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Employment Law News March 2009

Misleading & deceptive conduct in employment contracts

Sections 52 & 53 of the Trade Practices Act offer some recourse to employees who have relied upon representations made by their employer prior to the commencement of the employment relationship, and suffered detriment as a result of the employer's failure to honour these representations.

This was illustrated in the decision of McRae v Watson Wyatt Australia Pty Ltd [2008]. Here, the plaintiff negotiated the terms of her employment with the defendant company prior to the completion of an employment contract with them. The plaintiff's redundancy entitlements were negotiated via telephone.

A written employment contract was ultimately drafted and signed by both parties, but did not contain any provision relating to redundancy. When the plaintiff was eventually made redundant, the redundancy package she was offered did not conform to that negotiated with the defendant employer prior to the drafting of the formal employment contract.

The plaintiff relied on the argument that the employer's promises regarding her redundancy package were genuine representations and not ‘mere puffs', which do not give rise to a course of action under the Trade Practices Act. The Court accepted this argument, finding that the plaintiff would not have accepted the contract but for the representations of the employer regarding redundancy entitlements. It was not relevant that these representations were made orally, since the plaintiff's employment contract was held to include both written and oral terms and warranties.

Employers will need to ensure that all care is taken to be consistent in stating the terms offered to potential employees when discussing these terms and when drafting the written terms.

ADVANCE NOTICE OF NEW INDUSTRIAL RELATIONS LAWS JULY 2009

The new unfair dismissal regime will commence on 1 July this year. It will remove the threshold of 100 employees introduced under Work Choices and instead introduce new qualifying periods that have to be met before an unfair dismissal claim can be made - 12 months for employees of businesses with fewer than 15 employees and six months for employees in businesses with 15 or more employees.

Casual employees who have been employed on a regular and systematic basis and who have a reasonable expectation of continued employment will no longer be excluded but will have to meet the same qualifying periods as permanent employees.

What process is involved where an employee wishes to apply for relief for unfair dismissal?

• The employee must apply to Fair Work Australia ("FWA")(successor body to the AIRC) within 7 days of termination.
• FWA may gather information by phone or in writing from the parties
• Where there is disagreement between the parties, FWA must either hold an informal face to face conference or a hearing.
• Legal representation will only be allowed if FWA deems it appropriate, but both parties can have non-legal representation.
• Reinstatement is the preferred remedy.
• However, if that is not in the interests of one or both parties, monetary compensation is an alternative.

Businesses with less than 15 employees will able to avoid unfair dismissal claims by complying with the Small Business Fair Dismissal Code. This is a kind of safe harbour, in the sense that if you comply, FWA will look no further. Non-compliance does not automatically mean that the dismissal was unfair: however, FWA will then consider whether the dismissal was "harsh, unjust or unreasonable".

FWA may extend the 7-day period if it is satisfied that there are "exceptional circumstances".

"Agreement making" under the new legislation

There will be no distinction under the Fair Work Bill between union and non-union collective agreements. There will be a single stream of collective, enterprise agreements made between an employer and employees. While employers will still have the right to make "Greenfields" agreements to cover a new enterprise, these agreements must be made with a union or unions that will have coverage over that workplace.

The Bill expands the matters which can be covered in an enterprise agreement to cover the following:

• Matters pertaining to the relationship between the employer or employers that will be covered by the agreement and the employees who will be covered by the agreement.
• Matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement.
• Deductions from salary for any purpose authorised by the employee covered by the agreement.
• How the agreement will operate.

Further, the parties can include more matters if they wish. Matters that contravene provisions of the Bill will remain unlawful. Examples given are attempts to contract out of the unfair dismissal laws and the payment of union bargaining fees.

Enterprise agreements will also be required to include an individual flexibility arrangement and a consultation clause where major change is considered.

What process is involved for the approval of enterprise agreements?

All enterprise agreements must be submitted to FWA for approval. FWA will verify the following:

• there is genuine agreement;
• the group of employees covered by the agreement was fairly chosen;
• the agreement passes the "Better Off Overall Test" (BOOT);
• the agreement contains a nominal expiry date and dispute settlement clause;
• the agreement does not contain terms that contravene the NES; and
• the agreement does not contain unlawful content.

The BOOT test will be an assessment of the pay and entitlements of an agreement on the papers submitted. The EM says that it will not be as complicated as the fairness test under Work Choices.

How will the bargaining process be regulated?

If no issues arise in bargaining, the Bill will only regulate the bargaining process by requiring employers to advise employees of their right to be represented at the commencement of bargaining. Bargaining representatives will be able to bargain and create an agreement and will not be required to interact with FWA until the agreement is submitted for approval.

If an employer refuses to bargain with their employees, FWA will have the power to test the support amongst the employees to which the agreement will apply in a manner it considers suitable, for example, using evidence of union membership, petitions or a ballot of employees. If a majority of the employees wish to collectively bargain, their employer will be required to bargain with them.

If the parties are bargaining, but not doing so effectively, the FWA will have power to make bargaining orders relating to procedural matters only and not on the content of the agreement.