Varying or extending a pre-Work Choices agreement: avoiding the Work Choices rules may be the best option
Employers must behave reasonably: an update on the implied duty of mutual trust and confidence
Unfair and harsh independent contracts
New laws regulating deductions from wages
Recent changes to Victorian equal opportunity legislation

Varying or extending a pre-Work Choices agreement: avoiding the Work Choices rules may be the best option

  • An AIRC decision of SDP Lacy has confirmed that employers with certified agreements made before the commencement of the Work Choices reforms (26 March 2006) can significantly extend or vary those agreements under the pre-Work Choices rules.
  • There are advantages and potential disadvantages to employers who have the option to choose to bargain under the pre or post Work Choices rules.
  • This article reviews SDP Lacy’s decision and also summarises some of the key factors employers should consider in weighing their options, including:
  • extending an agreement allows the parties to include ‘prohibited content’.
  • an extension may discourage union threats of industrial action
  • an extension may take employers well past the settling in period of the government’s proposed ‘Forward with Fairness’ reforms to the bargaining framework - now scheduled to commence on 1 July 2009.

Many employers are still subject to certified agreements which were made prior to the commencement of the Work Choices reforms on 26 March 2006. One of the key differences between pre- and post-reform agreements is that Work Choices agreements must not contain clauses dealing with ‘prohibited content’ (for example, union membership deductions, trade union training, restrictions on the engagement of independent contractor or labour hire workers, paid leave to attend trade union meetings, and so on).

Despite the limitations imposed by the Work Choices reforms, many employers and unions still prefer the relative simplicity associated with making agreements under the pre-reform rules.

As part of the first phase of its ‘Forward with Fairness’ reforms, the Federal Government amended the Workplace Relations Act 1996 (Cth) (WR Act) to enable parties bound by pre-reform certified agreements to extend or vary those agreements subject to certain conditions being met. Those conditions include:

  • all parties bound by the agreement genuinely agreeing to the extension or the variation
  • the absence of any actual or threatened industrial action, and
  • the variations must not result, on balance, in a reduction in the overall terms and conditions of employment of the employees under the relevant award.

Where the parties agree to extend or vary a pre-reform agreement, the Australian Industrial Relations Commission (AIRC) must approve it in much the same way as the AIRC previously had to be satisfied that a certified agreement complied with the obligations of the WR Act.

Although this may be seen as somewhat of a ‘back to the future’ reform, many parties actually prefer the timeliness and certainty of having such matters dealt with by the AIRC. This is in contrast to the uncertainty and delays associated with the current process, whereby workplace agreements must be approved by the Workplace Authority, and only come into operation seven days after the agreement is certified as passing the no disadvantage test. In our recent experience, there are still delays of six months or more before the Workplace Authority provides its formal consideration of workplace agreements filed under the current rules.

Employers with the option of extending or varying pre-reform certified agreements should be aware of a decision1 of Senior Deputy President Lacy of the AIRC. In his decision of 8 September 2008, SDP Lacy resolved some uncertainty as to what amounts to an ‘extension or variation’ of a pre-reform certified agreement. SDP Lacy concluded that the WR Act allows the parties to add, excise, modify or substitute provisions in the previous certified agreement. Effectively, this means that the parties can make significant changes to the style and content of the pre-reform agreement and still have this approved under the extension provisions. However, SDP Lacy concluded that it is not possible for the parties to change the name of their agreement or to change the operative commencement date.

This decision will be welcomed by many employers in that it clarifies that an almost inexhaustible list of new matters and new provisions can be introduced into an extension of a pre-reform certified agreement.

Why choose to extend or vary an agreement?

Some of the advantages of seeking an extension of a pre-reform agreement are outlined above—relative simplicity, certainty and timeliness. The option is especially attractive for employers whose agreements may be expiring in the next six months or so and who do not desire to be entangled in the forthcoming debate about the government’s second phase of its ‘Forward with Fairness’ reforms. In particular, many employers are wary about the possible effect of the proposed rules regarding ‘good faith bargaining’.

On 18 September 2008, the Federal Government published a series of fact sheets setting out further detail on what the new legislation will look like. Importantly, the commencement of the new bargaining rules have been brought forward to 1 July 2009—six months before the scheduled commencement of the substantive reforms. Many employers had not expected this change and are now carefully reconsidering their bargaining strategies.

Some employers—even those with the opportunity to pursue extensions of pre-reform agreements—may prefer to bargain under the current Work Choices rules. In some respects these rules are more favourable to employers, not least because agreements cannot contain prohibited content. Further, post Work Choices agreements can be made for periods up to five years. In contrast, extensions of pre Work Choices agreements cannot be made for more than three years.

There are a range of additional factors which will be relevant for various employers in these circumstances. It is important that employers with pre-reform agreements carefully consider the pros and cons of making agreements under the new (Work Choices) rules or extending their pre-reform agreements.

This article was written by Tony Wood, Partner, Melbourne.

Employers must behave reasonably: an update on the implied duty of mutual trust and confidence

  • Recent decisions in Nikolich v Goldman Sachs JBWere and public disputes like the claim by former PricewaterhouseCoopers partner Christina Rich have highlighted the new minefield that employers face: the need to act fairly and reasonably to employees, especially where company policies express shared commitments and behaviours.
  • Courts will imply a term in employees’ contracts of employment which require both parties to behave honestly, reasonably and fairly in their mutual dealings. So what’s new? Don’t most employers already act fairly? Sure, most do, and most do most of the time. But even good employers make mistakes or lose sight of good judgement sometimes. And if they do, it seems courts can provide a remedy for the aggrieved employee.
  • The decisions in McDonald v State of South Australia2 and Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney,3 which are considered below, provide an update on the implied duty of mutual trust and confidence in Australia.

McDonald v State of South Australia

Facts

Mr McDonald was a teacher employed by the South Australian Department of Education and Children’s Services (DECS) from 1988. Apart from a break between 1991 and 1996, he worked for DECS teaching at various schools until his employment ended in 2003.

Mr McDonald was an experienced business studies and economics teacher. At two schools, he was asked to take on a role managing the schools’ computer systems in addition to his existing teaching workload. Mr McDonald agreed, despite having no IT qualifications or training and there being no-one to manage or supervise his work. DECS knew that he was not qualified and he was not given any training. In 1996, Mr McDonald made DECS aware of some health problems which he attributed to work-related stress and anxiety arising from taking on the additional IT duties

When other staff were appointed to positions which encroached on Mr McDonald’s duties without any consultation, Mr McDonald raised further complaints that he was being undermined. He also complained about being harassed in various ways including by the removal of his phone from his office, copying his keys, altering his computer access and changing his password, all without any consultation with him. Mr McDonald’s complaints of harassment were not investigated.

In June 2002, DECS reclassified Mr McDonald’s co-ordinator position. He was subsequently treated for stress and anxiety but received no support or contact from the school during his six-week sickness absence. Upon his return from sick leave, the principal asked Mr McDonald to sign a form transferring him out of the school.

Mr McDonald made a formal complaint to DECS but it failed to deal with the grievance. Mr McDonald’s health continued to suffer. In early 2003, having been given no assistance in relation to following up his grievance, Mr McDonald resigned.

The proceedings

Mr McDonald commenced proceedings in the Supreme Court of South Australia claiming:

  • constructive dismissal
  • breach by his employer, DECS, of its contractual duty to care for his safety and welfare by providing a safe system of work, and
  • breach by DECS of an implied term in his employment contract not to destroy or damage the relationship of mutual trust and confidence.

Mr McDonald claimed that DECS had breached the implied term of mutual trust and confidence by:

  • requiring Mr McDonald to perform the role of IT network manager, a role for which he was not qualified (a fact known to DECS)
  • failing to observe the stress this was causing Mr McDonald and the detrimental effect this was having on his health, and
  • failing to support Mr McDonald and subjecting him to harassment, victimisation and bullying.

The main findings

The court found in favour of Mr McDonald and awarded him general damages in the sum of $392,850 for past and future loss of earnings, superannuation and long service leave entitlements. The court made the following findings:

  • Mr McDonald had been constructively dismissed
  • DECS had breached its duty to provide a safe system of work by failing to properly resource the technology roll-out, which resulted in Mr McDonald suffering stress due to an excessive workload for which he received no training, and
  • DECS had breached an implied term of mutual trust and confidence.

Breach of the implied duty of mutual trust and confidence

The judgment provides a snapshot of the leading English and Australian authorities on the implied term of mutual trust and confidence.

His Honour ultimately found that there is, under Australian law, a term implied into employment contracts that ‘an employer will not, without reasonable and proper cause, conduct itself in a manner likely to damage or destroy the relationship of mutual trust and confidence between the employer and employee.’

In this case, the court found that DECS had breached the implied term by failing to:

  • adhere to the procedures set out in its own detailed grievance and violence/bullying policies (even though the court did not find these policies to be contractually binding)
  • provide Mr McDonald with adequate support, training or performance management leading to a foreseeable risk that his health would suffer
  • manage Mr McDonald’s workload despite knowing the pressure he was under and his requests for assistance
  • carry out any risk management procedures in connection with onerous IT expansion plans, and
  • consult Mr McDonald about the recruitment of two IT staff and their occupation of office space previously used by Mr McDonald.

The court also found that:

  • Mr McDonald’s psychiatric injury was foreseeable given the stress caused by harassment and victimisation combined with an excessive workload. DECS was well aware of Mr McDonald’s complaints regarding his workload, and knew that he was suffering from stress, but did nothing about it.
  • DECS’ Grievance Resolution Policy and Violence/Bullying Management Procedures were not incorporated into the employment contract, but were still relevant to deciding if DECS had breached the implied term of mutual trust and confidence.

Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney

Facts

In 1976, Mr Russell was appointed Director of Music at St Mary’s Cathedral, Sydney. In January 2003, his employment was terminated by the church, following an investigation into a complaint concerning his involvement in sexual misconduct between a boarder in his house (who was later convicted) and two boys in the choir.

Mr Russell succeeded in unfair dismissal proceedings brought under the Industrial Relations Act 1996 (NSW), and was reinstated in June 2004 and awarded back pay.

In 2005, Mr Russell commenced proceedings in the Supreme Court of New South Wales, seeking damages for breach of contract. At first instance, Justice Rothman found that the dismissal had been in breach of contract, but rejected each of the claimed heads of damage. As a result, judgment was given for the church and Mr Russell was ordered to pay its costs.

Mr Russell appealed to the Court of Appeal. One of the issues on appeal was whether the church had breached the implied term of good faith, mutual trust and confidence in the employment contract by its investigation of Mr Russell’s conduct, and the termination of his employment. For example, Mr Russell asserted that the church’s failure to conduct a face to face meeting with a relevant witness was a breach of its obligations. If so, the court had to consider whether Mr Russell could recover damages for distress, humiliation, injury to feelings or loss of reputation.

The findings

  • An implied term of good faith, mutual trust and confidence can be implied into an employment contract. However the precise scope of that term in Australia is unclear, particularly given that an employer may act with reasonable and proper cause to pursue its own interests (whether or not they are adverse to those of the employee).
  • The church had not demonstrated any element of bad faith, or acted in such a way as to seriously damage mutual trust and confidence, in accepting a telephone interview of a principal witness in the misconduct investigation.
  • Even if the church had acted in bad faith or in a way to seriously damage mutual trust and confidence, there was no basis for an award of general damages to Mr Russell for distress, humiliation, injury to feelings or loss or reputation. Recovery of damages is precluded for breach of the implied term of good faith, mutual trust and confidence, where the loss has flowed from an unfair dismissal.
  • Mr Russell’s appeal was dismissed, with costs.

Implications for employers

  • There are now many state court decisions which have upheld the implied contractual duty of mutual trust and confidence.
  • The McDonald and Russell decisions simply continue the trend—although it is a powerful message to employers that they must conduct themselves fairly and reasonably in their dealings with employees.
  • If an employer fails to conduct its activities consistently with the duty, an employee who suffers financially or physically as a result of the breach could bring a claim for potentially significant damages.
  • Employers with policies governing workplace behaviour need to carefully monitor their compliance with these policies, and be especially mindful that failing to meet commitments (even if a policy is not contractually binding) can expose the employer to substantial damages claims.
  • Employers should be aware that the duty of mutual trust and confidence can cover a multitude of situations: failing to follow established policies or procedures; failing to examine genuine employee grievances; or exposing employees to dishonest, unsafe or unethical conduct by colleague or managers, to name but a few.

This article was written Kerryn Tredwell, Senior Associate, Sydney and Natalie Spark, Solicitor, Melbourne.

Unfair and harsh independent contracts

  • The Independent Contractors Act 2006 (Cth) gives federal courts the power to amend the terms of a services contract which is ‘unfair’.
  • Corporate contractors can bring a claim under the Act if the work under the contract is wholly or mainly performed by the director of the company, or their relative.
  • There is no technical meaning for what an ‘unfair’ contract is, but courts will adopt a commonsense approach and consider what is fair and reasonable in the circumstances.

Independent contractor legislation

As part of its Work Choices reforms the former Federal Government introduced laws relating to independent contractors, titled the Independent Contractors Act 2006 (Cth) (Act). The Act includes an ‘unfairness’ jurisdiction which allows the federal courts to amend an independent services contract if it is found to be unfair and/or harsh having regard to the terms of the contract when it was made.

Two recent decisions of the New South Wales Federal Magistrates Court provide some guidance about the likely future application of the federal unfair contracts jurisdiction, in the Federal Magistrates court at least.

The truck drivers’ case

The truck drivers’ case4 concerned a dispute between Riteway Transport and three of its truck owner drivers about the upgrade of their trucks from ‘single trailers’ to ‘B doubles’. In consideration for the upgrades to their trucks the drivers were offered an additional $200 per trip undertaken for Riteway Transport. This increase did not offset sufficiently the cost of the upgrade. The contractors were advised by Riteway Transport that if they did not arrange the upgrade of their trucks within six months, their transport agreement with Riteway Transport would end (at the end of the six months). Riteway would not negotiate with the owner-drivers about the issue.

The court amended the contracts between Riteway Transport and the owner drivers so that Riteway Transport could only require new vehicles ‘having specifications reasonably equivalent to the vehicle to be replaced’.

The court concluded that the contracts were unfair because the contracts:

  • permitted Riteway Transport to require the owner drivers to upgrade their trucks with facilities that were materially different from those on the trucks that had originally been acceptable, and
  • did not require Riteway Transport to make a commensurate increase in payments to the owner drivers to adequately offset the cost of adding to the trucks.

The court also found, however, that there:

  • was no unfairness due to the relative bargaining strengths of the parties – because the truck drivers were represented by a trade union at the time their original contracts were entered, or
  • had not been any undue influence or pressure as shown by the fact that the truck drivers could not withdraw from the contracts with Riteway Transport. (In this regard the court noted that it ‘is hard to conceive of a commercial negotiation which involved no pressure nor any reason why pressure which was not so great as to be illegitimate …should justify relief’.)

In determining whether the contracts were unfair, the court had regard to the law developed in the New South Wales unfair contracts jurisdiction (currently in the form of section 106 of the Industrial Relations Act 1996 (NSW)). Under the state unfair contracts jurisdiction, there are no special or technical meanings for ‘unfair’, but the concept should be interpreted using a ‘commonsense approach’ and applying ‘ordinary standards of reasonableness and fair dealing’ to the particular circumstances. In order to be considered fair in the state jurisdiction, a contractual arrangement must be a ‘balance of advantage and disadvantage to each party’. This approach, it is suggested, makes it very difficult to determine what may or may not be considered unfair or harsh in future. This is one for a largely subjective judicial judgment.

The warehousing services case

The warehousing services case5 concerned an agreement between Fabsert and ABB, under which Fasbert provided warehousing management and container unloading services to ABB. The agreement was entered into in September 2005 and was terminated without notice by ABB in August 2007. Fabsert was paid $3,000 per week, a profit share for provision of the management services, and a fixed fee per container unloaded. Fabsert had two directors (together with the wife of one of the directors) who provided the ‘warehousing management services’ but it also subcontracted some of its work and engaged casuals to unload containers.

The scope of the unfair contracts jurisdiction is significantly broader than the previous federal independent contractors regime, which could only be accessed by individual contractors. The unfair contracts jurisdiction of the Act only applies to a services contract to which a contractor that is a company is party if the work is wholly or mainly performed by a director of the company, or a member of the family of a director.

The court held that because the contract was for the supply of warehousing management services and not a labour hire contract (although it did expressly permit the hire of sub-contractors and others to perform the container unloading), the work of the contract was performed by the Fabsert directors. Accordingly, Fasbert was capable of bringing a claim under the federal unfair contracts jurisdiction. In interpreting the relevant provision of the Act, the court found further that ‘wholly’ or ‘mainly’ requires that ‘significantly more than half of the work under the contract must have been performed by [the directors]… if the Court is to deal with the contract under the Independent Contractors Act’.

However, access to the current regime by corporate contractors is unpredictable in circumstances where there is room for argument about the nature of the services provided under a contract, and whether these services are performed wholly or mainly by certain individuals.

Implications for employers

  • The corporate veil will not always protect an organisation from a claim by a contractor that the work arrangement was unfair or harsh. The federal unfair contracts jurisdiction enables the court to pierce the veil and look to the substance of the arrangements and, even where workers in addition to the directors of the corporate contractor (and their relatives) perform work under the independent contract, it may still be held to be a contract that the unfair contracts jurisdiction can apply to.
  • What constitutes unfairness or harshness for the purposes of the Federal jurisdiction will be determined, by the Federal Magistrates Court in New South Wales at least, having regard to the principles developed in the state unfair contracts (or section 106) jurisdiction. These principles require a case by case analysis and regard to societal conceptions of fairness at the relevant time. This will make it difficult for organisations to predict, at the time an agreement is reached, whether it will be subject to successful challenge under the unfair contracts jurisdiction.
  • While the Act requires that the unfairness or harshness exist at the time the relevant contract is made, courts may have regard to later events if they demonstrate that aspects of a contract were unfair or harsh from the outset. In particular, a contract may be found to be unfair for what it permits as opposed to what it says. On one view, the concept of ‘permitted fairness’ enables the court to look at the operation of the contract in light of post-contractual conduct. There is a real question as to whether this is permissible in light of the requirement of the Act that the fairness of the contract be assessed at the time it is entered into.

This article was written by Darren Perry, Partner and Justine Turnbull, Senior Associate, Sydney.

New laws regulating deductions from wages

  • The Victorian Government’s new legislation, the Victorian Workers’ Wages Protection Act 2007 (Vic) comes into force on 1 December 2008 (unless it is proclaimed prior to this date).
  • The legislation requires that employees be paid in money and regulates when an employer may make deductions from wages.
  • The legislation will apply to all Victorian employees and employers.
  • The legislation reinforces the common law that prohibits employers from unilaterally deducting from an employee’s wages.
  • The legislation stipulates circumstances where an employer cannot deduct from an employee’s wages regardless of whether they had the employee’s authorisation.

Background

The common law in Australia prohibits an employer from unilaterally deducting from an employee’s wages.

This general prohibition is consistent with legislation which already exists in New South Wales, Queensland, South Australia, Tasmania and Western Australia that require an employer to seek authorisation from the employee before it may deduct from the employee’s wages.

Each state has slightly different rules. For example, in Queensland, deductions to offset overpaid wages must be made within one year of payment and may extend for up to six years after payment. Further, a deduction must not reduce an employee’s wages for a pay period to less than ¾ of the employee’s ordinary wage.

Prior to the enactment of the Victorian Workers’ Wages Protection Act 2007 (Vic) (Act), Victoria did not have similar laws regulating deductions from wages.

The Act will not only bring Victorian legislation in line with the other states, but will also go beyond in specifying circumstances in which even authorisation from an employee cannot make deductions from their wages lawful.

Interestingly, such legislation operates despite the fact that the Workplace Relations Act 1996 (Cth) (WR Act) now regulates virtually all aspects of the employment relationship between corporations and their employees. This is because section 16 of the WR Act expressly reserves some areas for state law including ‘deductions from wages or salaries’.

Payment in money

Under the Act, employers are required to pay employees in money, either by cash, cheque, postal or money order, or by deposit into a bank account. Payment using means other than cash, for example provision of a motor vehicle, is unlawful under the new legislation.

Deductions from wages

The Act regulates deductions from wages and it prohibits employers deducting amounts from an employee’s wages unless the deduction is made under a valid written authorisation from the employee.

The definition of ‘deduction’ is wide and expressly applies to amounts withheld in accordance with a salary sacrifice arrangement.

A deduction will also include attempts by the employer to recover amounts owed by an employee by withholding payment of wages. This might include instances where the employer has previously overpaid the employee’s wages, or where the employee owes the employer an amount for the provision of work-related clothing or equipment.

Exceptions to prohibition against deduction from wages

Under the Act, it is possible to lawfully deduct from wages where:

  • the employer has written authorisation from the employee, or
  • deductions are required or authorised under an industrial instrument such as an award or a certified agreement.

Where the employee has authorised the deductions, the authorisation must state the amount of each deduction, unless it is a regular deduction that is not for the benefit of the employer or a related party—for example, premiums for health insurance sent to a health fund.

The Act also imposes additional requirements where the deduction is for the benefit of the employer—for example, where the deduction is for the uniform or equipment of a new employee, or where the employer recovers a previous overpayment of wages by making a deduction into the subsequent pay cycle. In this scenario, the employer must inform the employee in writing of:

  • the reason for the proposed deduction
  • in whose favour the deduction is to be made
  • the amount of the deduction
  • whether it is a single or multiple deduction, and
  • the date(s) or period when the deduction will be made.

Whilst it is as yet unclear whether such an option is valid under the Act, it may be possible for an employer to obtain a ‘pre-authorisation’ by including a general authorisation in the contract of employment to the effect that the employer may make deductions from the employee’s wages at a time and for an amount to be specified as the need arises.

Authorisation void in certain circumstances

The Act also provides that some deductions may be unlawful, despite employee authorisation. For example, if the deduction would result in the employee being paid less than the minimum wage, or if the deduction is intended to represent the cost of replacing any clothing, equipment or other property provided to the employee by the employer that was lost, damaged or destroyed unintentionally by the employee.

This provision is designed to protect employees in industries such as hospitality, whose wages were significantly reduced by deductions for accidental breakages on the job.

Employees are entitled to withdraw their authorisation at any time.

No contracting out

From 1 December 2008, it will not be possible for Victorian employers and employees to enter into a contract that is contrary to the requirements of the Act.

However, as part of the transitional arrangements, contracts made between employers and employees before 1 December 2008 that are otherwise inconsistent with the Act will have effect up until 30 June 2009.

Penalties for non compliance

Where an employer makes an unlawful deduction or fails to pay an employee in money contrary to the Act, a court may impose a penalty of up to $10,000 and order that the employer reimburse the employee. A claim may be brought by an employee, union or the minister, but only following a written demand.

Implications for employers

In order to avoid up to $10,000 in penalties, employers in Victoria should:

  • review their contracts, policies and payroll practices to ensure that all deductions from wages are made in accordance with the new requirements, and
  • ensure that authorisations given by an employee contains the amounts that the employee consents to having deducted from their wages.

This article was written by Rainbow Cheung, Articled Clerk and Tony Wood, Partner, Melbourne.

Recent changes to Victorian equal opportunity legislation

  • A new ground unlawful discrimination—‘employment activity’—was added to Victoria’s Equal Opportunity Act 1995 and took effect from 31 March 2008.
  • A new requirement not to ‘unreasonably refuse’ to accommodate a request to work flexibly was added to the Act and took effect from 1 September 2008.
  • Equal opportunity policies will need to be reviewed and updated to reflect these changes, and to ensure that they continue to be current and meet minimum legal requirements.

Equal opportunity laws in Victoria have been expanded this year to add a new ground of unlawful discrimination and a new requirement to consider flexible working requests.

New ground of discrimination: ‘employment activity’

A new ground of discrimination—‘employment activity’—has been added to the Equal Opportunity Act 1995 (Vic) (Act). The provision took effect from 31 March 2008.

‘Employment activity’ is defined in the Act as an employee making a reasonable request of their employer about their entitlements, or communicating a concern to their employer about the employer’s failure to provide them their employment entitlements.

Employee ‘entitlements’ are broadly defined in the Act and include an employee’s rights and entitlements under an applicable contract of employment, including a workplace agreement, employment agreement or award.

The Victorian Equal Opportunity and Human Rights Commission (Commission) has released guidelines6 on the new provision and provides the following examples of the type of requests on ‘entitlements’:

  • what is my rate of pay?
  • how much leave have I accrued? or
  • do I have an entitlement to maternity leave?

Examples of discriminatory employer responses include:

  • cutting an employee’s hours or regular overtime
  • denying an employee annual leave, or
  • transferring an employee to undesirable duties.

Employees who believe they have been subjected to unlawful discrimination can make a complaint to the Commission.

In some respects, this provision will not be ‘new’ to employers. Employers already have obligations under the Workplace Relations Act 1996 (Cth) and the ‘industrial activity’ ground of discrimination in the Equal Opportunity Act 1995 (Vic) not to treat an employee less favourably because of their industrial association or industrial activity (for example, making enquiries about benefits under instruments or seeking employer compliance with those benefits). The new provisions, however, extend the existing laws outside of the ‘industrial’ context, to more general employee entitlements.

New flexible working requirements for parents and carers

From 1 September 2008, the Act has provided that an employer must not, in relation to the work arrangements of an employee, potential employee or contractor, ‘unreasonably refuse’ to accommodate the responsibilities that the person has as a parent or carer.

Examples of ways an employee’s responsibilities may be accommodated include:

  • working from home
  • part time work
  • job share, and
  • flexible hours (for example, later start or earlier finish times).

In determining whether an employer’s refusal to accommodate an employee’s parent or carer responsibilities is reasonable, the Act provides that ‘all relevant facts and circumstances’ must be considered, including:

  • the employee’s circumstances, including the nature of his or her responsibilities as a parent or carer
  • the nature of the employee’s role
  • the nature of the arrangements required to accommodate those responsibilities
  • the financial circumstances of the employer
  • the size and nature of the workplace and the employer’s business
  • the effect on the workplace and the employer’s business of accommodating those responsibilities, including the financial impact of doing so, the number of persons who would benefit from or be disadvantaged from doing so and the impact on efficiency and productivity, and if applicable, customer service of doing so
  • the consequences for the employer of making such accommodation, and
  • the consequences for the employee of not making such accommodation.

The Victorian Government has recently released some guidelines7 for employers and employees on these new provisions.

No process is specified for the way in which employees must make flexible working requests, or the response required by an employer. However, employers can take some guidance from the requirements set out in the Federal Government’s National Employment Standard on flexible working requirements. This standard, to come into effect on 1 January 2010, provides the following procedure for making and responding to requests:

  • an employee applying for flexible working arrangements must make a request in writing
  • the employer must give the employee a written response within 21 working days
  • the employer may only refuse to grant the request if it has reasonable business grounds for doing so. (‘Reasonable business grounds’ is not defined, although it is likely those grounds set out in the Victorian Act will be considered), and
  • where an employer refuses the request, the reasons for the refusal must be given.

There are some key differences between the Victorian and federal flexible working provisions. The federal provision, for example, only applies to parents and not carers. There is also a requirement in the federal provision that employees have 12 months of continuous service with their employer before a flexible working request can be made. 

Implications for employers

  • As a result of these changes, we recommend that employers review their equal opportunity, diversity or workplace behaviour policies to ensure that a reference is made to the new ‘employment activity’ ground. Managers should also be made aware of the new provision as part of your organisation’s training in equal opportunity issues.
  • Employers should also consider reviewing or implementing a flexible work policy, including an application form for employees making flexible working requests, and guidelines for managers on how to manage these requests.

This article was written by Lisa Croxford, Senior Associate and Georgia Rutecki, Solicitor, Melbourne.

 
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