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Allens Arthur Robinson

Focus: Workplace Relations – March 2009

In this issue: We look at the new regime for unfair dismissal; the case of Miles v Genesys Wealth Advisers Limited; and the prohibition on discrimination against employees for taking industrial action.

New regime for unfair dismissal

In brief: The Federal Government's Fair Work Bill 2008 provides a new scheme for unfair dismissal protections that significantly alters the existing WorkChoices framework. Lawyer Sophie Ryan reports.

How does it affect you?

  • The approach to unfair dismissal under the Fair Work Bill 2008 has two key features:
    • increased availability of claims for employees; and
    • quicker and less formal procedures for dealing with claims.
Background

On Tuesday 25 November 2008, the Federal Government introduced into the House of Representatives the Fair Work Bill 2008 (the Bill) to replace Australia's current workplace relations legislation.

Under the Bill, the basic principle underlying unfair dismissal continues to be whether the dismissal was 'harsh, unjust or unreasonable'. The Bill aims to:

  • broaden the scope of employees with access to unfair dismissal claims; and
  • reduce the burden on business, particularly small business, of defending an unfair dismissal claim.
Principal changes
Protection from unfair dismissal – increased availability of claims

The Bill removes the exclusions currently applying to:

  • employees in businesses with 100 or fewer employees; and
  • employees dismissed for 'genuine operational reasons'.

In broadening the scope of the unfair dismissal laws, the six exemptions to a claim of unfair dismissal under the current regime are reduced to four. The only circumstances in which an employee will not be able to claim are if they:

  • earn annual remuneration of more than $106,400, unless covered by a modern award or collective agreement;
  • are employed by an employer with 15 or more employees, and have not been employed for six months;
  • are employed by an employer with fewer than 15 employees, and have not been employed for 12 months; or
  • are dismissed for genuine redundancy.

Casual employees are also included in the new unfair dismissal scheme, provided they have been employed on a regular and systematic basis with a reasonable expectation of continuing employment.

Procedural aspects – less formal procedures for claims

Another significant feature of the Bill is that an unfair dismissal claim will have to be filed with Fair Work Australia (FWA) within 14 days of a dismissal. The time limit proposed by the Bill was originally seven days but was extended in an effort to have the Bill passed in the Senate. This is, however, still less than the current 21-day period.

The Bill grants FWA broad discretion as to how it will investigate and determine whether dismissal was harsh, unjust or unreasonable. FWA will use an inquisitorial approach, with no formal written submissions, cross-examinations or hearings. Where there are contested facts between the parties, FWA will be required either to hold an informal conference or, where considered appropriate by FWA, refer the matter to a full public hearing.

Remedies for unfair dismissal

The remedies available for unfair dismissal are essentially the same as under the existing regime, and include reinstatement (unless it is not in the interests of the employee or the employer's business) or remuneration for lost pay or monetary compensation (capped at six months' remuneration).

Likely effect of the new changes

In expanding access to unfair dismissal provisions, it is estimated that approximately 100,000 previously exempt businesses, with around 3 million employees in total, will become part of the unfair dismissal system. Put another way, the Government has estimated that under WorkChoices approximately 44 per cent of employees in Australia had access to unfair dismissal laws. The proposed changes will mean that 80 per cent of employees are eligible.

When will the Bill take effect?

The Bill is now awaiting assent but is intended to commence on 1 July 2009, in advance of the new modern awards and National Employment Standards commencing on 1 January 2010.

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Thirty-month restraint of trade clause enforced

In brief: Following on from our report on a Supreme Court of New South Wales decision in which a 30-month restraint clause was upheld,1 Lawyer Rima Hor reports on the recent appeal.2

How does it affect you?

  • A lengthy restraint clause is more likely to be enforced if it can be shown that the restrained party:
    • obtained independent legal advice before agreeing to the restraint;
    • through their position had close and productive long-standing relationships with clients; and
    • had access to confidential information, such as business plans and corporate strategies, that could be used by a competitor to the employer's detriment.
Background

Mr Miles was employed by Genesys Wealth Advisers Pty Ltd (Genesys) as Managing Director – Member Firms and Acquisitions. In this role he was responsible for recruiting, and managing the relationships with, a large number of financial planning firms (member firms). Mr Miles had developed good relationships with some of the member firms over a period of 20 years.

In 2004, Mr Miles signed a deed of release with Genesys, which prevented him from, for a period of 30 months:

  • engaging in competition with Genesys;
  • soliciting or attempting to solicit clients of Genesys; and
  • using confidential information of Genesys.

In 2006, before the restraint period had ended, Mr Miles decided he wanted to establish a business in competition with Genesys. He admitted to having, to this end, approached member firms.

The decision

The Court of Appeal held that the restraint was reasonable in light of Mr Miles's long-standing and well-established relationships with member firms. It was also relevant that Mr Miles had access to confidential information that he could use to target specific member firms to the detriment of Genesys.

The court emphasised that Mr Miles had obtained independent legal advice prior to entering into the deed of release and that he had even made amendments to it during negotiations.

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Employer fined for discriminatory conduct

In brief: The Federal Magistrates Court has imposed a penalty on an employer for breaching the prohibition on discrimination against employees for taking industrial action. Overseas Practitioner Fiona Robertson reports.

How does it affect you?

  • Employers should take care that they do not discriminate against employees involved in industrial action.
  • Discriminatory treatment can result in fines of up to $33,000.
Background

Several employees of Austral Bricks (Qld) Pty Ltd (Austral Bricks) were involved in taking protected industrial action. Austral Bricks offered Saturday overtime work to certain casual employees but did not offer it to three permanent employees who were involved in the industrial action. The CFMEU3 launched legal action against Austral Bricks4 on the basis that this treatment was discriminatory and in breach of section 448 of the Workplace Relations Act 1996 (Cth).

The decision

Austral Bricks admitted the breach, as there was a clear link between the lack of an offer of overtime and the employees' participation in the protected action.

The court imposed a $3300 fine, payable to the CFMEU, even though the breach was an isolated occasion affecting very few employees and with very limited consequences. The fine was at the lower end of the scale because the breach did not involve systematic or senior management conduct.

This result emphasises the importance of protected action as a legitimate bargaining strategy that cannot be used by either side of the negotiation to justify unfavourable treatment.

Footnotes
  1. Genesys Wealth Advisers Ltd v Miles [2008] NSWSC 802.
  2. Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25.
  3. Construction, Forestry, Mining and Energy Union.
  4. CFMEU v Austral Bricks (Qld) Pty Ltd [2009] FMCA 143.

Published 31 March 2009

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