Download Industrial Law

Industrial Law
Law Extension Committee
Winter 2010
1. Contract of
Employment
Relationships in which work is
performed:







Employment (contract of service);
Independent contractor (contract for services);
Principal and agent;
Bailment;
Public office (judge, constable of police, etc);
Partnership;
Minister of religion.
Fair Work Act


s13 – defines a “national system employee” as
an individual so far as he or she is employed, or
usually employed ... by a “national system
employer.”
s14 – defines an “national system employer” as
(among other things) “a constitutional
corporation, so far as it employs, or usually
employs, an individual.”
Fair Work Act
s43 – provides that the main terms and conditions
of employment of an employee (being a
“national system employee”) under the Act are
set out in :
 the National Employment Standards (Part 2-2);
 a modern award (Part 2-3), enterprise agreement
(Part 2-4) or workplace determination (Part 2-5).
Other legislation





Annual Holidays Act 1944 (NSW), s3 – confers entitlement to
annual leave on a “worker” who is a “person employed”.
Long Service Leave Act 1955 (NSW), s4 – confers entitlement to
long service leave on a “worker” who is a “person employed”.
Workers Compensation Act 1987 (NSW), s4 – applies to a “personal
injury arising out of or in the course of employment”.
Occupational Health and Safety Act 2000 (NSW), s8 – imposes
duties on employers with respect to the health and safety of
employees.
Superannuation Guarantee (Administration) Act 1992 (Cth), s16 –
imposes a charge on an employer for any shortfall in
superannuation contributions with respect to an employee.
Control test
Performing Right Society Ltd v Mitchell [1924] 1 KB
762:
… the final test … lies in the nature and degree of detailed
control over the person alleged to be a servant. … A servant
is a person subject to the command of his master as to the
manner in which he shall do his work … An independent
contractor is one who undertakes to produce a given result,
but so that in the actual execution of the work he is not
under the order or control of the person for whom he does
it, and may use his own discretion in things not specified
beforehand.
Multi-factor test
Stevens v Brodribb Sawmilling Co Pty Ltd
(1986) 160 CLR 16:
“But the existence of control, whilst significant,
is not the sole criterion by which to gauge
whether a relationship is one of employment.
The approach of this court has been to regard it
merely as one of a number of indicia which must
be considered in the determination of that
question …”
Other indicia:







Mode of remuneration;
Provision and maintenance of equipment;
Obligation to work;
Right to dictate place and hours of work;
Deduction of income tax and provision of holidays;
Right to suspend or dismiss;
Delegation of work and right to exclusive services of
putative employee.
Other suggested tests?
 Organisation
or business integration
test;
 Economic
reality test.
Expressed intentions of the
parties
Australian Mutual Provident Society v Chaplin (1978)
18 ALR 385:
“... if the true relationship of the parties is that of
master and servant under a contract of service, the
parties cannot alter the truth of the relationship by
putting a different label upon it ... On the other hand, if
their relationship is ambiguous and is capable of being
one or the other, then the parties can remove that
ambiguity, by the very agreement itself.”
Hired or lent workers?
Worker
Labour Hire Agency
Client Company
Odco contract
"AGREEMENT TO CONTRACT
CONDITIONS OF CONTRACT
Hereunder let Troubleshooters Available be read as:
TROUBLESHOOTERS AVAILABLE AND/OR ASSOCIATED CLIENTS.
1. I (the undersigned) acknowledge and agree that there is no relationship of Employer-Employee with TROUBLESHOOTERS
AVAILABLE and that TROUBLESHOOTERS AVAILABLE does not guarantee me any work. I (the undersigned) am self-employed
and, as such, I am not bound to accept any work through TROUBLESHOOTERS AVAILABLE.
2. I (the undersigned) hereby agree to work for ... per hour for actual on-site hours or job price to be agreed.
3. I (the undersigned) hereby acknowledge and agree that TROUBLESHOOTERS AVAILABLE does not cover me in respect of
Workcare, the onus of responsibility and liability in respect of insurance is mine only. Further, I have no claim on
TROUBLESHOOTERS AVAILABLE in respect of Workcare.
4. I (the undersigned) expressly forbid TROUBLESHOOTERS AVAILABLE to make deductions in respect of PAYE Taxation.
5. I (the undersigned) hereby agree that I have no claims on TROUBLESHOOTERS AVAILABLE in respect of Holiday Pay, Long
Service Leave, Sick Pay or any similar payment.
6. I (the undersigned) hereby agree that TROUBLESHOOTERS AVAILABLE has no responsibility or liability to me except that I am
guaranteed to be paid agreed hourly rate for actual on-site hours or agreed job price for work done.
7. It is agreed that I (the undersigned) must carry out all work that I agree to do through the Agency of TROUBLESHOOTERS
AVAILABLE in a workmanlike manner and TROUBLESHOOTERS AVAILABLE is hereby guaranteed against faulty workmanship.
All work must be made good. Further, I agree to cover the work (where necessary), for Public Liability, Accident Insurance, Long
Service Leave, Holiday Pay, Sick Pay and superannuation, and have no claims on TROUBLESHOOTERS AVAILABLE in respect of
the above.
8. I (the undersigned) agree that I must be a financial member of the Trade Union covering my trade.
9. I (the undersigned) hereby agree to supply my own plant and equipment, safety gear, boots, gloves or any necessary ancillary
equipment required and that I (the undersigned) have no claim on TROUBLESHOOTERS AVAILABLE in respect of the above.
SIGNED ......
WITNESSED ......
DATED ...... "
Formation of contract






Intention to create legal relations;
Offer and acceptance;
Valuable consideration;
Parties capable of making contract;
Genuine consent;
Not in effective by reason of illegality or public
policy.
Terms of contract

Express terms (including documents
incorporated by reference)

Implied terms
Terms implied in law;
 Terms implied in fact.

Terms implied in fact
BP Refinery (Westenport) Pty Ltd v Hasting Shire
Council (1977) 52 ALJR 20:
(1)
(2)
(3)
(4)
(5)
it must be reasonable and equitable;
it must be necessary to give business efficacy to the
contract, so that no term will be implied if the
contract is effective without it;
it must be so obvious that ‘it goes without saying’;
it must be capable of clear expression;
it must not contradict any express term of the
contract.
Wages/work bargain
Automatic Fire Sprinklers Pty Ltd v Watson
(1946) 72 CLR 435:
“The common understanding of a contract of
employment at wages or salary periodically payable is
that it is the service that earns the remuneration and
even a wrongful discharge from the service means
that wages or salary cannot be earned however ready
and willing the employee may be to serve.”
Obedience to lawful orders
Adami v Maison de Luxe (1924) 35 CLR 143:
“… once the relation of employer and employee is
established, obedience to lawful orders is, if not
expressly, then impliedly contemplated by the
contract creating the relationship, and mere
disobedience of such orders is breach of the
bargain.”
Reasonable orders?
Australian Telecommunications Commission
v Hart (1982) 43 ALR 165:
‘… if a command relates to the subject matter of the
employment and involves no illegality, the obligation
of a servant to obey it depends at common law upon
its being reasonable.”
Duty of fidelity







Solicitation of customers or destruction of
goodwill;
Unauthorised use or disclosure of information;
Unauthorised comment on employer’s business;
Responsibility with respect to inventions;
Competition with employer;
Bribes or secret commissions;
Duty to account for employer’s property.
Duty of confidence
Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617:
“It is clear that the obligation not to use or disclose
information may cover secret processes of manufacture
such as chemical formulae … or designs or special
methods of constructions … and other information
which is of a sufficiently high degree of confidentiality
as to amount to a trade secret. The obligation,
however, does not extend to all information which is
given or acquired by the employee … and in particular
may not cover information which is only “confidential”
in the sense that an unauthorised disclosure of such
information to a third party while the employment
subsisted would be a clear breach of the duty of good
faith.”
Trade secrets and confidential
information






Extent to which known outside the business;
Measures taken to guard secrecy of information;
Value of information and effort taken to acquire
the information;
Whether made plain to employee that
information is confidential;
Usages and practices of the industry;
Extent to which confidential information is
handled by the employee.
Employer’s duty of care
Wilson & Clyde Coal Co v English [1938] AC 57:
An employer is required to ensure, so far as it is
possible to do so by the exercise of reasonable care:
(1) that the persons selected to work with an employee
are competent;
(2) that the premises at which the employee is to work,
and the appliances in use there, are safe; and
(3) that the general system of working is also safe.
Duty of trust and confidence
Bliss v South East Thames Regional Health
Authority [1987] ICR 700:
“It was an implied term of the plaintiff’s contract
that the authority would not without reasonable
cause, conduct itself in a manner likely to damage or
destroy the relationship of confidence and trust
between the parties as employer and employee.”
Termination of employment
Methods of termination of contract:




Fixed or contingent term;
Agreed period of notice;
Frustration
Summary termination for cause.
Reasonable notice







Importance of position, seniority and salary;
Employee’s age and job mobility;
Length of service;
Period the employee would likely have
continued in employment;
What the employee gave up to take job;
Employee’s prospective pension or other rights,
Custom and practice in the particular industry.
Statutory notice periods



An employer must not terminate an employee’s
employment unless it has given the minimum period of
notice: FWA, s117(1) and (2).
The minimum notice period is up to 4 weeks after 5
years service (an additional week must be given for
employees over 45 years old): FWA, s117(3).
The notice periods do not apply if employee is
employed for specified period, task or season, is
terminated for serious misconduct, is a casual employee
or under a training arrangement: FWA, s123(1).
Frustration
Finch v Sayers [1976] 2 NSWLR 540:
"… the usual understanding in many types of
employment today is that prolonged incapacity of an
employee does not automatically terminate the
employment contract, but, subject to sick leave
rights, excuses the employee from work and the
employer from the obligation to pay, and gives the
employer the right to terminate the contract."
Summary dismissal
Laws v London Chronicle (Indicator
Newspapers) Ltd [1959] 2 All ER 285:
“Since a contract of service is but an example of
contract in general … it follows that, if summary
dismissal is claimed to be justifiable, the question
must be whether the conduct complained of is such
as to show the servant to have disregarded the
essential conditions of the contract of service.”
After-acquired knowledge
Lane v Arrowcrest Group Pty Ltd (1990) 27
FCR 427:
“… it is still open to an employer to justify a
dismissal by reference to facts not known to the
employer at the time of the dismissal, but discovered
subsequently, so long as those facts concern
circumstances in existence when the decision was
made.”
Condonation
Burge v BHP Steel Pty Ltd (2001) 105 IR 325:
“… where an employer with a full knowledge of an act
amounting to misconduct justifying summary dismissal
does not exercise the right which he thereby possesses
but elects to treat the contract as still subsisting, then he
is regarded in law as having waived the right of
summary dismissal for that offence, or of having
`condoned' that offence, so that he cannot, therefore, in
an action for wrongful dismissal based on misconduct,
rely upon an offence which he has waived as
justification for his action.”
Procedural fairness
Intico (Victoria) Pty Ltd v Walmsley [2004] VSCA 90:
“The employer is exercising a contractual right in
dismissing an employee for misconduct. The employer
is not bound to act reasonably, or to give reasons or
accord the employee an opportunity to be heard. The
question whether the employer is contractually entitled
to dismiss his employee depends upon whether the
facts emerging at trial demonstrate breach of contract;
it does not depend on whether the employer has heard
the employee in his own defence.”
Constructive dismissal
Western Excavating (ECC) Ltd v Sharp [1978]
QB 761:
“If the employer is guilty of conduct which is a
significant breach going to the root of the contract
of employment, which shows that the employer no
longer intends to be bound by one or more of the
essential terms of the contract, then the employee is
entitled to treat himself as discharged from any
further performance. If he does so, then he
terminates the contract by reason of the employers
conduct … He is constructively dismissed.”
Remedies for wrongful termination

Right to affirm contract;

Injunction/specific performance;

Damages.
Damages in contract
Robinson v Harman (1848) 1 Ex 850:
“… the sum required to put the plaintiff in the
position he or she would have been had the
contract been properly performed”:
Bostik (Aust) P/L v Gorgevski (1992)
36 FCR 20
“Where an employee is wrongfully dismissed, he is
entitled, subject to mitigation, to damages equivalent to
the wages he would have earned under the contract
from the date of the dismissal to the end of the
contract. The date when the contract would have come
to an end, however, must be ascertained on the
assumption that the employer would have exercised any
power he may have had to bring the contract to an end
in the way most beneficial to him; that is to say, that he
would have determined the contract at the earliest date
at which he could properly do so.”
Addis v Gramophone Co
[1909] AC 488
“If there be a dismissal without notice the employer
must pay an indemnity; but that indemnity cannot
include compensation either for the injured feelings of
the servant, or for the loss he may sustain from the
fact that his having been dismissed of itself makes it
more difficult for him to obtain fresh employment.”
FWA, Remedies for dismissal



General protections – prohibition on “adverse
treatment” on various grounds (Part 3-1)
Unfair dismissal – on the ground that the
dismissal was harsh, unjust or unreasonable (Part
3-2)
Notice provisions – on the ground that
employer has breach notice provisions in s117.
Protected from unfair dismissal
(s382)
A person is “protected from unfair dismissal” if:


The person has competed a minimum period of
employment (6 months or 12 months if the employer is
a small business employer).
One or more of the following applies:
•
•
•
A modern award covers the person;
An enterprise agreement applies in relation to the
employment;
The person’s annual rate of earnings is less than the high
income threshold ($100,000 per annum indexed).
What is an unfair dismissal (s 385)
A person has been unfairly dismissed if FWA is
satisfied that:
 The person has been dismissed;
 The dismissal was harsh, unjust or unreasonable;
 The dismissal was not consistent with the Small
Business Fair Dismissal Code; and
 The dismissal was not a case of genuine
redundancy.
Unfairness (s 387)
FWA must take into account:
 whether there was a valid reason for the termination related to
the employee’s capacity or conduct;
 whether the employee was notified of that reason and given an
opportunity to respond to any reason related to the capacity or
conduct of the employee;
 any unreasonable refusal by the employer to allow a support
person to be present as discussions relating to the dismissal;
 whether the employee had been warned about that unsatisfactory
performance before the termination;
 the degree to which the size of the employer’s impacted on the
procedures followed in effecting the termination; and
 the degree to which size of employer or absence of dedicated
human resource specialists or expertise would be likely to impact
on the procedures followed in effecting the termination.
Remedies (ss 390-393)


Reinstatement – FWA may reinstate a person
by reappointing to same position or appointing
to another position on terms and conditions no
less favourable (s391(1)).
Backpay/continuity – if FWA orders
reinstatement it may also make such order as it
considers appropriate to maintain continuity of
employment and in respect of remuneration lost
(s391(2) and (3)).
Remedies (cont)



Compensation – if FWA is satisfied that reinstatement
is inappropriate, it may order the payment of
compensation (s390(3)).
Maximum compensation – remuneration received or
to which the person was entitled in 6 months before
termination or $50,000 (s392(5) and (6)).
FWA must consider – viability of business, length of
service, efforts to mitigate, other remuneration earned
and not shock, distress, etc (s392(3).
General protections (Part 3-1)
A person must not take “adverse action” (including dismissal)
against a person because:
 The person is entitled to, has exercised or proposes to exercise a
“workplace right” (s340).
 The person is or is not a member of an organisation or engages
or proposes to engage in an industrial activity (s346).
 The person’s race, colour, sex, sexual preference, age, physical or
mental disability, marital status, family responsibilities,
pregnancy, religion, political opinion, national extraction or
social origin (s351).
 The person is temporarily absent from work because of illness or
injury within the meaning of the regulations (s352).
 The person is covered, or not covered, by a particular industrial
instrument (s354).
Unfair contract jurisdiction
106 Power of Commission to declare contracts void or varied
(1) The Commission may make an order declaring wholly or partly void, or
varying, any contract whereby a person performs work in any industry if the
Commission finds that the contract is an unfair contract.
(2) The Commission may find that it was an unfair contract at the time it was
entered into or that it subsequently became an unfair contract because of any
conduct of the parties, any variation of the contract or any other reason
…
(5) In making an order under this section, the Commission may make such order
as to the payment of money in connection with any contract declared wholly
or partly void, or varied, as the Commission considers just in the
circumstances of the case.
(6) In making an order under this section, the Commission must take into
account whether or not the applicant (or person on behalf of whom the
application is made) took any action to mitigate loss.
Exclusion of state
unfair contract laws
FWA, s26 excludes some State and Territory laws
(1) This Act is intended to apply to the exclusion of all State or
Territory industrial laws so far as they would otherwise apply in
relation to a national system employee or national system
employer.
(2) A State or Territory industrial law is:
…
(e) a law of a State or Territory providing for the variation or
setting aside of rights and obligations arising under a contract
of employment, or another arrangement for employment,
that a court or tribunal finds is unfair;
Trade Practices Act
52 Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce,
engage in conduct that is misleading or
deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this
Division shall be taken as limiting by implication
the generality of subsection (1).
Trade Practices Act
53B Misleading conduct in relation to
employment
A corporation shall not, in relation to
employment that is to be, or may be, offered by
the corporation or by another person, engage in
conduct that is liable to mislead persons seeking
the employment as to the availability, nature,
terms or conditions of, or any other matter
relating to, the employment.
Discrimination legislation
16 Discrimination in employment
(1) It is unlawful for an employer or a person acting or purporting to act on behalf of an
employer to discriminate against a person on the ground of the other person’s
disability or a disability of any of that other person’s associates:
(a) in the arrangements made for the purpose of determining who should be offered
employment;
(b) in determining who should be offered employment; or
(c) in the terms or conditions on which employment is offered.
(2) It is unlawful for an employer or a person acting or purporting to act on behalf of an
employer to discriminate against an employee on the ground of the employee’s
disability or a disability of any of that employee’s associates:
(a) in the terms or conditions of employment that the employer affords the employee; or
(b) by denying the employee access, or limiting the employee’s access, to opportunities for
promotion, transfer or training, or to any other benefits associated with employment; or
(c) by dismissing the employee; or
(d) by subjecting the employee to any other detriment.