HR Managers beware…

In a decision handed down last week (Cerin v ACI Operations Pty Ltd & Ors [2015] FCCA 1654), the Federal Circuit Court held that a human resources manager at bottle manufacturer ACI Operations (“ACI”) may have a penalty imposed on her personally for her role in dismissing an employee in breach of the National Employment Standards (the “NES”).

The manager gave the employee one month’s notice of termination of his employment rather than the five weeks’ he was entitled to under the NES (as an employee over the age of 45 who had been employed with ACI for over five years). The Court held that she was “involved” in ACI’s breach of the NES within the meaning of the Fair Work Act 2009 (Cth).

Whether a penalty (which could be up to $10,200) will be imposed against the manager will be determined at a later hearing.

The decision makes clear that human resources managers must have a thorough understanding of the employment law framework in which they operate if they are to protect not just their companies, but themselves, from the ramifications of getting it wrong.

High income threshold increases from $133,000 to $136,700

From 1 July 2015 the High Income Threshold will increase from $133,000 to $136,700. The maximum amount of compensation that an Applicant can be awarded will increase to $68,350.

Determining an employee’s earnings for the purposes of the High Income threshold

Pursuant to section 332 of the Fair Work Act 2009 (Cth) (FW Act) an employee’s earnings includes:

  • wages;
  • money that is applied or dealt with on their behalf (e.g salary sacrificing, additional superannuation); and
  • non-monetary benefits with an agreed value (e.g car, mobile phone etc).

An employee’s earnings does not include:

  • payments which cannot be determined in advance (e.g bonuses, commission etc);
  • reimbursements; or
  • superannuation contributions.

What does this mean for your business?

  • An employee earns more than the High Income Threshold and is not covered by an Enterprise Agreement or Modern Award will not be protected from unfair dismissal under the FW Act.
  • Employers should keep this figure in mind when conducting their annual remuneration reviews as employees previously not covered by unfair dismissal protections may now be covered as a result of the increase.
  • Employers should also take note of the definition for earnings when assessing if an employee is covered by the unfair dismissal protections in the FW Act. In particular employees who earn more than $136,700 may still be covered by unfair dismissal protections if their remuneration consists of:
    • bonuses or commission payments that can’t be determined in advance; or
    • a car allowance in circumstances where the vehicle is required to perform their job.

If you require advice or clarification, please call PCS on 02 8094 3100

Minding Your Own Business

Leave your personal problems at home. It’s one of those commonsense sayings that we assume everybody abides by. But what if there’s an employee in your organisation that just can’t help wheeling their cabin sized emotional baggage to work?

How badly can personal issues affect an Employer? 

In a recent unfair dismissal case[1], a manager going through a divorce was justifiably terminated after his circumstances began to adversely affect his work performance. Not only would the manager bring his own laptop to work so that he could prepare his divorce case during business hours, but he allowed his personal issues to impact his employer through his:

  • unresponsiveness to his clients and colleagues; 
  • lack of leadership and guidance as a manager;
  • threatening and erratic behaviour;
  • poor and tardy attendance to work; and
  • bullying claim which was lodged after his manager attempted to discuss performance concerns with him.

The manager took things a step further by drawing the employer into his personal issues by sending his ex-wife abusive messages from his Linkedin account bearing his employer’s name. The messages came to the employer’s attention when the ex-wife called head office to complain about the threatening messages.

The manager’s employment was terminated upon the advice of an independent investigator that concluded his conduct had caused an irreparable breakdown in the employment relationship. The manager made an application for unfair dismissal, however the Fair Work Commission sided with the employer that his poor conduct justified termination.

But it’s none of my business

As demonstrated in the above case, an employee whose focus is disrupted by personal problems can have an impact on an employer that is greater than a just a downturn in productivity. Whether or not the allegations were proven, the Applicant, as a manager, failed to conduct himself in a “cooperative and civil way” or show the “desired suite of managerial traits”. 

Employers should not be afraid to take control in circumstances where someone’s private life interferes with their work. Sometimes an employee’s personal circumstances will necessitate leniency but there is a limit on conduct that an employer is expected to ignore.

What can you do?

Mismanaging employees that are dealing with personal issues can increase the risk of an employer facing an adverse action, bullying or unfair dismissal claim. Here are our top five tips for striking the balance between being a compassionate but fair employer:

  • Take preventative action: If you notice someone struggling in the workplace, see if you can point them in direction of the help they might need. Provide your employees with a safe outlet to address their personal challenges by offering Employee Assistance Programs.
  • Speak up: Don’t let your silence be construed as tolerance if an employee engages in behaviour that is inconsistent with the expectations of your organisation. Convene a meeting as a matter of urgency to bring the concerns to a head and propose a resolution.
  • Take a breather: Perhaps the employee and the organisation may benefit from some time apart to deal with the issues at hand. Noting that only in particular circumstances can an employee be directed not to attend work, consider granting a period of leave to the employee if they request it. 
  • Investigate where necessary: Lack of procedural fairness can be an employer’s undoing in termination disputes. Investigate grievances that involve the troubled employee, ensuring each party has the opportunity to have any mitigating circumstances heard. Consider using an independent third party for guaranteed impartiality.
  • Set the scene: If an employee is commits serious breaches of their obligations to their employer, a written warning or dismissal may be warranted. Make sure you include sufficient detail and context in your warning or termination letter to make clear to the employee (and potentially the Fair Work Commission) why you have taken disciplinary action.

Industrial Action by government departments to delay travellers and visa processing

Protected industrial action commenced this week by employees of the Department of Immigration and Border Protection (DIBP) and the Australian Customs and Border Protection Service (Customs) and will continue until Friday 26 June 2015, affecting various airports and visa processing.

As a leading provider of employment and migration law services, PCS is keen to ensure that employers and employees alike are aware of and prepared to deal with the potential implications of this industrial action personally and for their organisations over the coming period.

Background

Employees of DIBP and Customs have this week commenced industrial action in connection with the negotiation of the terms and conditions of employment under their proposed new enterprise agreement.

This industrial action will take the form of half day strikes.

Various airports will likely be affected by the strikes, at the locations and dates provided below:

  • 18 June 2015 – Sydney, Perth and Darwin
  • 24 June 2015 – Brisbane and Gold Coast
  • 25 June 2015 – Melbourne

How will this affect you?

Employers

Employers may be affected by delays arising from the industrial action in a number of ways, including:

  • possible delays in processing visa applications for existing employees or newly recruited expats;
  • visitors, including but not limited to clients, may have their travel schedules disrupted, resulting in disruption to the employer’s business; and
  • employers may face the need to exercise a degree of flexibility with arrival dates for employees or make arrangements to enable employees to work remotely if they are likely to be impacted by the strikes.

We recommend that employers take steps to understand, and be prepared for, the potential impact of these delays on their employees, visitors and their business operations over the coming period. This may include drafting communications for employees and others who may be impacted by the delays, informing them of the potential delays and encouraging them to ensure there is flexibility in their travel plans and the scheduling of any other work-related commitments to accommodate any delays.

Employees

Employees who have applied for a visa should plan accordingly for the delays in the coming weeks as this may impact on their ability to commence work, undertake travel (in-bound or out-bound) or change visa status.

Current employees who are required to undertake travel in connection with their work should similarly consider the potential impact of the delays and plan accordingly.

What can PCS do for you?

PCS can assist you in any number of ways in managing the potential impact of the delays arising from the industrial action by DIBP and Customs employees, from drafting communications with employees to providing advice on the potential implications of delays in the processing of visas.

If you would like any advice in respect of the above, please contact us.

Go Home! Managing Sick Employees

With the weather cooling down, the number of sicknesses in the workplace is increasing. When an employee presents at work sick, not only are they more likely to spread their illness, but they are also costing the employer money. In 2009/2010, the total cost of presenteeism (an employee coming to work sick) to the Australian economy was estimated to be $34.1 billion. On average, 6.5 working days of productivity are lost per employee annually as a result of presenteeism.

So what can an employer do in the circumstances when an employee comes to work sick? These Q+A’s look at how to manage sick employees and some of the key issues that employers must watch out for.

How much sick leave are employees legally allowed?

Under the National Employment Standards in the Fair Work Act 2009 (Cth) (“FW Act”), full time employees are entitled to 10 days’ paid personal leave and part-time employees are entitled to pro rata of 10 days’ each year depending on their hours of work. Casual employees are excluded from paid personal leave. Employees may be awarded more generous sick leave entitlements under their award, enterprise agreement or employment contract. 

What are the notice requirements in taking that sick leave?

If a permanent employee wishes to take personal leave, the FW Act provides that notice must be provided as soon as practicable setting out the expected period of leave. Notice can be given before or after the taking of the leave. When an employee takes personal leave, an employer can request evidence that would satisfy a reasonable person, such as a medical certificate or statutory declaration that sets out the reason for the leave taken. Awards and enterprise agreements may contain provisions about the type of evidence required.

Do employers have any obligations under any Work Health and Safety legislation?

Employers have a duty of care under the Work Health and Safety Act 2011 (NSW) (“WHS Act”) to ensure, so far as reasonably practicable, the health and safety of workers. Similar provisions can be found in corresponding work health and safety legislation around Australia. Conversely, workers under the WHS Act have a duty to take reasonable care for their own health and safety, and take reasonable care that their acts and omissions do not adversely affect the health and safety of other persons. They must also comply with reasonable instructions and cooperate with policies and procedures given by their employer that have been notified to the employee. 

In these circumstances, if an employer reasonably suspects that the employee is posing a health risk to other employees, for example, if the employee has signs of a contagious disease such as chicken pox, the employer may consider it necessary to ask the employee to obtain a medical certificate indicating whether or not the employee is fit for work.

Best Practice Tips for Employers

  • Setting up an organisational culture which supports employees in the taking of personal leave in appropriate circumstances will avoid the spread of sickness to other employees.
  • Creating a workplace sick leave policy and establishing expectations around the taking of sick leave. Employees must be aware of any notice requirements around the taking of sick leave and any expectations that employers have regarding coming to work sick or leaving work early due to sickness. This will avoid employees coming to work sick due to any confusion about who to speak to, what they need to do and what they are entitled to in the event that they are sick.
  • Including a clause in an employee’s employment contract acknowledging that they may be required to attend a medical examination in relation to their fitness for work.
  • Focusing on health and well-being in the workplace, including offering wellness programs, such as subsidised gym memberships and flu vaccinations.

FWC hands down decision on annual leave

Yesterday, the Fair Work Commission (the “FWC”) handed down its award review decision on annual leave with a number of implications for employers.

Most importantly, the FWC has determined that a model term on cashing out of annual leave will be inserted into all modern awards. The Fair Work Act 2009 (Cth) has allowed for such terms since 2009 and they have been a common feature of enterprise agreements.

The model term will allow the cashing out of an award-covered employee’s annual leave, subject to four safeguards consistent with and expanding upon the minimum safeguards provided for by the FW Act:

  • maximum of two weeks’ paid annual leave can be cashed out in any 12 month period (subject to the requirement of the FW Act that an employee cannot be left with less than four weeks’ accrued annual leave following the cashing out);
  • employers must keep records of any agreement relating to cashing out annual leave and its content;
  • agreements to cash out annual leave involving employees under 18 years of age must be signed by the employee’s parent or guardian; and
  • the model term will be followed by notes drawing attention to the general protections provisions of the FW Act with respect to undue employer influence and misrepresentation of employee rights.

The decision also covered a number of other issues, including:

  • excessive leave: a model term has been drafted which will allow employers, in certain circumstances, to direct an employee to take annual leave if the employee has accrued more than six weeks’ annual leave;
  • close down: the FWC has rejected inserting a model term into 65 modern awards which would have allowed employers to shut down their organisations and require annual leave to be taken at certain times (for example, during business turndown); and
  • purchased leave: the FWC has recognised an interest in “purchased leave” (whereby an employee chooses to forego wages in return for receiving a corresponding period of leave) and will begin work on a discussion paper with respect to this issue.

Discretionary bonus not so discretionary

Employers have to be very careful when implementing their discretionary performance based bonus systems if they do not want them to become an entitlement. Even when a matrix of employment documents “have been prepared with a high degree of technical drafting skill and diligence”, it is possible that aspects which are intended to be absolutely discretionary will be found to be contractually binding.

In the recent case of Russo v Westpac Banking Corporation [2015] FCCA 1086, the Federal Circuit Court of Australia (the “Court”) determined that Mr Russo (the “Plaintiff”) was entitled to a “discretionary” bonus as Westpac (the “Defendant”) breached a term in his contract which read:

“If your employment with Westpac is terminated on the basis of redundancy, your entitlements will be determined in accordance with the more favourable to you of any applicable industrial instrument or a relevant Westpac policy or procedure in accordance with the terms and conditions of that industrial instrument or policy.”

The Plaintiff had participated in a “discretionary” bonus scheme in which the payment of bonuses was tied to a performance appraisal scheme. In 2008/2009 and 2009/2010 the Plaintiff was awarded a bonus, being $70,000 in 2009/2010. In September 2011, the Plaintiff’s position was made redundant. He was not paid a bonus.

The Plaintiff argued that the Defendant had breached express and/or implied terms of his employment contract by failing to pay the bonus and also claimed under the Competition and Consumer Act 2010  (Cth) for misleading and deceptive conduct. The Defendant argued that the Plaintiff was not entitled to a bonus on his retrenchment because it was discretionary and non-contractual, and in any case, in the preceding year his performance had been downgraded to “needs development”. This was despite the Plaintiff ranking as “effective” for 70% of his overall performance up to his review.

In its decision the Court accepted that policies did not generally form part of the Plaintiff’s contract (due to a general term excluding them), the redundancy term had to be given effect as a contractual term for determining termination entitlements.

After giving consideration to the Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357 decision, which requires that discretion not to award a bonus must not be exercised capriciously, arbitrarily or unreasonably, the Court determined that the Plaintiff was in fact entitled to a bonus on his redundancy. This was because evidence showed that the Plaintiff’s manager had “confidently, and in some respects arrogantly” departed from the objectives of and policy behind the bonus plan. He had taken irrelevant considerations into account and failed to properly apply the policy.

The Plaintiff was awarded a $70,000 bonus based on the bonus he had received in the preceding year.

Lessons for Employers

Contract is king! If employers wish not to be bound by their discretionary bonus schemes, this must be made clear in the contract with no exceptions. Care must be taken that a specific term does not override a more general exclusionary term.

Silverbrook remains good law–contractual discretions can be exercised arbitrarily, capriciously or unreasonably.

If a policy requires particular factors to be considered, they should be.

Whether discretion is exercised arbitrarily will depend on how it is framed. The broader the discretion, the broader the range of decisions that may validly be made within it.

Handling Difficult Conversations

Are managers averse to conflict? Do we avoid having difficult conversations with underperforming employees because we are worried about the consequences? Do managers even know how to have these difficult conversations? What happens when employees feel or claim to be bullied as a result of these conversations? Is there any such thing as a “rule book” when it comes to handling difficult conversations at work?

Joydeep Hor, PCS’s Managing Principal, has been assisting leaders at all levels of organisations for the last 20 years on these issues. He addressed these critical issues in the webinar below.