How long is too long? When the job can no longer be done by an injured worker

Therese MacDermott, Consultant

A common response to a situation when a worker is injured is to assign the worker to a different role for a designated period, often referred to as “light” or “suitable” duties, while he or she is recovering from an injury. This response is generally dictated by the requirements of workers’ compensation legislation and may also be undertaken to fulfil an employer’s obligations under anti-discrimination legislation. However, employers can feel pressured to retain an injured worker in an alternative role long after it becomes clear that the worker cannot return to his or her pre-existing duties, and after the requirements of workers’ compensation laws are satisfied.

In this article, we consider what obligations an employer must satisfy under disability discrimination legislation, in order to terminate an injured worker’s employment safely on the basis that he or she is unable to perform the inherent requirements of the particular work, as they cannot return to their pre-injury duties, even with reasonable adjustments. While an injured worker may seek to be retained permanently in a re-assigned role, this is not what the legislative framework requires. What is important is the capacity to fulfil the duties for which the injured work was employed, albeit with reasonable adjustments, rather than characterising the alternative role itself as a reasonable adjustment.

Assisting a worker to return to their original role

Courts have found the requirements of the Disability Discrimination Act 1992 (Cth) (“DDA”) to make reasonable adjustments are directed towards alterations to the job or other modifications for the person, which are designed to facilitate the person being able to do the work that he or she was employed to do.

An illustration of this point is a recent case1 where a worker injured his hand at work and subsequently undertook suitable duties on a part-time basis, but was ultimately found to be unfit to perform his pre-injury duties as a “fitter”. The medical evidence in this case was to the effect that the injured worker could no longer perform the “fitter” duties and could only return to work for permanently modified duties, such as office work. The court found that the employer’s obligations arising from the DDA in this context were to make reasonable adjustments to the injured worker’s situation so that he could continue to work in the position for which he was employed, that is the “fitter” position. It was not to find him other employment in an alternative role.

One qualification to this point is that if an employer has a history of allowing injured workers to remain long term in alternative roles, the application of the strict letter of the law may raise questions about the reasonableness of this response. If the injured worker remains in the alternative role long-term, this could give rise to a situation where it is taken to be the substantive role going forward against which capacity is assessed. In such circumstances, it is generally advisable not to leave the matter unresolved indefinitely, but to make a clear decision regarding any incapacity to perform the pre-injury role. A new contract to employ the person in the alternative role can then be entered into if that is negotiated between the parties. Employers also need to be mindful of any significant differences in salary and entitlements between the two roles, and negotiate contractual terms to reflect this.

Making appropriate enquiries

If an employer is contemplating terminating an injured worker’s employment based on his or her inability to perform the inherent requirements of the job, it is incumbent on the employer to make enquiries about a worker’s capacity at that point in time. Generally, this requires a consideration of the feasibility of a return to work (including the possibility of a return to work in a reduced form in the short term), with a view to the worker returning to the pre-injury position in the foreseeable future.

The type of information relevant to these inquiries includes medical reports provided by the worker and any other reports that may have been obtained by the employer from an insurer or rehabilitation provider. Where this information is insufficient to enable the employer to make a fully informed decision, it may be appropriate, for example, to obtain the consent of the worker to release medical information from their treating doctor or specialist. An alternative approach is to request the worker to attend a medical assessment arranged and paid for by the employer. An injured worker is required to co-operate with such a request.

Consultation

A failure to give the injured worker an opportunity to consider or propose any adjustments prior to a termination of employment can impact on how an assessment of the capacity of the individual is viewed by a court or tribunal, particularly in unfair dismissal cases. The importance of consultation with an injured worker is highlighted in a recent Fair Work Commission decision,2 where it was found that a nurse had been unfairly dismissed following a non-work related injury. The Commissioner stated:

“…I am satisfied that the decision to terminate Ms Maharaj’s employment was unreasonable. Northern Health may well have been able to satisfy itself as to the correctness or otherwise of its position had it undertaken even the most basic of investigation with Ms Maharaj. It did not do so and there is nothing before the Commission that suggests that Ms Maharaj could not have returned to work, to her pre-injury duties on a graduated return to work plan.”

Timing

The appropriate time to consider a worker’s ability to perform the pre-injury role is at the time that termination is being considered. Workers’ compensation legislation in each state and territory also set timeframes for various matters, such as how long alternative duties need to be provided, and need to be factored into managing a return to work.

Another important timing factor is in relation to timeframes for a return to full capacity. If a medical report indicates that an injured worker is likely to return to full capacity to enable him or her to undertake their pre-existing duties within a nominated timeframe, then an employer will need to work with that assessment, including in some cases allowing access to different forms of leave, such as unpaid leave if necessary. This is different to a situation where the prognosis of a return to full capacity in the foreseeable future is poor. In this case, the argument that a person is not able to perform the inherent requirements of the job is strengthened.

Key takeaways

  • The duties undertaken in the pre-injury role are crucial to the assessment of incapacity.
  • Act on medical information and obtain further reports to enable informed decision-making.
  • Employing a worker permanently in an alternative role is not required, but may be an option that an employer is prepared to consider.
  • Develop a comprehensive strategy as legal challenges may arise through a number of different avenues, including compliance with workers’ compensation obligations, disability discrimination and unfair dismissal.

Just the facts: Mistakes to avoid when conducting an investigation

Kathryn Dent, Director

In our June webinar, cognisant of the fact that many HR Practitioners are increasingly involved with or conducting investigations, I highlighted the mistakes to avoid when conducting an investigation to ensure that the process and the outcomes are fair, transparent, legally compliant and defensible.

It is difficult to recommend a model investigation process because the process of an investigation will necessarily depend on the allegations, the participants and the workplace. However, avoiding the mistakes set out below should steer organisations in the right direction to ensuring that their findings and action taken in response to the findings, are solid and defensible.

My “top 10” mistakes, and how to avoid them, are reproduced here.

1.  Not following the process

Fortunately, it is rare to find an organisation that doesn’t have a grievance or complaint policy (and those that do not have one should consider drafting and implementing one as a priority).

Policies vary from organisation to organisation so it is important to be familiar with what is required once the complaint or grievance is received. Whilst a policy may not be contractual in nature (the best policies aren’t), they are there to provide consistency of approach and security to employees and to that extent compliance with them is highly advisable.

Generally, policies have a multi-step approach, starting with internal resolution before the matter is escalated. The best policies avoid mandating that each step must be followed (sometimes this is not appropriate given the identity of the parties involved), reserve discretion and afford flexibility to cater for different circumstances. Importantly, the policies should not commit the organisation to commencing and concluding an investigation within a set timeframe. Instead, a general commitment to expediency should suffice, as a means of reassuring the parties.

If you need to deviate from the process set out in the policy, make sure you have sound reasons for doing so and that you consult with those involved in the investigation about this to obtain their consent. This minimises the risk of technical objections and challenges on this point at a later date.

2.  When failing to plan is planning to fail

Once you have decided to investigate, which can sometimes be a challenging step in itself (think about the “off the record” or “confidential chats” employees want to have, usually for fear of retribution), the next phase is planning it. Failing to plan an investigation can affect the outcome and defensibility of findings. For example, it could lead to witnesses and evidence being overlooked, policies not being complied with, insufficient support, an exacerbation of health issues caused by the behaviour the subject of the investigation, an aggravation or repetition of behaviour and further damage to working relationships. Planning will help to mitigate these risks. Planning involves:

  • Identifying witnesses, additional to the complainant and respondent
    • This may or may not be capable of being done early depending on how comprehensive the initial complaint or grievance is.
    • Only interview those who are likely to have knowledge of the matters or who have been identified as potential witnesses by the complainant or the respondent.
  • Working out the order of interviews
    • Generally, interview the complainant first and then the respondent, with any witnesses last. Remember that any new material from witnesses that could affect the findings may necessitate a further interview to put that material to the person (at least of the respondent).
    • Whether respondent or witnesses follow the complainant may depend on:
      • The extent of confidentiality that is required to preserve the integrity of evidence including the respondent’s answers; and
      • How likely it is that the respondent will admit to the allegations and obviate the need for interviewing the witnesses.
  • Working out the mechanics of the interviews
    • Where will they be held? Away from the workplace to protect confidentiality?
    • How will they be recorded? Audio recording requires consent of the party being interviewed. If you are transcribing by hand or recording digitally on an electronic device, best practice dictates that the written statement should be signed.
    • When will they be conducted?
    • How long is each interview likely to take?
  • Status quo
  • Whether or not the parties should remain in the workplace is an important consideration to minimise further damage to workplace relationships or potential health-related issues.
  • There is also the question of whether to suspend the alleged wrongdoer, to avoid a continuation of the behaviour in question and/or victimisation. Suspension on full pay is often sanctioned for cases of serious misconduct and is made easier if there is a clause in the employment contract permitting such an action.
  • Selecting the investigator is also part of the process and leads into a discussion of the next mistake.

3.  Not choosing the right investigator

Remember there are a variety of types of investigators whose job it is to hear the alleged facts and complaint, obtain responses, marshall evidence, assess it on the balance of probabilities and make findings.

The selection of an investigator will depend on the issues at stake (for example, are they potentially press-worthy and reputationdamaging if made public? Could they result in litigation? Would a lawyer be a better choice in order to potentially attract legal professional privilege and preserve confidentiality?)

The selection will also depend on resources (Can the organisation spare an internal resource being devoted to hours of interviews? Does the internal investigator have sufficient experience? Could the internal investigator be accused of bias if they have had dealings with the participants in the investigation?).

4.  Investigator as decision maker

While the investigator’s primary responsibility is to determine the truth of the allegations as far as he or she can, the investigator should also be conscious to avoid acting in a way which may lead to challenges to his or her findings.

On this basis, it would be a mistake to have an investigator as decision-maker on anything other than very minor matters. If the findings could lead to a termination of employment, then separating the investigation function from the decision-making function is prudent. An “independent” decision maker can review the report and accept or reject the findings and then determine the most appropriate course of action without the added pressure of having to defend the process and course they adopted, which may happen if they were the investigator.

5.  Relying on “untested” information

Information should be tested as far as possible. If untested information is going to be relied on, the investigator should be able to justify why that reliance was reasonable in the circumstances.

For example, it would be a mistake to accept as fact information presented by the complainant or witness if there was a means to test it (for example if a document existed which would verify the information presented or event or if a third party witnessed it).

6.  Not knowing the role of a support person

Within the unfair dismissal regime industrial tribunals may find a termination to be harsh, unjust or unreasonable if the unfair dismissal applicant was unreasonably refused the opportunity of having a support person present during any discussions relating to dismissal.

The case law which has developed in this area has clarified that a support person’s role is not that of an advocate or representative, but is limited to assisting the relevant employee.

On this basis an investigator has the right to caution or silence a vocal or obstructive support person or, in extreme cases, suspend or terminate the interview.

7.  No logical order

The order of interviews will help ensure the investigation runs smoothly and expeditiously, the latter being important to preservation of confidentiality, protection of participants, potential restoration of the relationship or timely disciplinary action at worst.

Whilst it is not fatal to have to reinterview witnesses, having an order to the process will minimise this potential. A logical order means that all allegations or accounts can be put to a person in the one interview, and this is usually best achieved if the order of interviewees starts with those who know the most. This can also flush out additional interviewees or other evidence.

8.  Blurring the investigation and the disciplinary response

If you have followed the recommendation to separate the roles of investigator and decisionmaker, then this potential blurring is less likely to occur.

The disciplinary process should be separate and distinct from the investigation. The disciplinary process is about identifying what action is appropriate based on the findings and other relevant material (such as an employee’s personal circumstances and other extenuating factors). At its most simple, the disciplinary process starts when the investigation findings are accepted and should be embarked on in a manner that is procedurally fair. Procedural fairness can be dictated by applicable contractual obligations, policies or procedures. It also arises from the general proposition that any proposed disciplinary action should be put to the employee, a response obtained and consideration given to that response (relevant to defending an unfair dismissal).

It is appropriate to warn the employee prior to the meeting of the potential for dismissal, indicate that all circumstances will be taken into account, and allow a support person to be present.

9.  Not dealing with the findings and implementing recommendations (if there are any)

There are several reasons why it is a mistake to not deal with findings and/or not to implement recommendations.

Inaction may:

  • be seen as excusing unacceptable workplace behaviour, thereby prejudicing the ability to discipline other employees for similar behaviour in the future;
  • adversely impact staff morale and productivity, and at worst may lead to staff turnover or inability to attract new staff;
  • undermine the integrity of the complaint or grievance procedure and as a consequence, employees’ confidence in invoking it;
  • have health and safety implications if a person continues to engage in bullying or harassing behaviour;
  • restrict an employer’s ability to mount a defence, ie making it difficult to demonstrate it took all reasonable steps to prevent any unlawful conduct.

10.  Not learning from mistakes

The final takeaway is to review the investigation once it is completed. Were there lessons to be learned? What were they? For example:

  • Was the relevant process easy to follow?
  • Were employees able to access and rely on the policy, or were there impediments? Can those impediments be eradicated and how?
  • Were there any additional matters raised during the investigation that require attention by way of unaddressed behaviours, non-compliance with policies, flaws in processes, gaps in policies, other breaches?
  • Was confidentiality and non-victimisation maintained or should any potential breaches be separately investigated and disciplined?
  • Has a systemic issue been identified that requires broader investigation or rectification?

My house, my rules: The “pros and cons” of workplace policies

Sam Cahill, Associate

It is common for employers in Australia to have a suite of workplace policies. Indeed, in recent years, it has become an unquestioned assumption that employers should have written policies concerning a range of workplace issues, including bullying and social media. In this article, we look at the advantages and disadvantages associated with workplace policies, and how an employer can maximise the effectiveness of its policy arrangements.

Benefits of Workplace Policies

Managing legal risks

An employer has various legal obligations with respect to work health and safety and the prevention of certain types of behaviour in the workplace, including discrimination, harassment and workplace bullying. An employer, and its senior officers, may face severe penalties for failing to comply with work health and safety duties. Similarly, an employer can be held vicariously liable for a failure to take appropriate steps to prevent, or respond to, unacceptable behaviour at work. Importantly, an employer can use workplace policies to:

  • provide staff with information concerning work health and safety;
  • explain the types of behaviour that are prohibited at work;
  • outline the disciplinary consequences for engaging in prohibited behaviour; and
  • establish processes for reporting behavioural or safety issues to management.

These policies can assist in managing the employer’s legal risks. By way of example, an employer may be able to rely on its policies to assist in demonstrating that:

  • it complied with its work health and safety obligations;
  • it took reasonable steps to prevent sexual harassment in the workplace, and is therefore not vicariously liable for such behaviour; and/or
  • it had grounds to dismiss an employee who had engaged in unacceptable behaviour in breach of a policy.

However, the mere existence of policies covering these issues will not be sufficient. An employer will need to demonstrate that the relevant policy had been actively promulgated and enforced. This was highlighted in a recent case involving racial vilification in the workplace, in which the Federal Circuit Court made the following assessment of the employer’s policies:

“The official position taken by [the employer] is wholly exemplary. The code of conduct and other documents exhibited to the Court show that, on its face, [the employer] is wholly opposed to any form of racial or other unlawful harassment in employment. The difficulty, however, is that it is one thing to have these policies, no doubt sincerely embraced by the management of [the employer], but it is another to enforce them.”1

The employer in that case had failed to respond adequately to complaints of racist behaviour in the workplace, and thereby failed to enforce its policies regarding racial vilification. As a result, the Court found that the employer was vicariously liable for the unlawful conduct of its employees.

Clarifying expectations and ensuring consistency

Policies can be used to provide employees with clarification regarding the employer’s expectations. By way of example, an employer may have policies regarding appropriate workplace attire and attendance at work. Used in this way, workplace policies can be an effective method of delivering instructions to an employer’s entire workforce. They can also provide a basis for disciplinary action against employees who fail to comply with these instructions.

Policies can also be used to provide guidance to managers, and thereby ensure consistency of decision-making across the organisation. By way of example, a policy may provide guidance on:

  • how and when an employee can be required to provide medical evidence in respect of a period of personal leave;
  • how and when an employee may be issued with a formal warning for misconduct or unsatisfactory performance; and
  • when the employer will provide support to an employee undertaking further study.

Policies of this kind may be especially helpful in organisations where managers are required to make decisions regarding employment issues without assistance from human resources practitioners.

Detriments of Workplace Policies

Limiting employer’s discretion

An employer will often have a significant amount of discretion when issuing instructions to employees and managing issues in the workplace (provided the employer complies with the relevant laws). For example, an employer may adopt one of a number of approaches when responding to complaints made by an employee, or raising concerns regarding an employee’s performance. However, an employer may have a policy that restricts this discretion by prescribing certain requirements, such as a requirement to:

  • provide an employee with a certain amount of notice of a disciplinary meeting;
  • provide an employee with written information regarding an allegation or investigation;
  • complete a workplace investigation within a prescribed period of time; or • provide an employee with a certain number of warnings before terminating his or her employment.

Given the importance of maintaining an employer’s flexibility when dealing with employment issues, we generally recommend that employers refrain from introducing policies of this kind or that policies which do cover these issues retain a level of flexibility within which discretion can be exercised and the consequences for an employer of noncompliance are less onerous.

Legal risk associated with failure to comply

An employer may face legal action from employees if it fails to comply with its own policies. The main avenue of legal redress is for an employee to allege that the policy in question was incorporated into his or her contract of employment, meaning that a breach of the policy amounts to a breach of contract for which (unlimited) damages may be awarded.

Australian courts have recently considered this issue in the following scenarios:

  • An employee’s contract of employment contained a promise to “abide by all Company Policies and Practices currently in place, any alterations made to them, and any new ones introduced”.2 The employer in question had a policy setting out generous redundancy entitlements, but refused to follow this policy in respect of the employee.
  • An employee’s letter of engagement provided that the employer’s policies “are to be observed at all times.” 3 The employer in question had a “Workplace Harassment and Discrimination Policy”, which stated that the company would “handle complaints promptly, with confidentiality, impartiality and with sensitivity to the complainant’s needs”. The company failed to do so in respect of a complaint made by the employee.
  • An employee was required to sign a policy document titled “Working with Us”, which provided that the company would “take every practicable step to provide and maintain a safe and healthy work environment for all people”. 4 The employee argued that the employer breached this policy by allowing him to be bullied at work.

In each of these scenarios, the court found that the promises contained in the employer’s policy were incorporated into the employee’s contract of employment, and were therefore enforceable against the employer under contract law.

Conversely, in a recent High Court decision, the Commonwealth Bank avoided being held liable for failing to follow its redundancy policy as the documentation made it clear that processes outlined in the policy, such as those dealing with redeployment, did not give rise to a contractual entitlement.5

Key takeaways

  • Regularly evaluate whether your organisation’s current policies are necessary and appropriate. In doing so, it is important to distinguish between policies that are designed to protect the organisation (eg, anti-discrimination, work health and safety, sexual harassment, confidential information) and other policies that relate to operational matters (eg, performance management, dress code, study leave). It may be that policies falling into the second category are unnecessary or inappropriate.
  • Ensure that your organisation’s employment contracts expressly state that its policies do not form part of the employee’s contract of employment (and that this wording is also reflected in the policies) and do not use language that conveys a promise to employees or imposes an obligation on the organisation.
  • Ensure that all staff in your organisation, and especially managers, understand and follow your organisation’s policies. This can be done by encouraging staff engagement and providing regular updates and training. Your organisation should strive to create a compelling narrative as to why its policies exist and why they must be followed.

Think Before You Act: Enforcing Restraints Strategically

 
Michael Starkey, Associate

It is a common misapprehension, particularly among employees, that post-employment restraints are rarely enforceable. In fact, provided they go no further than is reasonable and necessary to protect an employer’s “legitimate business interests”, courts are willing to uphold such restraints, which can prevent former employees from taking up work with a competitor, or soliciting or accepting work from the employer’s clients. However, post-employment restraints remain tricky for reasons broadly associated with two “stages”.

  1. Documentation and drafting: post-employment restraints must be properly documented and drafted so that they only impose obligations which are reasonable and necessary; and
  2. Circumstances of enforcement: when an employee’s employment comes to an end, a business needs to make a decision about whether or not it is worthwhile to seek to enforce the restraint.

This article looks at a number of considerations employers may wish to take into account when making decisions associated with these “stages”, in order to ensure that their use of post-employment restraints is practical, strategic and helps to protect their business interests.

Up-to-date Documentation

The surest way of protecting an employer’s legitimate business interests is including a properly drafted post-employment restraint in an up-to-date contract of employment that is applicable to an employee’s current position. While all employees have ongoing obligations in respect of an employer’s confidential information, attempting to enforce restraint obligations which are not documented, or which are only documented in an employment contract that is no longer relevant to the employee’s role, is a difficult task.

Employers who are concerned about an employee’s post-employment activities that may not be captured by a documented post-employment restraint should, nonetheless, seek legal advice in respect of their position. In some cases, it may be possible for an employer to obtain injunctive relief to prevent a former employee from wrongfully diverting or exploiting a business opportunity that arose as a consequence of the employee’s employment.1

Finally, employers should also ensure that any post-employment restraints contained in an employee’s contract are incorporated (or otherwise, not displaced) by any documentation entered into regarding an employee’s separation from the business (such as a deed of release).

Be Specific

One of the best ways of ensuring that a post-employment restraint is drafted so as to be enforceable is to be as specific as possible with respect to the activities the employee is restrained from undertaking. This is particularly so in the case of broad non-compete clauses which seek to prevent an employee from working with a competitor of the employer. As well as being reasonable in terms of geographical scope and duration, these clauses should take into account the nature of the employer’s business and the employee’s position within it.

In an illustrative case from 2016, an employer was unable to enforce a non-compete clause against its CFO because the way in which the clause was drafted would have prevented her from working for a competitor in any capacity (examples raised during proceedings included “check out operator” or “shelf stacker”). The court refused to enforce the clause because, if it did so, the CFO would be prevented from working in positions in which she could pose no “threat” to her former employer’s legitimate business interests if the clause was enforced.2

This is particularly important for employers outside of New South Wales. While courts in New South Wales are permitted by legislation to “read down” a restraint which would otherwise be too broad so as to make it enforceable, courts outside New South Wales do not have this ability.

Upholding Your End of the Bargain

An employer that wishes to enforce a post-employment restraint should be careful to “uphold its end of the bargain” during an employee’s employment. In one recent case,3 a leading accountancy firm was unable to prevent a senior accountant setting up in competition because it was found to have “repudiated” his employment contract. This “repudiation” came about because of certain changes the employer made to the employee’s role and bonus structure. These changes were said by the court to be so fundamental that they indicated that the employer no longer intended to be bound by the employment contract. In these circumstances, the employer was unable to rely on the post-employment restraints contained in it.

In any event, parties should always aim to ensure that they adhere to the terms of a contract. However, employers may take some reassurance from the fact that they may be able to enforce post-employment restraints, even if they have breached an employee’s contract, if their breach is not so fundamental as to constitute a repudiation of the contract. For example, in a 2015 case,4 another leading accountancy firm was able to enforce a post-employment restraint against a key executive whose business it had purchased despite not paying certain instalments of the purchase price for the business on time. This was (in part) because the late payment, while a breach of the contract, was not found to amount to a repudiation.

Considering the Reason for Termination

When considering whether, or to what extent, to enforce a post-employment restraint, employers should give consideration to the reason and circumstances in which an employee’s employment has come to an end. This may be relevant to both the potential risk a former employee poses to an employer’s business, and whether a court would be likely to hold that it is reasonable to restrain the employee from certain activities. For example, a court will be more likely to enforce a broad non-compete clause in circumstances in which an employee has suddenly resigned and is found to have taken copies of the employer’s confidential information upon doing so, than in circumstances in which an employee has been made involuntarily redundant.

This is because a court may conclude that it is “excessive” to prevent an employee from earning a living in their chosen field when the employee’s employment has come to an end at the employer’s initiative and through no fault of the employee. However, the reason an employee’s employment has come to an end is less likely to be a factor in whether an employer is able to enforce more “particularised” restraint provisions, for example, relating to the non-solicitation of clients, or an employer’s confidential information. This is because such provisions are likely to do no more than is necessary to protect an employer’s existing interests, without affecting an employee’s ability to earn a living.5

Finally, employers should bear in mind that the enforcement of post-employment restraints is not an “all or nothing” process. Often, employers and former employees are able to negotiate an agreed position without the need to resort to legal proceedings. Employers should consider the most appropriate strategy for enforcing restraints on a case-by-case basis, in consultation with their legal advisers.

Key takeaways

  1. While post-employment restraints should be used diligently and strategically, Courts have displayed a consistent willingness to enforce post-employment restraints which are well-documented and properly drafted, taking into account the nature of an employee’s role.
  2. Employers are far more likely to be able to rely on contractual post-employment restraints if they “uphold their end of the bargain” during an employee’s employment.
  3. When considering whether to invest in enforcing a post-employment restraint, employers should have regard to the circumstances of the termination of the employment in question. This may assist in an evaluation of what “threat” a former employee might pose, as well as the employer’s prospects of success.

Hook, line and sinker: Accessorial liability under the Fair Work regime

Bree Woodhouse, Senior Associate

Regulatory agencies such as the Fair Work Ombudsman (“FWO”) are increasingly interested in seeking to hold third parties accountable for their involvement in contraventions of the Fair Work Act 2009 (Cth) (the “FW Act”). Over the past few years’ prosecutions by the FWO have held various individuals accountable for their involvement in breaches of the FW Act. When reviewing non-compliance, the FWO has looked past the corporate veil to those who orchestrated the breaches, such as Directors.

This article looks at other categories of individuals who may be at risk of being found to be accessories to breaches by an employer, including external and internal advisers.

In the 2015/2016 financial year the FWO sought orders against accessories in 92% of the cases filed in court. This is an increase  from the prior year of only 72%.1 It is now emerging that the FWO is willing to scrutinise both internal and external advisers as to their involvement in breaches of the FW Act, and to hold them accountable for their part in the breaches.

In an October 2016 media release, Natalie James, of the FWO, stated that “We are prepared to use the accessorial liability provisions of the Fair Work Act, where it is in the public interest to hold anyone to account for their involvement in exploiting workers.”2

The degree of involvement

Under the FW Act, involvement in a contravention is treated in the same way as an actual contravention. The most common form of involvement relied on in enforcement proceedings is being “… knowingly concerned in or party to the contravention”. Turning a blind eye to conduct constituting a contravention can amount to “wilful blindness”, and thereby satisfy the knowledge aspect. Borrowing from the criminal law concept, “wilful blindness” can arise “where a person deliberately refrains from making enquiries because he prefers not to have the result, when he wilfully shuts his eyes for fear that he might learn the truth, he may for some purposes be treated as having the knowledge which he deliberately abstained from acquiring”.3

External advisers

External advisers such as accountants, business consultants and the “head office” of franchised companies are being closely watched by the FWO as to the degree of involvement that these third parties have in any non-compliance. If these external advisers have been ‘knowingly concerned in or party to the contravention’ or alternatively have engaged in ‘wilful blindness’ regarding their client’s obligations, the FWO may take action against these third-party businesses.

In a recent case the Federal Circuit Court of Australia found that an accountancy firm was liable as an accessory in its client’s underpayment of staff. In Fair Work Ombudsman v Blue Impression Pty Ltd the Court found that the Victorian accountancy firm Ezy Accounting 123 Pty Ltd (“Ezy”) had “deliberately shut its eyes” to breaches by its client when it provided bookkeeping services to its client Blue Impression.

The alleged underpayment by the employer (Blue Impression), which ran a Japanese fast- food outlet in Melbourne, related to the failure to pay the correct minimum hourly rate and related loadings and allowances in breach of the Fast Food Industry Award 2010. Ezy claimed that it was no more than a service provider and was dependent on the information provided to it by its client. It claimed it had no knowledge of the specific circumstances of any of the employees, their duties, their hours of work, the applicable penalty rates and loadings or the relevant modern award. The bookkeeper at Ezy tasked with providing the payroll and bookkeeping services to Blue Impression gave evidence that her role was limited to purely “data entry” and that she “did not think twice” about the information regarding hourly rates provided to her. When providing evidence to the court the bookkeeper stated: “It was not my business to know whether or not the rates complied with any award. That was a matter for the employer

The Court found that EZY “had at their fingertips all the necessary information that confirmed the failure to meet the Award obligations by the first respondent and nonetheless persisted with the maintenance of its (payroll) system with the inevitable result that the Award breaches occurred.”

Ezy faces penalties of up to $51,000 per breach for seven breaches of the FW Act, with the hearing regarding this penalty to be heard at a later date.

A further example of external third party liability is the case of Fair Work Ombudsman v Yogurberry World Square Pty Ltd. This is the first case in which a master franchisor has been found liable for the contraventions of its franchisees. When reviewing the matter the Court found widespread underpayments and imposed fines of $146,000 on the companies in the Yogurberry group, including the master franchisor and CL Group, the Yogurberry payroll company. The court found that the companies within the group had “knowledge of, and participated in, establishing rates of pay, making payment of wages, determining hours of work and dealing with employment related matters”, and therefore had the requisite knowledge of the contraventions.

Internal advisers

The category of internal advisers extends to those individuals who have knowledge of, and make decisions regarding, the working conditions of employees. By virtue of their positions, managers and others senior personnel have the authority to influence compliance regarding working conditions.

In Fair Work Ombudsman v Crystal Carwash Café Pty Ltd both the director and a manager of the company were found to be involved in the contraventions on the basis that they were responsible for setting the terms and conditions of employment, including wages and working hours, and were involved in breaching the obligation to pay minimum wages for the shifts employees worked. In addition to the back pay due to the employees, the company was fined $70,000 and the director and manager were each fined $10,000 for their role in the breaches.

In the cleaning services industry, in Fair Work Ombudsman v Jooine (Investment) Pty Ltd the Court considered how the company’s director (who was also the company’s internal workplace adviser) was knowingly involved in breaching the FW Act through the use of sham contracting. The matter involved the underpayment of a foreign worker who was engaged by the company in a sham contracting arrangement. Both the company and its director/internal workplace adviser were found liable for the contravention. The Court commented that the director/adviser who had prepared the contracting documents did so “with a deliberate intention to circumvent the legislative framework that has been put in place to protect vulnerable individuals from exploitation.” The Court further foreshadowed the need to deter advisers (internal and external) from assisting businesses evade their obligations under the FW Act: “The deterrent should also extend to the advisors who have facilitated the orchestration of these scams, to prevent their further proliferation of such advice and facilitation.”

A Human Resources Manager was found to have contravened the FW Act in Fair Work Ombudsman v Centennial Financial Services Pty Ltd & Ors. This was based on the HR Manager’s involvement in setting up sham contractor arrangements. The HR Manager was initially involved in employing the employees and preparing their contracts of employment.

At a later point in time the HR Manager terminated the contracts of employment and prepared “Consultant Agreements” to replace the contracts. The HR Manager did this on the instructions of the employer. The “Consultant Agreements” were to perform the same duties in the same positions, with the only substantive difference being that the individuals would be paid commission only rather than wages. The Court found that the knowledge of the terms of the employment agreement and the terms of the consultant agreement was sufficient for the HR Manager to be “knowingly concerned in” the contravention, and cautioned HR professionals with regards to following directions from “higher up” as not being a defence to breaches of the FW Act. In this context, the Court observed that “as Human Resources Manager, he should have been aware of, and at least attempted to give advice on, Centennial’s obligations under the WRA”.

Key takeaways

  1. Both internal and external advisers need to be mindful of the accuracy of information provided to them.
  2. Inquiries should be made to confirm compliance with minimum statutory obligations.
  3. Where the information gives rise to doubts, a strategy of deliberately refraining from inquiring presents significant risks.

Is that sexual harassment? Everything you wanted to know about sexual harassment but were too afraid to ask

Erin Lynch, Director

Employers focus a lot on sexual harassment. This is largely due to its prevalence and the impact it can have on an organisation. The Australian Human Rights Commission conducted a national survey in 2012 which found that, over the previous five year period, one in four women and one in six men were sexually harassed in the course of their employment.1

In terms of the impact on an organisation, sexual harassment can lead to:

  • emotional and physical damage;
  • a hostile working environment;
  • criminal liability;
  • vicarious liability; and
  • public scrutiny.

Given the focus on sexual harassment and our knowledge about its impact, what are the questions we have always wanted to ask, but were too afraid?

Appearance, dress and personality, do they lead to sexual harassment?

It is not uncommon in discussions around allegations of sexual harassment to hear phrases such as “did you see what he or she was wearing” or “but they never said they didn’t like it”.

The case law tells us that while a person’s appearance, dress, personality or conduct may be factors that are considered when allegations of sexual harassment arise, they will not ultimately determine whether a finding of sexual harassment is made. What needs to be determined is whether the perpetrator’s conduct amounted to sexual harassment. The legal elements of sexual harassment are not based on how the alleged harasser saw the situation or the factors that influenced his or her views.

For example, in Collins v Smith (Human Rights) [2015] VCAT 1029, an alleged change in the victim’s behaviour, and a suggestion that by continuing to place herself in close proximity to the perpetrator (including requesting meetings with him after hours), the victim had herself engaged in behaviour that was not consistent with the conduct she alleged against the perpetrator, were addressed. While accepted as relevant considerations, it was noted that “it is not appropriate to criticise the employee on the basis that she should have handled the sexual harassment better or should have stormed out of the room or escaped from the harasser earlier”.

Further, in Trolan v WD Gelle Insurance and Finance Brokers Pty Ltd [2014] NSWDC, the defendant’s submissions sought to criticise the plaintiff’s credit and focussed on what the Court considered to be irrelevant matters. These centred around the perpetrator’s after hours visits to the complainant’s home for business purposes and a suggestion that she was shown in photographs (taken at the home) to have been wearing a short dress well above knee height.

Can a customer or client sexually harass an employee?

If you walked into most workplaces today, you would find policies and procedures around discriminatory behaviour and sexual harassment by employees. But you are far less likely to find policies and procedures that address situations and potential liability where a customer or client acts in a discriminatory or harassing manner towards an organisation’s employees.

Under the Sex Discrimination Act 1984 (Cth) (“SD Act”) it is unlawful for any person to sexually harass another in the course of seeking or receiving the provision of goods, services or facilities from another person. This creates an obligation on a customer or client to refrain from sexually harassing employees. Additionally, employers who “cause, instruct, induce, aid or permit” another person to do an act that is unlawful under the SD Act may be found liable for the conduct.

This means that if an employer has knowledge of sexually harassing behaviour by a customer or client that affects their employees and does not take all reasonable steps to stop that behaviour, then it may be “permitting” the person to engage in acts that are unlawful under the SD Act.

Personal relationships at work – how should they be treated?

In recent months we have seen a number of media headlines commenting on office romances, for example, when the Seven Network sought an urgent court order in the New South Wales Supreme Court to stop a former executive assistant disclosing details about her relationship with the company’s CEO, and the QBE CEO forfeiting part of his STI bonus for delaying the disclosure of a personal relationship with an employee.

In the Seven Network proceedings, while much of the media attention (and also the comments on social media by the former executive assistant) centred around the office romance, there was no judicial comment about an employer’s role relating to work colleagues conducting a consensual, personal relationship.

However, what the Fair Work Commission has recently said about an employer’s ability to govern personal relationships at work is as follows:

“Employers cannot stop their employees forming romantic relationships. However, in certain circumstances, such relationships have the potential to create conflicts of interest. This is most obviously the case where a manager forms a romantic relationship with a subordinate especially where the manager directly supervises the subordinate. It is virtually impossible in such circumstances to avoid at the very least the perception that the manager will favour the subordinate with whom they are in a romantic relationship when it comes to issues such as performance appraisals, the allocation of work, and promotional opportunities”.

Further

“Employers have a reasonable expectation that employees will disclose any potential conflicts of interest, so that they can be appropriately managed”.

So, how do organisations ensure that personal relationships are adequately addressed and do not negatively impact upon the organisation and its working relationships?

While unlikely to be adopted in Australia, in the United States, it is common for employers
to require workers to disclose any intimate relationships with colleagues. This often involves entering into a written agreement commonly called a “love contract”. This “love contract” usually contains:

  • an acknowledgment that the relationship is consensual;
  • what happens if the relationship ceases to be consensual;
  • an acknowledgment that the employees are aware of the company’s policies on sexual harassment and workplace ethics; and
  • an understanding of the consequences of failure to follow those policies.

What is more commonplace in the Australian employment environment is a conflict of interest policy or something similar, which details occasions when personal relationships must be disclosed.When considering a conflict of interest policy and addressing personal relationships at work, employers need to address questions such as:

  • what constitutes an “office romance”?;
  • when must an “office romance” be disclosed?;
  • will the policy address “affairs”?;
  • what confidentiality mechanisms will be in place?;
  • what disciplinary action will be enforced (if any) for a failure to disclose?; and
  • is there going to be a blanket rule against “office romance”?

It seems that consideration of personal relationships by employers will become more and more prevalent as survey data shows that almost 85% of 18 – 29 years old would engage in a romantic relationship with a co-worker.2

Do I have an obligation to report?

Under section 316 of the Crimes Act 1900 (NSW) (“Crimes Act”) if a person has committed a “serious indictable offence”, and another person, who knows or believes that the offence has been committed and that he or she has information which might be of material assistance in securing the apprehension, prosecution or conviction of the offender, fails without reasonable excuse to bring that information to the attention of a member of the police force or other appropriate authority, that other person is liable to imprisonment for up to two years.

A serious indictable offence is one for which a person may be imprisoned for five years or more, for example, sexual assault. When considering sexual harassment, consideration must therefore be given to whether the organisation needs to bring findings of sexual harassment (that amount to sexual assault) to the attention of the police or other appropriate authority.

What is key to determining this obligation is having “knowledge or belief” that the offence has been committed. Belief is not defined by the Crimes Act, but has been considered to be
a state of mind which can be reached as the result of a mix of knowledge which an offender has come to possess, as well as suspicions and opinions which he or she has come to hold and conclusions which he or she has reached. It therefore follows that under section 316, what must be established is that the person actually came to hold the alleged belief. The obligation does not apply to mere suspicion of an offence.3

Key takeaways

  1. A person’s appearance, dress, personality or conduct are unlikely to be determining factors in a finding of sexual harassment.
  2. A customer or client has an obligation to refrain from sexually harassing employees.
  3. Employers who “cause, instruct, induce, aid or permit” another person (for example, a customer, client or employee) to do an act that is unlawful under the SD Act may be found liable for the conduct.
  4. Organisations will need to consider how they intend to address personal relationships at work as the prevalence of office romances continues to grow.
  5. When findings of sexual harassment are made, consider whether you may have an obligation to report the conduct to the police or another authority.

  1. Working without fear: Results of the 2012 sexual harassment national telephone survey, Australian Human Rights Commission, 2012
  2. Millennials More Likely to be Smitten with Superiors, Co-Workers, Workplace Options, 2012, http://www. workplaceoptions.com/polls/millennials-more-likely-to- be-smitten-with-superiors-co-workers-2/
  3. Wilson v Department of Public Prosecutions (NSW) [2016] NSWSC 1458

Good Cop and Bad Cop: How the Fair Work Ombudsman might engage with your business and tips for how to respond

Sam Cahill, Associate

The Fair Work Ombudsman (“FWO”) carries out a range of compliance and enforcement activities. In this article, we look at the different ways in which the FWO engages directly with employers and set out our tips for how employers should manage such an engagement.

What are the FWO’s areas of concern?

The FWO is responsible for bringing about compliance with various federal workplace laws. The key areas of concern for the FWO are:

  • the National Employment Standards, which includes entitlements such as annual leave, personal leave, parental leave, notice of termination and redundancy pay;
  • Modern Awards and Enterprise Agreements, which can include entitlements such as minimum rates of pay, penalty rates and rostering requirements; and
  • General Protections issues, including unlawful discrimination, sham contracting and coercion.

The FWO is less likely to be concerned about employment entitlements that are purely contractual, such as performance incentive payments.

What will trigger the attention of the FWO?

A common way for an employer to come to the attention of the FWO is for one of its employees to make a complaint. In the 2015- 16 financial year, the FWO received nearly 30,000 complaints of alleged non-compliance.1 However, it is not necessary for an employee to have made a complaint. The FWO may act on information received from other sources, such as media reports. It may also take an interest in an employer as part of an industry-wide compliance campaign.

Early intervention (FWO as Good Cop)

When a complaint is made to the FWO about an employer, or the FWO otherwise suspects that an employer has engaged in non-compliance, the FWO will generally begin by using an “early intervention” approach to resolve the dispute and/or bring about compliance with the relevant laws. This approach is characterised by an emphasis on education, conciliation and voluntary correction. It usually involves advising the parties on their rights and obligations and offering to act as a mediator where there is a dispute.

During this phase, the FWO relies on the parties to:

  • provide relevant information (records of hours worked, wages etc.);
  • attend discussions and consider options for resolutions (eg, mediation); and
  • take steps to resolve any compliance issues (eg, making backpayment and committing to take steps going forward).

This means that the FWO does not exercise its powers under the Fair Work Act 2009 (Cth) (“FW Act”) and parties are not legally compelled to cooperate or take any action.

The FWO considers that an “early intervention” approach is often successful in resolving workplace disputes and bringing about compliance. In 2015-16, the FWO conducted over 10,000 “early interventions”, resulting in the backpayment of over $4.3 million in wages.2

In the same period, the FWO finalised over 4,500 workplace disputes by mediation, resulting in the backpayment of over $7 million in wages.3

Investigation

Generally speaking, the FWO may decide to conduct an investigation where the available information suggests there is:

  • exploitation of vulnerable workers;
  • significant public interest or concern (e.g. gender discrimination);
  • blatant disregard for the law; and/or
  • an opportunity to provide an educative or deterrent effect.

The FWO has a range of investigation powers under the FW Act. Importantly, an inspector may enter a workplace without the permission of the employer or the occupant of the premises. While on the premises, the inspector may:

  • inspect any work, process or object;
  • require a person to tell them who has, or who
  • can access, a record or document;
  • require the person with access to a record or document to hand it over while the inspector is on the premises or within a specific timeframe;
  • inspect and make copies of any record or document kept on the premises (hardcopy or on computer); and
  • take samples of any goods or substances after informing the owner or other relevant person in charge of the goods or substances.

The exercise of these powers is subject to certain conditions and limitations. For example:

  • an inspector must not use force to enter the workplace or premises;
  • an inspector must show his or her identity card to the employer or the occupier of the premises;
  • an inspector must only interview a person if the person consents;
  • an inspector must reasonably believe that the FW Act applies to the work performed at the workplace, or that there are records at the premises that are relevant for compliance purposes; and
  • an inspector must enter the workplace or premises during working hours, unless the inspector believes that it is necessary for compliance purposes to enter outside of working hours.

FWO inspectors also have powers to require people to produce documents and provide their name and address.

The FWO expects that, during an investigation, all parties will:

  • always tell the truth;
  • fully disclose all relevant matters from the outset of the investigation;
  • provide relevant information as it comes to hand; and
  • respond in a timely manner to requests.

At the completion of an investigation, the FWO will provide the employer with a letter setting out its findings. This letter will also set out any steps that the FWO would like the parties to take, and any steps that it may intend on taking.

Enforcement (FWO as Bad Cop)

If the FWO is not satisfied with the outcome of the investigation phase, or if the FWO is concerned that the employer may engage in further non-compliance in the future, the FWO can use one of its enforcement options, including prosecution for breach of the FW Act.

(a)  Compliance Notices

A Compliance Notice is a written notice that legally requires a person to take certain steps to remedy a breach of workplace laws. Compliance Notices are typically issued where the FWO suspects that the employer will not voluntarily rectify an alleged breach.

In 2015–16, the FWO issued over 180 compliance notices.4 Failure to comply can result in financial penalties of up to $27,000 for a company and $5,400 for an individual.

(b) Enforceable Undertakings

Enforceable undertakings are legally-binding documents that set out an employer’s commitment to addressing contraventions and preventing future breaches. This can include:

  • back-payment of wages;
  • training sessions for managers;
  • independent wage audits; and
  • announcements to media.

An employer will usually enter an enforceable undertaking under the threat of prosecution. In 2015-16, over 40 employers entered enforceable undertakings with the FWO.

(c) Prosecution

The FWO will generally only take legal action in the most serious instances of non-compliance. Cases typically involve deliberate exploitation of vulnerable workers, refusal of an employer to cooperate with the FWO, or a significant history of non-compliance. In 2015-16, the FWO initiated 50 civil penalty litigations.5

Tips for engaging with the FWO

If the FWO seeks to engage with your business in relation to a compliance issue, we recommend you consider the following tips:

  • Don’t take it personally. It is not uncommon for management to take offence when contact is made by the FWO with the organisation. By not reacting defensively, you will be better able to develop an appropriate strategy for managing the engagement.
  • Ask yourself: Why is the FWO interested in our organisation? This will not only help you to resolve the immediate issue, but will also help you to understand what it was that resulted in the FWO’s interest in the first place.
  • Ask yourself: What is the FWO asking us to do? The FWO may be asking your organisation to take some action voluntarily, in which case there may be some flexibility about how and when these acts are done. However, if the FWO is exercising its powers under the FW Act, you need to be mindful of the consequence of any non-compliance.
  • Don’t be afraid to play by the rules. You should not be afraid to request that the FWO only exercises its powers in accordance with the FW Act. For example, you can request that an FWO inspector present his or her identity card before entering the workplace. At the same time, do not attempt to interfere with or prevent the lawful exercise of powers by the FWO. If you are not sure how the rules apply, you should consider seeking legal advice.
  • Keep the ball rolling. Do not seek to resist or delay when you are required to deal with the FWO. You should develop a strategy early on for managing the engagement, involving planned and active compliance, rather than ad hoc appeasement.
  • Don’t defend the indefensible. If your organisation has issues with compliance, you should move to address these issues as soon as possible. It is clear from the way the FWO exercises its powers that organisations that assist the FWO and rectify any issues are dealt with more favourably in the long term. On the other hand, organisations that attempt to conceal and obfuscate are more likely to end up feeling the full force of the law.

  1. Fair Work Ombudsman, Annual Report 2015-16, at p. 17.
  2. Fair Work Ombudsman, Annual Report 2015-16, at p. 18.
  3. Fair Work Ombudsman, Annual Report 2015-16, at p. 18.
  4. Fair Work Ombudsman, Annual Report 2015-16, at p. 21.
  5. Fair Work Ombudsman, Annual Report 2015-16, at p. 22.

A New Gig for the Fair Work Commission?

David Weiler, Associate

It was recently reported that the gig-economy giant, Airtasker, had agreed to explore the option of a dispute resolution process overseen by the Fair Work Commission (“FWC”). This is an important step in coming to terms with how employment regulation should respond to an industry that allows users to access on-demand the services of individuals whose employment status and the basic conditions under which they work is uncertain.

The details of the proposal are not yet clear, but according to news sources, President Ross and Senior Deputy President Sams of the FWC along with Unions NSW and Airtasker have entered into a heads of agreement with respect to issues being faced in these types of work arrangements.

According to Unions NSW, the agreement commits Airtasker to:

  • ensure that its recommended rates of pay are above award rates;
  • offer workers using the platform an insurance product similar to workers’ compensation to protect against workplace injuries and illnesses;
  • work with Unions NSW and the FWC to introduce a dispute resolution process; and
  • implement “best practice” WHS/OHS standards to protect workers and consumers using the platform.

In response to the announcement by Unions NSW, Airtasker has clarified that it already has an existing dispute resolution process operated by a third party provider, and that the potential involvement of the FWC in such a process is only at a “discussion stage”. Airtasker did however take steps to amend its online pay guide for various tasks to reflect, at a minimum, award rates for such work. This willingness to work with employee associations and address concerns about the pay and conditions of workers is a significant deviation from the practices of other operators in the gig-economy.

Background

Founded in 2012, Airtasker is an Australian based online company that offers a platform for a user (a “Job Poster”) to have various jobs performed by an individual (“Worker”), including specialised tasks performed by tradespeople.

It is free to post on the platform, where the Job Poster describes the task and indicates a budget for the work. Workers then post comments with regards to that task and can “bid” on the work, often indicating their experience and offering such features as “satisfaction guaranteed or free”. Following negotiations between the Job Poster and the Worker, the Job Poster can accept an offer from the Worker and the agreed amount is paid into a trust account held by Airtasker. Upon completion of the task, the Worker can request payment, which prompts the Job Poster to agree to Airtasker “releasing” the funds. If the Job Poster does not accept that the task has been completed in accordance with the agreed terms, it may raise a dispute, which prevents Airtasker from releasing the funds to the Worker. As discussed above, disputes relating to the disbursement of these funds are currently handled by a third party, and both Job Posters and Workers have profiles with ratings and reviews that may affect future work prospects.

The service fee for using the platform is included in the “bid” made by the Worker and is 15% of the value of the task. The Airtasker website boasts that it has created $116 million worth of jobs and that nearly one million Australians use its platform.

Employment relationship

In a Senate inquiry held in April 2017, Airtasker’s CEO, Tim Fung, testified that the people bidding for work (i.e. the Workers) are defined under the site’s terms and conditions as independent contractors and that he “certainly doesn’t think that there’s any form of employment relationship being created.”

The terms and conditions expressly state that if a Job Poster accepts an offer from a Worker, a “Task Contract” is formed between the Worker and the Job Poster (i.e. Airtasker is not a party to this arrangement). The terms also only permit “natural persons” to use the platform, so corporations are excluded from posting jobs or bidding on work, however persons may “represent a business entity.” Not surprisingly, the platform and its terms and conditions have been structured to create a strong argument that no employment relationship is created between Airtasker and the Worker.

Minimum wages

In 2014, Unions NSW published an issues paper that challenged the status of work arrangements in the gig-economy, and specifically questioned the obligations of Airtasker in relation to, among other things, minimum rates of pay. The paper included a comparison between Airtasker’s recommended pay rates for popular tasks like data entry, sales and cleaning and the relevant minimum award rates for such work. In some instances, where the cost of the 15% service fee charged by Airtasker was accounted for, this difference was almost $10/hour.

Importantly, the service fee is built into the value of the bid made by the Worker and accepted by the Job Poster at the time the Task Contract is entered into. As such, the cost of using the platform (which is arguably an equally shared benefit for both the Worker and the Job Poster) is borne entirely by the Worker and remains largely hidden from the Job Poster in relation to determining the value of the task.

Another concern for Workers is the fact that fees are set per task and not per hour. If a task takes longer than anticipated, the Worker can negotiate for an additional payment to complete the task, but this must be agreed between the parties. If the task is not performed in the agreed time, the Job Poster may refuse to pay the Worker at all, which would likely lead to the dispute being brought to the third party (the cost of which the parties must bear).

Dispute resolution

The potential move towards a dispute resolution process overseen by the FWC is certainly welcomed by Unions NSW, but its scope is far from certain. The lack of clarity of the terms of many of these agreements has the potential to disproportionately disadvantage the Workers. One such example is a case study that has been published on Airtasker’s website, which sets out that even after an offer is accepted and a Worker travels to the Job Poster’s location and is willing and able to perform the work, if the Job Poster cancels the Task Contract prior to the Worker commencing the work, unless there is an express term that has been agreed in relation to these circumstances, the Worker will not be entitled to any payment. An important point here is that these relationships are largely governed by comments left on postings and private messages between the parties, which in many (if not most) cases lack the basic terms and conditions around when and how a Job Poster can terminate a Task Contract.

Some important considerations regarding the establishment of an FWC dispute resolution process include:

  • what powers the FWC would be able to exercise (determinative or advisory only); and
  • the type of disputes within its jurisdiction.

The terms and conditions that a party accepts by using the Airtasker platform set out that the current third party provider has the power to arbitrate (that is, to issue a binding determination on the parties). The FWC process could involve similar powers to arbitrate disputes. It is likely that if this method was implemented, the FWC would also require the parties to conciliate prior to arbitration.

The type of disputes that may come within the FWC’s jurisdiction is also uncertain at this point but conceivably, it could include the enforcement of pay rates at the award minimum. It could also be empowered to ensure that certain conditions are met in respect of task contracts (e.g. around cancellation periods).

Insurance

A further issue relating to these arrangements is the provision of insurance for Workers. An aspect of the recent announcement is that Airtasker is working with a third party provider to develop personal insurance policies for Workers, which would address the concerns raised by Unions NSW around workers currently being excluded from workers’ compensation insurance.

Conclusion

The proposed partnership with the FWC and this collaborative engagement between Unions NSW and Airtasker is certainly a change of pace for observers of the gig-economy. It reflects an interest in finding ways to provide a platform of minimum conditions and a fair dispute resolution process. But it is important to note that neither of these aspects would necessarily make it an employment relationship. The fact that Airtasker is Australian and has grown in a market that has longstanding, strong workers’ rights protections may explain why its approach stands out amongst similar platforms. However, it is still early days for the company and the industry as a whole, and the only certainty is that we need ways to deal with the work undertaken pursuant to such arrangements as technologies develop and the demand for such services increases.

Sign on the pixelated line… e-Mployment contracts in the digital age

David Weiler, Associate

The way individuals, corporations and governments are signing documents is rapidly changing. In the current commercial context, communications are almost entirely undertaken in an electronic form. The challenge for businesses is to ensure that documents are executed in a way that is legally binding, despite the fact that there may not be a hard copy of the document created or returned to them.

A natural extension of these commercial practices is for employers to allow employees to sign their employment contracts using electronic signatures. The question from a compliance point of view is whether this impacts on the binding nature of the employment contracts and the enforcement of obligations contained in these contracts, such as restraints and extended notice periods.

When considering the appropriateness of e-signatures, it is useful to remind ourselves that even the President of the United States can satisfy the Constitutional requirement that he or she must “sign” a bill of Congress to turn the document into law by directing a subordinate to affix the President’s signature using an auto-pen, when he or she unable to be in the same location as the document1

Types of e-signatures

e-signatures fall into two principal categories:2

Electronic Signatures – this is simply an electronic symbol or process used to signify the execution, or acceptance of the terms, of an agreement. This type of e-signature might be a scanned signature or other form of electronic sign-off, or an email confirming acceptance of a document.

Digital Signatures – this term describes a method that uses an encrypted digital certificate to authenticate the identity of the signatory. In contrast to an electronic signature, a digital signature is linked to certain identifying information and provides for greater certainty and security around the circumstances of the e-signature.

The legislative regime

In Australia, the legislative framework makes it clear what requirements are relevant when considering the use of e-signatures. Commonwealth and State/Territory governments have in place legislation designed to provide certainty around electronic transactions in the form of uniform laws, referred to as the Electronic Transactions Act 1999 (“Act”).

The uniform laws provide that where a law (either at the Federal or State/Territory level) requires a handwritten signature, this requirement can be satisfied electronically, (unless the regulations specifically exclude the Act from operating in respect of certain circumstances). For the purpose of the Act, an electronic signature will have the same weight as a handwritten signature, and therefore a digital signature is not necessary. However, there may be circumstances where a business will choose to use a digital signature instead of an electronic signature for greater certainty surrounding the authenticity of a particular transaction.

The requirements for a valid e-signature under these laws are threefold, with each one serving its own purpose. The important take away from these requirements is the idea of capturing a person’s intention to be bound by a particular transaction or to undertake certain obligations.

Identification and intent

The overarching and leading determination of the validity of an e-signature under the Act is that it must use a method for identifying the person as well as indicating that person’s intention with in respect to the information communicated.

For example, a person’s email signature that sets out their contact information can be helpful as part of the method of identifying the person, but it is not helpful in indicating that person’s intention in relation to a particular transaction (such as accepting an employment contract). Instead, there would need to be an acknowledgement from the sender that they are accepting the terms of the agreement, for example, in the body of the email. Another way of confirming a person’s intention is requiring that person to take steps to tick a box electronically in order to accept the terms or indicate their agreement.

Reliability

The method used to communicate the signature must be appropriately reliable for the purpose for which the electronic communication was generated or communicated. This is viewed in light of all the relevant circumstances, including any indication by the parties themselves as to what is acceptable. For example, if an employment contract provides that an e-signature can be used, this would indicate the parties have deemed it to be reliable in the circumstances.

Consent

The final requirement under the Act is that the party receiving it (unless they are a government entity or official) must have consented to the method used to convey the e-signature. If a party requires a signature in a specific way (e.g. a signed original) then the provisions in the Act would be insufficient to establish the validity of the purported e-signature. This final point is crucial with respect to the broader use of e-signatures in relation to employment contracts.

Contractual relations

Given that e-signatures are permitted by law, the question then is whether there are any relevant constraints on using them in the context of employment contracts.

The employment relationship is one that lends itself to using e-signatures for a number of reasons, including:

  • the preference to store documents electronically rather than using hard copies for contracts and policies;
  • for the purpose of training and policy implementation, e-signatures give employers the ability to time-stamp and record when
    an employee has read and accepted a policy document; and
  • drawing employees’ attention to specific and important obligations in the employment relationship, such as a behaviour policy.

Some businesses are now shifting away from hard-copy “wet signatures”, however in doing so there are some aspects to which employers should pay particular attention. For example, where a term of a contract (such as a non-solicit/non-compete restraint) is particularly onerous, it may be helpful for an employer seeking to enforce such a clause that it had drawn the employee’s attention to the particular provision, possibly with a specific acknowledgment of the term. If the terms of an employment contract are contained separately from where an employee accepts the terms electronically, this may also increase the likelihood of the terms of the agreement being challenged. Having an integrated process where the terms of the contract and any relevant polices are accessed prior to any electronic acceptance of the terms will minimise this risk.

Key Takeaways

  1. Have a robust system which is capable of identifying the signatory.
  2. Always draw the terms and conditions of employment to the attention of employees prior to signing.
  3. Ensure that the storage of employment contracts is capable of providing for both e-signatures as well as wet signatures in the event e-signatures cannot be used by the employee.

1 Mark Knoller, Obama uses autopen, again, to sign bill into law, CBS News

Global Guide to Electronic Signature Law

Transgender: a new frontier in workplace diversity

Michael Starkey, Associate

When it comes to the new frontier of workplace diversity, few issues stand out as prominently as the rights of transgender individuals, and the associated practical and cultural challenges for employers in ensuring that those individuals are supported in, and given every opportunity to contribute to, their workplace without risk of harassment, discrimination or victimisation. The need for employers to face up to those challenges was recently highlighted by The Report of the 2015 U.S. Transgender Survey, the largest survey of transgender people ever conducted, involving almost 28,000 individuals, and released in December 2016. It reported that, “in the year prior to completing the survey, 30 per cent of respondents who had a job reported being fired, denied a promotion, or experiencing some other form of mistreatment in the workplace due to their gender identity or expression, such as being verbally harassed or physically or sexually assaulted at work”. This article will explore the ways in which transgender rights at work are evolving (albeit unevenly across the globe), the challenges for employers when it comes to transgender issues, and how employers can capitalise on those challenges in order to create workplace cultures in which diversity and its benefits are embraced.

Evolving legal rights

It is in the realm of anti-discrimination law that the rights of transgender individuals at work are most rapidly evolving. However, the nature and extent of legal protections for transgender individuals in employment varies significantly across the globe.

A global snapshot

Australia

At the federal level in Australia, discrimination by employers specifically on the basis of an individual’s gender identity has been unlawful since 2013. All Australian States and Territories, with the exception of the Northern Territory, also explicitly make unlawful discrimination on the basis of gender identity, and in some of these jurisdictions these protections have been in place for some time.

Under federal legislation, employers have a responsibility to take all reasonable steps to prevent such discrimination (which may include harassment or victimisation) in the workplace and may be found vicariously liable for discrimination engaged in by their employees, unless they have taken all such steps. In effect, to avoid liability, Australian employers should have policies on transgender discrimination and harassment, thoroughly implement and train their employees in respect of these policies, and react swiftly to investigate any alleged discrimination or harassment.

On the topical issue of the use of toilets and other facilities, Australian anti-discrimination laws require employers to support transgender employees to use the toilets of the gender with which they identify, and employers run the risk of a discrimination claim by denying transgender employees access to appropriate toilets and facilities. Individuals who believe they have been discriminated against on the basis of their gender identity may complain to the Australian Human Rights Commission (or an equivalent State or Territory agency) in respect of that discrimination, and have the potential to be awarded compensatory damages in the event that such a complaint is ultimately successful in court. The treatment that an individual receives at work may also be the subject of proceedings under national labour laws if that treatment amounts to an unfair dismissal or a form of adverse action.

The United States

In the United States, there is no federal law which explicitly prohibits discrimination on the basis of gender identity. However, federal courts have held that discrimination on the basis of a person being transgender can constitute unlawful discrimination on the basis of sex. A number of States also have laws that prevent discrimination on the basis of gender identity.
However, in certain other States, transgender rights continue to be limited. Perhaps the most high profile situation in 2016 was with respect to North Carolina, where a law was passed to (among other things) prevent transgender people who have not taken surgical and legal steps to change their gender from using public restrooms of the gender with which they identify. While the law does not extend to private companies (which are able to continue to develop their own policies in respect of transgender rights in the workplace), the North Carolina situation highlights a greater degree of uncertainty surrounding transgender rights in the United States than in places such as Australia (particularly given the often robust relationship between State and Federal legislatures in the United States).

China

In China, there is no specific law or regulation that protects employees against discrimination on the basis of their gender identity.
In 2016, transgender rights in employment were placed under the spotlight in China after a transgender male brought a case before an arbitration panel against his employer on the basis that his employment was terminated on the basis of his gender identity. The complainant produced evidence of a sound recording in which he was told by his manager that wearing male clothing in the workplace would damage his employer’s image, and alleged that he was dismissed on this basis.
The arbitration panel rejected this evidence, holding that the conversation did not represent the employer’s intent because the manager did not work for the company’s personnel department, and accepting that the employer’s reason for dismissal was that the employee did not have the required skills for the job.

Transgender discrimination: what does it look like?

Whether unlawful or not, discrimination against transgender individuals may take many forms, including, but not limited to:
(a) refusing employment, promotion or training opportunities to a transgender employee because of their gender identity;
(b) refusing to work with, ignoring, bullying, harassing or ostracising transgender employees;
(c) refusing to share toilets and other facilities with transgender employees;
(d) invasive, inappropriate questioning about a person’s physical characteristics or their sex life; and
(e) refusing to use the transgender employee’s preferred name or refer to them by the gender with which they identify.
The challenge for employers in eliminating these forms of discrimination is addressing the underlying factors that perpetuate such practices, such as ignorance, lack of understanding, and prejudice.

Challenges for employers

The law is not the limit

In addressing transgender issues, employers should aspire to adopt best practice strategies rather than be guided by the minimum standards set by the law in their jurisdiction. Employers should adopt the mindset that, as well as being a benefit in itself, workplace diversity produces other tangible benefits for businesses in terms of boosting morale, inclusion, motivation, and creativity, and consequently has a positive impact on productivity and innovation.

Understanding the term “transgender”

One challenge confronting employers is the number of ways in which being transgender can be described. One of the broadest and most inclusive definitions being used is that a transgender person is a person whose gender identity is different to the physical sex they were assigned at birth. While legal definitions of what is encompassed by the term “transgender” may vary from jurisdiction to jurisdiction, in terms of best practice, employers should consider viewing transgender issues at work through a broad lens in order to avoid marginalising those who may identify as transgender despite not qualifying in terms of a legally defined threshold.

Challenging unconscious bias

While it is clear that employers need to take appropriate steps to counsel employees who overtly exhibit prejudice against transgender individuals, employers also need to be aware of and respond to unconscious bias that may exist within their organisations and affect their workplace practices in order to ensure that discrimination against transgender employees does not occur.

Recruiters and people managers should be trained on the nature of unconscious bias (that is, that they may make decisions based on judgments they are unaware of and that are influenced by their background and personal experience) and encouraged to question the reasons for which decisions are made with respect to certain employees or prospective employees. All employment related decision making should be based not on a personal attribute such as gender identity, but on the basis of an individual’s merits. In addition, how “merit” is constructed needs to be examined to ensure that this is not affected by preconceived ideas about what capabilities an individual might bring to the job or whether they will be a good “cultural fit” for a workplace.

Gender identifiers and other terminology

As transgender protections are still evolving globally, there are a number of questions that are yet to be answered about how far the protections afforded by the law extend. For example, in Australia, while it is clear that the tangible detriments outlined above constitute unlawful discrimination, it is less clear what employers are required to do with respect to a variety of administrative matters relating to the employment of transgender employees.

For example, it is not entirely clear whether a person who identifies as transgender, but may not have any official documentation from relevant government agency to confirm this, can insist that their employment records be changed to reflect the gender they identify with rather than the physical sex they were assigned at birth.

In terms of creating a culture which embraces transgender individuals, it is important that employers refer to transgender employees (both in the workplace and in official records, wherever possible) using their preferred name and preferred gender pronouns, and that they require (through policies) that their employees do the same. It is also important that the transgender individual is consulted about which name and pronoun they wish to be used and, for individuals who are transitioning, if and when they would like any change to commence.

Developing meaningful policies

While informing employees through policies that discrimination against transgender individuals is unacceptable workplace behaviour (and unlawful, if that is the case) is important, transgender policies should be as much about fostering inclusivity and support for transgender individuals in the workplace as they are about setting appropriate guidelines for behaviour.
For example, best practice policies often include provisions which make employees aware that their employer will work with them to develop a transition plan if this is desired, and include information about what a transition plan might involve (for example, in respect of communications with other employees about the transitioning employee’s gender identity and decision to transition).

Dealing with potential hostility

Employers also need to be prepared to work with the fact that other employees may express some hostility or animosity towards a transgender individual at work. While acknowledging that some employees might find the situation confronting, ultimately employers need to convey a clear message that inclusion and non-discrimination is the required standard of behaviour of all employees.

Implementing best practice

It is clear that there are a number of challenges facing employers as they work to support transgender individuals at work. By giving consideration to the issues below, employers can best position themselves to embrace these challenges through building workplace cultures that foster respect for diversity in all its forms.

  • Does the business have the right framework in place in terms of policies and procedures, including regarding the disclosure by employees of personal information of a highly sensitive nature?
  • Do any administrative changes need to be made in order to reflect a transgender employee’s preferred gender? For example, to existing employment records or recruitment forms (including by giving employees the option to not specify their gender), and in respect of how the employee is to be referred in terms of name and pronouns.
  • Does any training need to be undertaken (for example, on unconscious bias) to ensure that there is strong leadership in terms of transgender issues?
  • Does the business need to make any changes to ensure that the overall culture of the workplace conveys the support that exists for transgender individuals, including those who may not have yet communicated that they are transgender?

Ultimately, employers need to be aware that the legal landscape globally is evolving, and that some jurisdictions require a proactive response on the part of employers to transgender rights at work. While other jurisdictions may lag behind, there are clear benefits from an inclusive approach to diversity which extends to transgender issues. Positive messaging about and effective implementation of an organisation’s diversity and inclusion strategies can not only boost productivity by creating workplaces in which people of all backgrounds are given the support they need to contribute fully, but can also enhance an organisation’s brand in the marketplace. If the history of movements for diversity tells us anything, it is that employers should get on board now, or risk falling behind the pack.