred during the recruitment process. Common examples of this include, misleading employees in relation to remuneration, quick career progression, non-financial benefits, the length of the employment period or potential incentive schemes offered the employee.
Significant financial penalties may apply if the business is found to have engaged in misleading and deceptive conduct in connection with the person’s employment.
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