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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);

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Industrial Law

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  1. Industrial Law Law Extension Committee Winter 2010

  2. 1. Contract of Employment

  3. 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.

  4. 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.”

  5. 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).

  6. 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.

  7. 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.

  8. 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 …”

  9. 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.

  10. Other suggested tests? • Organisation or business integration test; • Economic reality test.

  11. 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.”

  12. Hired or lent workers? Worker Labour Hire Agency Client Company

  13. 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 ...... "

  14. 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.

  15. Terms of contract • Express terms (including documents incorporated by reference) • Implied terms • Terms implied in law; • Terms implied in fact.

  16. Terms implied in fact BP Refinery (Westenport) Pty Ltd v Hasting Shire Council (1977) 52 ALJR 20: • 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.

  17. 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.”

  18. 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.”

  19. 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.”

  20. 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.

  21. 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.”

  22. 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.

  23. 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: • that the persons selected to work with an employee are competent; • that the premises at which the employee is to work, and the appliances in use there, are safe; and • that the general system of working is also safe.

  24. 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.”

  25. Termination of employment Methods of termination of contract: • Fixed or contingent term; • Agreed period of notice; • Frustration • Summary termination for cause.

  26. 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.

  27. 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).

  28. 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."

  29. 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.”

  30. 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.”

  31. 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.”

  32. 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.”

  33. 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.”

  34. Remedies for wrongful termination • Right to affirm contract; • Injunction/specific performance; • Damages.

  35. 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”:

  36. 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.”

  37. 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.”

  38. 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.

  39. 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).

  40. 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.

  41. 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.

  42. 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)).

  43. 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).

  44. 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).

  45. Unfair contract jurisdiction 106Power 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.

  46. 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;

  47. 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).

  48. 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.

  49. 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.

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