Skip to content.

Home

Allens Arthur Robinson

Focus: Workplace Relations

24 February 2010

In this issue: we look at the dangers of potential demotion during restructures and the cost to employers; the protection of employers' confidential information; the obligation for employers to provide a 'reasonable opportunity' for their employees to consider an enterprise agreement; and the states referring workplace regulation to the federal jurisdiction.

Demotion as dismissal

In brief: Reducing a role by taking away a range of duties has cost an employer six months' salary in lieu of notice.1 Lawyer Nicole Winton reports.

How does it affect you?

  • Employers must be careful not to demote employees when altering duties, restructuring roles, or moving them to new positions.
  • A new role may involve a demotion even if the status of the former and new roles is the same.
  • The decision also provides guidance on when a company policy will form part of the employment contract.
Background

Mr Whittaker was employed by Unisys Australia Pty Limited as Vice President and General Manager of one of its divisions. As part of a restructure, Unisys transferred him to a newly created role that focused on negotiating and closing 'mega deals'. Mr Whittaker's salary, executive status and reporting lines were unchanged, but the new position excluded several business functions that were necessary for progression within Unisys.

Mr Whittaker considered the new position to be a sales role involving only some of his former duties. He objected to the proposal and refused to accept it.

Decision

The Victorian Supreme Court agreed that the new position constituted a substantial diminution in status and responsibility compared with Mr Whittaker's former role.2

The court accepted that 'from time to time, employees may be required to perform other duties that are within the limits of their skill base, competence and training,'3 but that this did not permit permanent assignment to a new position.

Despite this, the court did not accept that Unisys' redundancy policy was incorporated into the employment contract. The letter of offer for the new position referred to specific policies, suggesting that only those specified policies were incorporated into the contract. Further, there was no general clause in the contract stating that the employee agreed to observe all of Unisys' policies and practices. As a result, the employee's claim was limited to notice arising out of termination of employment.

Return to top

Employer's confidential information protected by injunction

In brief: The Federal Court of Australia has granted permanent injunctions restraining misuse of any of an employer's confidential information.4 Lawyer Rima Hor considers the decision.

How does it affect you?

  • A company's information may be confidential and capable of protection even if the information is not directly relevant to a new business venture of a former employee.
Background

In 2007, while employed by Blackmagic Design Pty Limited, the head engineer and sales manager contemplated establishing a new business manufacturing high-end audio products. Blackmagic manufactured high-end video products.

Subsequently, the head engineer began developing a spreadsheet containing the input costs associated with some of Blackmagic's video products.

In mid-2008, both the head engineer and the sales manager announced their resignations and left Blackmagic to pursue their own interests.

Decision

The Federal Court held that the spreadsheet created by the head engineer contained confidential information. The court granted permanent injunctions restraining both employees from using the confidential information in the spreadsheet.

The court also found that the head engineer had breached section 183 of the Corporations Act 2001 (Cth) that prohibits employees (including former employees) from improperly using information to gain an advantage for themselves. The court held that s183 had been breached even though no advantage may have ultimately been gained for the head engineer's new company. This was because, although the idea was eventually abandoned, the head engineer had used the spreadsheet with the intention of gaining an advantage for a new company.

Return to top

Meeting of employees unnecessary for agreement approval

In brief: An enterprise agreement may be approved even if employees are not offered a chance to meet as a group. Lawyer Charlotte Ahearne reports.

How does it affect you?

  • Employers must take reasonable steps to ensure that the terms of an enterprise agreement, and the effect of those terms, are explained to employees.
  • There is no specific obligation to facilitate communication between the employees before approval, such as through a group meeting.
  • Incorrect information does not necessarily invalidate the approval of the agreement, provided that employees were unlikely to have been misled.
Background

During February 2009, Blue Star Pacific Pty Ltd commenced negotiations for a new enterprise agreement, seeking the approval of its employees by ballot under s340(2) of the Workplace Relations Act 1996 (Cth). Section 340(2) required an employer to give all of the employees covered 'a reasonable opportunity to decide' whether they wanted to approve the agreement.5

Blue Star sent each of its employees a package of material, including a copy of the proposed agreement, an information statement, a ballot paper and a self-addressed envelope. In addition, Blue Star's managing director conducted meetings at some worksites. A majority of the employees voted in favour of the agreement.

The Communications Electrical Plumbing Union of Australia (the CEPU) challenged the validity of the agreement in the Federal Court, claiming that the agreement was not properly approved, as:

  • Blue Star did not give employees the opportunity to meet and confer as a group; and
  • the ballot paper was misleading by stating that the proposed term was two years, when in fact it was to operate for four years.

The CEPU was successful and Blue Star appealed.

Decision of the Full Federal Court

The Full Court allowed the appeal6. The court observed that what will constitute 'a reasonable opportunity' will depend upon the circumstances of the particular case, but it may be necessary for an employer (in the absence of a union negotiating on the employees' behalf) to take affirmative steps to facilitate communication between employees about whether they want to approve the agreement. However, this would depend on practicalities and, in the case of Blue Star, with multiple worksites in and around Brisbane, it was reasonable not to take that step.

The court set out several factors that might suggest when greater compliance is required from an employer, including when the information is:

  • unintelligible or incomprehensible;
  • in a language that would not be understood by the employees; or
  • provided in circumstances that are likely to mislead or deceive the recipients.

The court also held that the error in the ballot paper regarding the term of the agreement had to be considered in context, including the fact that the title of the agreement made it clear that it would run for four years, as did the payment schedule for wage increases.

Although the case was decided under the previous industrial relations framework, it is relevant also to employers making agreements under the Fair Work Act 2009 (Cth).

Return to top

States refer industrial relations powers to the Commonwealth

In brief: As of 1 January 2010, the Federal Parliament can extend workplace relations coverage to all private sector employees (except those in Western Australia). Employers now covered by the Fair Work Act 2009 (Cth) include sole traders, charities and partnerships, and their employees. Senior Associate Nicholas Fletcher reports.

How does it affect you?

  • All private sector employers and employees (except in Western Australia) will be subject to the 10 National Employment Standards and any applicable modern award.
  • Transitional arrangements, including the preservation of some state industrial instruments, will continue to operate for up to four years.
Background

For many years, there has been a push for a single national system of workplace regulation. After the corporations power was widely used to support the WorkChoices regime, and its coverage of all trading and financial corporations, most private employers fell under the federal system.

A further step towards this goal was taken with the passage of complementary legislation by the federal and state parliaments (excluding Western Australia) on 2 December 2009. By that legislation, the states have referred to the Federal Parliament the power to make workplace relations legislation for all private sector employees (the Referral Legislation).

As of 1 January 2010, the Referral Legislation extends federal coverage to private sector employers and employees not already covered in each state and territory, except Western Australia. Employers now covered federally include sole traders, charities and partnerships, and their employees.7

Accordingly, these private sector employers and employees are now part of the federal system, and will have 'the same laws, tribunals, minimum conditions, rights and entitlements as their counterparts doing the same work, regardless of whether they are within the same state or across a border, regardless of whether they are trading as a corporation, a sole trader or partnership.' 8 This means that all private sector employers and employees are now subject to the 10 National Employment Standards and any relevant modern award.

The question of whether the federal or state system applies to private sector employees will no longer depend on whether a business is a constitutional corporation. This leaves within the state systems only:

  • state public sector and local government employees in the referring states;9 and
  • certain private sector employees in Western Australia.
Transitional arrangements

The Referral Legislation includes transitional arrangements, including:

  • State awards and state agreements will initially be preserved as federal instruments in the same terms as the state instrument.
  • These state awards and state employment agreements will operate on a 'no detriment' basis with the National Employment Standards and the national minimum wage order, so that the arrangement more favourable to employees will prevail.
  • A state award otherwise applicable to an employee will continue to apply for a period of 12 months (ie until 2011), then to be replaced by a relevant modern award.
  • During the 12-month period following the referral of state powers, Fair Work Australia must consider whether any of its modern awards should be varied to provide appropriate transitional arrangements for incoming state employees and employers.
  • Fair Work Australia can make remedial take-home pay orders if the take-home pay of one or more employees would be reduced as a result of movement to a modern award.
  • Bargaining and dispute processes under state systems will not be carried over into the new system, so that conversion to the federal system immediately attracts the federal framework.
Conclusion

The implementation of the Referral Legislation should reduce business costs for all private sector employers with employees in different states and territories, as the burden of dealing with multiple workplace relations laws, tribunals and minimum conditions is replaced with a single national system.

Footnotes
  1. Andrew Whittaker v Unisys Australia Pty Limited [2010] VSC 9 (29 January 2009).
  2. [2010] VSC 9 at 22.
  3. [2010] VSC 9 at 19.
  4. Blackmagic Design Pty Ltd v Overliese [2010] FCA 13.
  5. Blue Star Pacific Pty Ltd v Communications Electrical Plumbing Union of Australia [2009] FCAFC 187.
  6. Under the Fair Work Act 2009, ss180(2) to (5) set out new pre-approval requirements.
  7. The Western Australian Government has publicly declared that it will not refer its industrial relations powers to the Federal Government.
  8. The Hon Julia Gillard MP, Deputy Prime Minister, Minister for Education, Employment and Workplace Relations, and Social Inclusion; Second Reading Speech, Fair Work Amendment (State Referrals and other Measures) Bill 2009.
  9. Whether state/government-owned corporations remain within state industrial relations systems depends on the Referral Legislation of a specific state. For example, New South Wales and Queensland have referred to the Commonwealth the power to regulate their state-owned corporations and government-owned corporations, respectively.

For further information, please contact:

Return to top

Share with

What are these?

 

 

Recent Workplace Relations publications