...,.

"

390 "U .", < «'"'''' '"

r
'\ \(

HRM AND THE LAW

Human resource specialists manage people within the employer-employee relation-
ship. The law of the land governs the boundaries of that relationship. It is therefore ~

essential for human resource managers to have a basic understanding of the law of
employment. In any legal relationship, there are mutual duties and obligations. The
employment arena is no exception. Employers have obligations to their employees
and, in turn, employees have certain duties regarding their employers. When these
mutual duties integrate successfully with the objectives of the organisation, then the
productivity of the enterprise will improve.
'£.

SOURCESOF LEGALOBLIGATIONS
There are several sources of legal obligations which interact to form the law of
employment. These are contract, statute, awards and the common law.

Contract
In most situations of employment, a contract will exist between the employer and
employee. This can be either: )
(a) formal: a written document signt>.dby both parties
(b) informal: an oral agreement. Usually the court will infer the existence of a con..
~ tract from when work commences.
In drafting contracts, employers often fail to consider terms other than remuner-
ation and hours of work. This means that other important terms in the contract are
missing. At best, these terms can be determined by a court. But this takes time and
money. By stating precise terms and conditions at the outset, human resource man-
agers can avoid the costly process of seeking a court's adjudication on the terms of
the contract.

Advantages of a written contract

In general, there are many advantages to having a written contract of employment.
It removes any doubts which the new employee may have as to his or her obli-
gations and duties. Surprisingly enough, parameters of the job are one of the major
areas of dispute between the parties in an employment relationship. Often the com-
ment is made, 'I did not think that that was part of my job description'. Drafting a
written contract has the added benefit of forcing the parties to consider which terms
they require in the contract. This means that the parties select the terms which
govern their relationship rather than allowing'the common law and industrial tri-
bunals to imply terms which the parties may not desire.
Employment contracts are not works of art. They are inexpensive to draft and,
ultimately, save a lot of time and money. However, conflict may arise if the terms
of a contract are uncertain. Strikes are obviously expensive and so are dis-
gruntled ex-employees, both in terms of public relations and potential litigation.
The more astute human resource manager, ever concerned with the prospects of
unnecessary litigation, should take the initiative by having all senior executives
enter into contracts of employment. A well-planned, well-drafted contract of

- - - -
 CHAPTER /4 Human resource management and the law 391

employment ensures that the employment relationship commences on the appro-

/ priate footing. .
Figure 14.1 illustrates how a written contract provides for the essential aspects of
the employment relationship.

~
I
.:II
I Hours I
~

I Supervision~
,
I ~ '-" t /
.,
1

.JIf.I
,..
WorklocationI

Promotionpolicy
and procedures
)f ' . ESSENTIAL TERMS ' . . .
C. onfId e~tla1 .-&..- OF EMPLOYMENT ---a DISClpme
I I
po ICY
,foimatlon ~ CONTRACTS and procedures

d
a /... -"'"I I

}- I Salary/wages r I \"1 Overtime I

f- I Benefits ~ I SuperannuationI
e Figure 14.1: Essential terms of employment contracts
d
}-
bf Statute
State and territory governments have legislated to prescribe minimum conditions of
employment which apply notwithstanding any express provision in the contract.
The Commonwealth has legislated to protect equal opportunity. The relevant
~t. Commonwealth acts are the Sex Discrimination Act 1983, Racial Discrimination
h- Act 1975, Affirmative Action (Equal Employment Opportunity for Women) Act 1986
r and the Human Rights Commission Act 1981.2
..

Awards3
Awards are the primary source of employment obligations for most Australian
employees. Created by federal and state industrial tribunals, they specify minimum
terms and conditions of employment. This explains why human resource managers
fd, need to be aware of all awards relevant to their organisation.
~ Award conditions include minimum pay, hours of work, types of leave and the
IS-
I regulation of employment termination. An employer may provide f!1ore favourable
,~n,
terms than those provided by the relevant award.
of
Copies of awards and information on them may be obtained from state and
es
federal departments of industrial relations,4 Employees should be informed of
of
which award is applicable to their work and where they can inspect a copy of it.

.'"
-
 392 PART SIX Mant/KinK hUll/an re.wurce.~
\
r
Mechanisms for enforcing a\\'ard obhgath'I1' I:..tn c:w,t either in a general
court of law or before a specialised tribunal. Legal sanction is almost invariably
limited to imposing a relatively small penalty.5 Employees may also take action I'J':
to recover unpaid wages or other sums due to them under an award. A contract .~
"
of employment is a prerequisite to enforcing an award obligation between
employer and employee. Clearly, if an appropriate industrial award governs the ", \.
conditions of employment then there will be some constraints on the employer's'
contractual freedom. This means that where an award exists, an employer
cannot include terms of employment less favourable than the award, even for [
employees who are not union members. In New South Wales, however, an
award can be overruled if an enterprise agreement is in place. The legislation
requires only that the following three minimum conditions of employment be
met:
/
. a minimum of one week of sick leave on full pay per year
. a maximum of forty hours per week, averaged over fifty-two weeks, as ordinary ~
hours of employment
. an hourly rate of pay for ordinary time that is not less than that which would
apply under an award or former industrial agreement.6

Common law ~
The common law is 'case law' which has developed in the court system. It is the
body of previous judgements which guide how we should interpret the other
sources of legal obligations. The common law is also a separate source of legal Fil
duties and obligations itself. Thus, the general duties of the parties to an employ-
ment relationship are prescribed by the common law. The main common law duties
are set out in table 14.1.
E
Table 14.1: General duties of parties to an employment relationship

Employer's duties and obligations to Employee's duties and obligations to

employees employers

To pay employees wages and reasonable
expenses incurred in the course of the
employment
To provide work in the circumstances
where payment is directly tied to
performance
To take reasonable care for the health and
safety of the employees
To indemnify an employee for losses
incurred by the employer while
performing duties under the Contract
Employment
A duty to work in a skilful and competent
manner
A duty to obey the employer's lawful
demands
A duty to provide faithful service, which
includes a prohibition on disclosing
confidential information; a duty to account
for and protect the employer's property;
and a duty to give complete attention to
performing the work. Further, the benefit.
of discoveries or inventions developed by
of employees during the course of their
employment must be given to the
employer. This should be explained to the
person at the interview stage.

- .~
 392 PART SIX ManaKinK hUll/ail re.wurCt'.~
~
Mechanisms for enforcing award obhgatl"II' I:an C~I!\t either in a general .f
court of law or before a specialised tribunal. Legal sanction is almost invariably
limited to imposing a relatively small penalty.5 Employees may also take action .j
iil.
to recover unpaid wages or other sums due to them under an award. A contract .~
of employment is a prerequisite to enforcing an award obligation between
employer and employee. Clearly, if an appropriate industrial award governs the :., \.
"
conditions of employment then there will be some constraints on the employer's'
contractual freedom. This means that where an award exists, an employer
cannot include terms of employment less favourable than the award, even for [
employees who are not union members. In New South Wales, however, an
award can be overruled if an enterprise agreement is in place. The legislation
requires only that the following three minimum conditions of employment be
met:
/
. a minimum of one week of sick leave on full pay per year
. a maximum of forty hours per week, averaged over fifty-two weeks, as ordinary ~
hours of employment
. an hourly rate of pay for ordinary time that is not less than that which would
apply under an award or former industrial agreement.6

Common law ~
The common law is 'case law' which has developed in the court system. It is the
body of previous judgements which guide how we should interpret the other
sources of legal obligations. The common law is also a separate source of legal Fil
duties and obligations itself. Thus, the general duties of the parties to an employ-
ment relationship are prescribed by the common law. The main common law duties
are set out intable 14.1.
E
Table 14.1: General duties of parties to an employment relationship

Employer's duties and obligations to Employee's duties and obligations to

employees employers

To pay employees wages and reasonable
expenses incurred in the course of the
employment
To provide work in the circumstances
where payment is directly tied to
performance
To take reasonable care for the health and
safety of the employees
To indemnify an employee for losses
incurred by the employer while
performing duties under the Contract of
Employment
A duty to work in a skilful and competent
manner
A duty to obey the employer's lawful
demands
A duty to provide faithful service, which
includes a prohibition on disclosing
confidential information; a duty to account
for and protect the employer's property;
and a duty to give complete attention to
performing the work. Further, the benefit.
of discoveries or inventions developed by
employees during the course of their
employment must be given to the
employer. This should be explained to the
person at the interview stage.

I
- .~
 71
? CHAPTER 14 HI/man resol/rce management and the law 393

The employment
relationship

+ l
a
/,
I ContractI

JI'
a I Federal I Unfaircontract
(section
275of
NSWIndustrial
Breach
(e.g.wrongful
dismissal)

t t It
RelationsAct)

I~m" t
Industrial
NSW
Industrial
NSW
Supreme
NSW
Industrial
Industrial
Relations
Commission
Industrial
Courtof
N
Relations
Industrial
Commission
NSW
Supreme
Relations Court Courtor (Variation, Australia Court Court
LocalCourt (Variation,
Commission set aside) (Enforcement) set aside)

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Figure 14.2: Aspects of the employment relationship at federal and state levels

EMPLOYEE
RECRUITMENT
AND SELECTION
Generally, less than 20 years ago there were few, if any, legal obligations and duties
which existed during the recruitment or pre-employment phase. However, the last
decade has seen the rapid growth and development of comprehensive legislative
and judicial intervention into the arrangements for employing people.
Now, in the pre-employment phase, the following areas require consideration:
. the job advertisement
. the job description
. the application form
. the interview
. privacy guidelines
. superannuation
. occupational health and safety.
The primary reason for their importance is a result of the anti-discrimination and
related legislation enacted federally and in most Australian states during the late
1970s and early 1980s. The main federal legislation is the Racial Discrimination
Act 1975 and the Sex Discrimination Act 1984.7 The former makes it unlawful for
an employer to discriminate on the basis of race, colour or national or ethnic origin.
The latter makes it unlawful to discriminate on the basis of sex, marital status or
pregnancy.

I
~
:~q,,"
,"-I'f!
i~(, 394 PART SIX Managing human resources
,t r
';,iiiJ.
t'
\'
.
,:
, State legislation, entitled Anti-Discrimination Act (New South Wales) or
tt.1,
" Equal Opportunity Act (Victoria, South Australia and Western Australia), pro-
hibits discrimination on broader grounds than those covered by the federal legis-
It' lation. It covers discrimination on the basis of sex, marital status, pregnan~y,
(!
:I sexuality, physical and intellectual impairment, race and age, and it also pro-
,p;
hibits sexual harassment. Tasmania and Queensland are soon to introduce
I! ' similar legislation.
j
I'
~ Discrimination involves making a distinction between individuals or groups so
as to disadvantage some and advantage others. It can be direct or indirect. Direct
discrimination is the most obvious form, and occurs where a person or group is
i
I treated less favourably than another person or group would be treated in similar cir-
l'
1:1"
cumstances. Indirect discrimination involves practices which appear to be inoffen- ,,\',.
.'1 sive but which result in a person or group being disadvantaged.Table 14.2contrasts ~:
f the two forms of discrimination. 1
I~ .~~
i Table 14.2: Direct discrimination versus indirect discrimination ~J~
! ~,:
! ~i'
i" Definition Example Remedy
I :: ~
Direct
ill. I
Treating a person or An employer dismisses a Damages - pecuniary '1j ,
discrimination group less favourably than female purely on the basis loss, hurt and
another person or group of her gender humiliation
in similar circumstances

Indirect A practice which appears A company makes Damages - pecuniary

discrimination inoffensive but which
produces a result in which
a person or group is
disadvantaged
promotion dependent. loss, hurt, loss of
upon five years' career prospects,
continuous service. This stress, humiliation
disadvantages women who
often take time off to have
children.

The following are examples of decisions concerning discrimination in the pre-

employment phase.
. Hall and Ors v. Sheiban Pty Ltd & Anor.8 This case concerned an extreme
example of sexual harassment by an employer in the pre-employment phase. It
illustrates the types of problems that an employer can create if the pre-
employment interview is conducted in an unthinking manner. The case involved
a medical practitioner who employed three receptionists over the years for his
private practice. At the interview, he asked questions which were' quite personal
and intrusive. These included:

'Are you planning on having children?'

'Are you on the Pill?'

'If you are pregnant would you have a termination or would you keep the baby?'
'Do you have sex with your boyfriend? In what positions?'
At first, the Court found that these questions did not amount to sexual har-
assment because the receptionists were not actually disadvantaged by the
manner in which the doctor conducted the interview. On appeal, however, this

.
,~
 / CHAPTER /4 Human resource management and the law 395

decision was overturned. The Full Federal Court found that the questions were
tasteless and unnecessary and gave the receptionists reasonable grounds for
believing that they would suffer an employment disadvantage by not answering
the questions. It was important that each of the applicants, anxious to obtain the
job of receptionist, was influenced to answer questions they would have found
intrusive.
. O'Neill v. Burton Cables Pty Ltd.9 In this Victorian case, the plaintiff was offered
the position of purchasing officer with a company on the condition that he
undergo a medical examination. He agreed to this. During the examination the l

doctor became aware of a stiffness in the man's back, arms, legs and shoulders \'1
. ".
which was apparently caused by exertions from gardening. The doctor advised

,
.-,c;,..
,+ the employer that the man had an acute back condition which made him unfit to
.~ commence work. The man was informed of this fact when he arrived at work the
'5;>;
day after his medical examination. The court found that the failure to employ the
"".'
(;,. plaintiff was discriminatory behaviour under the Equal Opportunity Act 1984.
',)
Back stiffness was an impairmeI,lt, but it did not render the man unable to carry
out the duties of purchasing officer. By refusing to employ the applicant, the
employer had treated him less favourably than someone who did not have a stiff
back.
. Human Rights Commission v. Eric Sides Motor Company Limited.tO This New
Zealand decision concerned discrimination in a job advertisement. The employer
owned a service station and advertised for a 'keen Christian person aged 16-18
who was not afraid of work' to apply for the position of service station
attendant. The test for discrimination was the same as the test under the New
South Wales Act and the federal Act, namely whether the advertisement could
reasonably be understood as indicating an intention to commit a breach of the
Act. The advertisement was held by the court to indicate an intention to either
employ or give preference to Christians. The Equal Opportunity Tribunal
rejected an argument that the term 'Christian' was intended to denote qualities,
such as honesty and trustworthiness, that any employer would seek in a prospec-
tive employee. The Tribunal found that decisions to refuse employment would,
as evidenced by the advertisement, be made on the basis of an applicant's
~.
religious beliefs.
Discrimination legislation affects every stage of HRM, including:
. the wayin whichthejob is advertised
. the wayin whichthe interviewis conducted
. howhiringdecisionsare made
. the term and conditions of employment
. promotion opportunities
. transfer and training opportunities
. decisions regarding dismissal.

The job advertisement

Human resource managers must be careful in publicising a job vacancy that the
advertisement does not indicate, or could not reasonably be understood to indi-
cate, an intention to do an act that is made discriminatory under any of the legis-
lation. The Acts make it clear that an employer need not actually do anything

-~~
l , I
~I
,~

396 PART SIX Managing human resources

~"f
II
f.1
discriminatory. The legislation is specifically concerned with an indication, or ter-
minology within an advertisement that could reasonably be understood as an indi-
cation of an intention to contravene the legal provisions. For example, an
I advertisement that includes such phrases as 'housewife preferred' or 'seeking an
II. office-boy' would offend the provisions.' Similarly, advertising for a Christi~n
:11
teacher is discriminatory.
I Ii Two groups of people are caught - the employer who causes the advertisement
'/
,,<i->

,}~,
't."'-
1"
to be published and the publisher." Even thoughI the fine imposed may not be great,
,
/'~
, HR specialists should be careful to operate within the legislative requirements. :t:i~;
JI '
,~
i, r
Aside from the bad public relations, any hint of discrimination at the recruitment
stage may be used later, for example, by a disgruntled employee alleging discrimi- :~
1
j I ' nation in an unfair dismissal action.
I .,&'
,"'.
','
'1 ,
I. i,W The job description .".
'
;:'
Iii;;
To avoid later accusations of discrimination, or complaints that and employee's i- .
rr ,

fI I duties are not part of his or her role, it is important to prepare a concise job 1,, ",,
i description. This job description should generally be made available at the "~
i !I interview. "'~t

.,'
Care should be taken in preparing a job description not to reuse old versions .~,
"
I (which may be out of date) or reproduce samples from other organisations (which
may be inappropriate). The successful HR manager will consider on each occasion ...

the employer's present and future expectations of the employee performing the job
being described.

"
Application forms
In framing the terms of an application form, HR managers and other inter-
viewers must be aware that certain questions may not be asked either during
an interview or on an application form. The following areas should be given
consideration.

Age
Age is one of the first questions on any application form. Although age discrimi-
nation is not presently prohibited in all jurisdictions, recent developments suggest
that questions concerning age soon may be outlawed nationwide. When this occurs,
the only allowable question will be whether the prospective employee is under six-
teen years of age, this being the age at which a person can enter into employment.

Marital status/family life

Commonwealth anti-discrimination legislation makes it quite clear that questions
concerning marital status should not be asked. Such questions may lead an appli-
cant to allege that the failure to employ him or her was motivated by discriminatory
considerations. The only real relevance of such questions may be to trace a person's
employment history. In this case, the question that could be asked is whether the
applicant has been employed under another name. Similarly, it is extremely ill-
advised to ask questions about an applicant's family responsibilities. Such ques-
tions are only relevant to an applicant's willingness to relocate, work overtime or
travel. In these instances, the appropriate question should be phrased in terms of the
applicant's ability to meet such commitments.

-= ~

..=
 I
,.
Workers' compensation history
CHAPTER /4 Hutnan resourc.. nlcIlOClJl:"""''''

Particularly where a position involves manual dexterity, details of an appli-

..-J II/ww.. J91

,., cant's workers' compensation history may be relevant to the prudent HR man-
ager. This includes questioning past and currently pending claims. Such
questions are not considered discriminatory on the basis of physical or mentaJ
;~~.
impairments, because they relate to the person's capacity to perform work.
Furthermore, any employer will want to avoid compounding the risk created by
f'ft

t,
:f' a workers' compensation problem. Such questions may also be required by a
s. I:-
~""., J. workers' compensation insurer (for example, to determine the amount of pre-
It ,~j~ miums to be paid).
L- .~?
~
11>:11
Physical and mental capacity
Qu(;stions regarding physical and mental capacity are proscribed by most state
legislation. Generally,such questions are unnecessary unless it can be demonstrated
that a particular physical or mental attribute is required. In this case, questions
s should be carefully worded so as to avoid contravening the legislation (and
b offending the person going for the job!). The wording should tie the question to the
e applicant's ability to perform the required duties - for example,'Can you work
under certain conditions, such as wet or humid environments?' or 'Can you distin-
s guish between different colours and accurately identify whether a particular electric
'
h wire is, for instance, red or green?' i .
n I
If the selection criteria include the ability to perform tasks which clearly require
b certain physical attributes, the applicant may be required to undergo a medical
examination or produce a recent medical certificate. Such physical requirements
should be described in the job advertisement.
Criminal convictions
;J It is quite common for application forms to contain questions regarding criminal
:>

1
convictions. It is unlikely that such questions will ever fall within the framework of
discrimination legislation.

References and previous employment

The application form will usually provide for the applicant to nominate referees. In
t contacting any person not nominated as a referee, the applicant's permission should
be sought. Also consult the applicant before contacting previous employers or
checking academic qualifications. Later, in the interview, the applicant may be
asked why he or she left a previous position of employment. .

The interview
An interviewer should not conduct an employment interview without careful plan-
ning and forethought. Failure by the interviewer to be aware of discrimination
legislation in particular, could lead to court and tribunal intervention. The interview
and the process surrounding it are easier if based on objectivity and a ready-
compiled job description.
It is also necessary to consider whether the interview should be conducted on
a one-to-one basis. Apart from affording the organisation the benefit of a second
opinion, a second interviewer may represent an important back-up if an appli-
cant later accuses the employer of discrimination. Therefore, a prudent HR

..
~y. - --

('
- ---
I lif"'"
II'l.,
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'.'l~
I~t:'tt.
t,r , t. 398 PART SIX Managing human resources
r "I .

't', I I manager should conduct the interview with another person from the organisa-
I~ ~ I
:~I '
d', ' I I tion. In all cases, comprehensive notes should be made of the interview so that
t " "1 there is an up-to-date record available in the event of any legal challenge.
Where there is only one interviewer, note-taking becomes more difficult. A
P, I j
useful approach is to comment on a' printed sheet containing space for' each
!W,1 '\1 selection criterion.
:
~~br !
After completing the interview or the process of culling written applications,
, , either destroy or return (on request) the forms of unsucqessful applicants.
: ~'
J" "I
, ;"

i'F I r ,
t
Terms and conditionsof employment
,

,
,

I "
S'r
J 1..,1 1
: ,~:' It, Superannuation '.' ;:'
': ::
I
<:. "' " " 1'
.. ''': ;" r "I
", """0." " '
f "I ,
"

~i'

., .,\.
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,
Since 1 July 1992, under a federal legislative package, it has been compulsory for
all employers to provide superannuation for their employees. Employers (if their
'
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,, ,
\, 1"
I 1\.
"
\' ,II ~'" ,;
I
' 't payroll exceeds $500000) are required to contribute either 3 per cent or 5 per cent
,'~,
of the employee's ordinary time earnings.12
i ~\1i It! ".,~
;l~
'L'"
,
,

1,
,

i
Occupational health and safety requirements
:~~'I:'
, ". "
All state governments and, more recently, .the Commonwealth Government have ~.
i' i.' introduced legislation obliging employers to be responsible for occupational health
", I, r~~~
~ r and safety.13 The purpose of the legislation is to balance the inevitable health and
i
safety risks associated with industry against social justice issues. Employees
i.,! I ! should not be exposed to unacceptable levels of hazard at work, and those who are
Ii
injured at work should be fairly and sufficiently compensated. Basically, an
,. I'I
employer must provide and maintain, so far as is practical, a working environment
" p which is safe and without risks to the employee's health. Safety standards set out
in the Regulations to the Occupational Health and Safety Acts aim at preventing
injuries. The legislation also deals with compensation schemes for injured
workers.
When hiring employees, HR managers must provide all the necessary infor-
mation, instruction, training and supervision for employees to perform their work.
The duty of the employer also extends to:
. providing and maintaining plant and systems of work that are safe and without
risks to health
I I
. making arrangements for safety in connection with the use, handling, storage and
transport of plant equipment and substances
. maintaining the workplace in a condition that is safe and without risks to health
;i . providing adequate facilities for the welfare of employees at the workplace.

In New South Wales, the legislation also creates a general duty on employers:
II
Every employer shall ensure the health and safety and welfare at work of all
employees.

The duty is an absolute obligation. It is not even qualified by the usual words, 'so
far as is reasonably practicable'! On the other hand, employees should be aware
that they cannot be compensated for injuries received whilst performing work out-
side their job requirements.

-= :~.
~

--
 CHAPTER /4 Human resource management urtJ flu- If/" J99

TERMINATINGEMPLOYEES
Dismissals invariably fall into one of three broad categories:
1. Dismissal based on an employee's serious breach of the contract demonstrating
an intention not to be bound by its terms. This is known as 'summary dismissar.
An example is where an employee repeatedly turns up for work intoxicated.
',( 2. Dismissal pursuant to the express or implied terms of the employment contract
r
.(
whereby an employer is entitled to terminate the contract by providing reason-
able notice or payment in lieu. This is known as dismissal 'on notice'. An
example is where the employer decides that a worker's performance is simply no
longer satisfactory.
3. Dismissal based on the employer's commercial or economic decisions regarding
the. management of the business. This is called redundancy or retrenchment.
Sometimes, an employee may resign from a position and refuse to accept an
alternative position, yet the employee is treated as if he or she had been dismissed.
This is known as 'constructive dismissal'. It occurs when an employee is effec-
tively forced to resign, usually because he or she disagrees with the employer's
changes to the contract of employment (for example, changes to the work location
or to duties). Even if contract changes are agreed to by the employee, the consent
~~,..' may not be freely reached. Effectively, this is no consent. In the case of construc-
tive dismissal, the employee has the same rights as if he or she had been dis-
missed.
'ill As discussed above, the contract of employment, (which may be oral or written
.. and contain either express or implied terms), includes a number of duties to which
employees are bound. Breach of these duties may constitute grounds for dismissal.
However, the employment relationship is not only governed by the law of contract,
and the right to dismiss does not arise automatically upon an employee's breach of
contract. Although the employment relationship is contractual in essence, any con-
tractual right to dismiss must be translated into an ability to dismiss. This involves
understanding how the four sources of employment law (see page 390) interact (see
'Procedures for dismissal').
Wherever dismissal occurs, the contract of employment is terminated. However,
every dismissed employee has the right to contest the termination of his or her
\."
employment contract in c()urt.

Proceduresfor dismissal
Significant changes were introduced pursuant to the Industrial Relations Act 1993
which came into operation on 30 March 1994. These new provisions have funda-
mentally changed the law regarding the termination of employment for employees
covered by federal award and for non-covered employees.
Employers must comply with provisions and provide employees an opportunity
to defend themselves against allegations related to conduct or performance. Other-
wise termination may be deemed to be harsh or unjust. Consideration should be
given to the following facts:
. It is mandatory that employers give employees the opportunity to Jefead them-
selves against allegation of misconduct. However, if not granted the opportunity
then there must be proper grounds for not providing this opportunity.

...::.oa..
~-

iL
l , ;'
400 PART SIX Managing human resources

. When terminating an employee for unsatisfactory performance the employee

must be warned accordingly and allowed a reasonable amount of time to
improve. If unsatisfactory work continues, termination can take place.
V The right to dismiss summarily is a powerful tool that may have a drastic effect
vr on the lives and livelihoodsof those dismissed. ThereforeLthecourts have restricted \1"1V"

, tj1~}ighUo.occasion~ere~.ee-conducLorJ1llimded conduct is in direct and

, serious oppposition to the employee's obligations. Most awards and industrial'
agreements preserve the employer's right to dismiss without notice in response to
~.
8 behaviour such as misconduct, dishonesty, neglect and insubordination. Even where i
i
tIi !
the award or agreement is not explicit on the matter, common law duties of obedi-
ence, fidelity and care are implied in the employment contract. Breach of these
t
.,.,.

J~
).{

duties may provide sufficient reason for summary dismissal. The following are
'~.
grounds which most commonly arise:
. misconduct .it
. physical and verbal abuse
.. disobedience ii
'-,
.'
. . drunkenness
,
1j
. incompetence ~i
'.
. neglect of duties '.~
. dishonestylbribery '...
:, . . criminal behaviour
I. . absenteeism.

NEYYSBREAK.

Humiliation claim
TORONTO: A woman in Canada who April 1991~ismissal by Calvin Klein
lost her job as a perfume demonstrator cosmetics.
because of alleged body odour told a r "No one sees that I'm a wife, a
court hearing in her wrongful dis- mother, thati!vhavealife," she told Judge
missal lawsuit that the incident made Lee Ferrier. /

people see her as "this smelly The Canadian subsidiary of the

person" . American-based firm maintained Ms
Sharon Bagnall told an Ontario Court Bagnall's odour created a persistent
judge that she was humIliated by the problem for other employees.

(Source: Agence France-Presse. cited in South Chi= Morning Post, 15 May 1994, p. 12.)

Notice of dismissal
Employers may not terminate employment unless they have given the employee
sufficient notice. Otherwise compensation must be paid. The worker should be noti-
fied in writing of the decision to terminate employment and should be entitled to
recover, on request, a statement of reasons for the dismissal. This is to ensure
clarity and avoid confusion. If employers do not abide by these regulations and ter-
minate employment for any of the above reasons described, termination will be
deemed unfair.

, ",......... ...... =-L--

.J

"-.~ - --~-
 I CHAPTER 14 Human resource management and the law

Notice is not required if the employee is guilty of serious misconduct. That is,
401

,
misconduct of a kind whereby it would be deemed unreasonable to require the
employer to continue the employment during the notice period.
How much notice is given depends on the employee's continuous service with
the employer (see figure 14.3):

Employer's contll"Juous servlce;wlth employer Period of notice

'e

Not more than. a year I. At least one week.

e .' At least 2 weeks.
More than a y~~rbut not mbre l~an 3 years.
i.n
'e f.' More'than'3 years'but not more lhan 5 years. At least 3 weeks.
! More than 5 yea.rs; At least 4 weeks.

I
Figure 14.3

~, The following categories of employees are exempted from the unlawful termin-
W'
ation of employment provisions:
'~
tl,
;:..
. employees engaged under contract of employment for a specified period of
time
" "
. employees serving a period of probation or a qualifying period of employment
. casual employees hired for a short period of time.

Other relevant factors in determining unfair

dismissal
Employers are prohibited from terminating an employee's employment for reasons
set out in SM170DF(1). This includes areas already covered in most federal awards
following the Termination Change and Redundancy Case, 1984. Apart from race, "
colour, sex, marital status, family responsibilities, pregnancy, religion, political
opinion, national extraction and social origin, the new provisions have added other
new discriminatory grounds prudent to unfair dismissal. These are:
. sexual preference
. age
. physical or mental disability.
In addition, an employer is prohibited from terminating an employee's employ-
ment because of temporary absence from work due to illness or an accident, union
membership or participation in union activities.
Where an employee is absent from work because of illness or injury it will be
regarded as temporary absence if one of the following applies:
. the employee is on authorised leave
. the employee complied with the terms of an award or court order to notify the
employer of any absence and to give a reason
. the employee has complied with the requirement set out in sub-regulation30D(5)
and obtains a medical certificate of absence stating illness and the duration of
absence from work as temporary.

J
-
 402 PAIU \/\ "..""r'''. "..-", ,,,,,'urCt'I

Remediesfor unfair dismissal

! i}
Under new changes to the federal Act, employees will be able to seek redress for
i .I unfair dismissal in the Australian Industrial Relations Court. The court has out-
I' lined detailed criteria required in applications in respect of unlawful termination. It
requires the employer to submit a detailed statement as a response. Failure to do
so could have irrevocable damage on hislher defence. Advice should be sought
immediately. ~.
. . An employer is served with an application in respect of unfair dismissal. If an
employer unlawfully terminates someone's employment, the employer may face a iW
j claim for compensation and reinstatement. .~
I
i I
If settlement cannot be achieved, the court may make orders to put the employee I
i , i~:
I in the same position as if the employment had not been terminated. Court orders '
may include: "'
* '
. declaring the terminating to have contravened the provisions of the Act

I '
. requiring the employer to reinstate the employee
.;1
... .
. ordering compensation.
, Damages awarded under the new legislation may well be larger than previous -I
! I
awards at common law. Whether unfair dismissal will be determined by objective 'i
or subjective standards is yet to be determined. I,
It is significant that compensation is not defined and there is no upper limit on
.~
amount or other limits on the application. If a contravention of the termination ~:;1
provision has taken place, the court may impose a penalty of no more than '.
$1000.

Rightsof the employee

Where an employee has been dismissed, he or she has various means of appeal. The
most important ones are:
. a statutory action for unfair dismissal
. a common law action for wrongful dismissal
. a statutory action under section 275 of the Industrial Relations Act 1991.14

Wrongful dismissal
Where an employer makes a fundamental breach of the employment contract, an
employee may make a wrongful dismissal claim. For example, termination on
insufficient notice constitutes a wrongful dismissal. Usually, the dismissed
employee can claim damages for wages lost due to a short dismissal period. An
employee has a duty to mitigate the loss and attempt to arrange alternative employ-
ment. If he or she secures a new job which provides equal or better remuneration,
then no damages will be awarded.

Unfair dismissal
A dismissal may not be 'wrongful', but is nevertheless 'unfair'. This would be the
case where the employer gives full lawful notice or pay in lieu, but there is no mis-
conduct which warrants the dismissal. Table 14.3 compares unfair dismissal with
wrongful dismissal.

!!!!!!oS

~,-- -=- -~
 CHAPTER 14 Human resource management and the law
I Table 14.3: Comparison of wrongful and unfair dismissals
Trigger
Wrongful Fundamental breach
of employment
, ' contract by employer
'i'
,~ Unfair Dismissal is harsh,
unjust or
~'
unreasonable
'",'
:~ NEWSBREAK
/~
\\
Ruling on random tests stirs debate
".~ Random breath testing of employees
was a means "to get rid of' extra~taff,
By/'Ben
..
it
according to the Australian Metals and
\",'
EngineeringUnion;
The State president of the AMEU in
Queensland, Me Ron Keating, said he
was concerned that employers would use
ranqombreath testing as a means i!;of
allowing other more dangerous health
and safety regulationsto go by.
But according to the head of the Aus-
tralian Chamber of Commerce and
Industry,MeBrianNoakes,randombreath
testingwas an optionemployersshouldbe
able to use if they felt it was necessary.
Their comments come after an arbi-
tration decision in Queensland about
three weeks ago,to force coal miners at
Newland Mines to take random breath
tests to enslire the safety of all workers.
Me Keatingsaid he believedit was too
early for his union to accept the viability
of random breath testing in the work-
place."',
"There are too many questions that
must be answered" before breath testing
could be implemented, such as how the
procedure would be handled, Me
Keating said.
"And then there is the whole idea of
victimising people;' he said.,
"It is a means of setting up a record
on a worker and establishing a way to
get rid of him."
Mr Keating said he had yet to see
concrete evidence to support the state-
(Source: Weekend Australian, 12-13 March 1994, p, 58,)
~
403 -..
Action
Remedy
Common law Damages
Statute Re-instatement;
re-employment;
compensation
~I
Hutchings
rilentthat drugs and aIcohoUn the work-
place were currently a threat to safety in
Australia.
He said the decision to force coal
miners .in Queensland to take random
breath tests was an infringement of their
rights and 9id not take important factors
into consideratioq.
"If you can test people in the 'coal
mining towns then why can't you do it
in the offices in the city," Mr Keating
said.
"We support safety and I would like
to see an ocCasionwhere no-one in the
workplace was under the influence of
drugs or alcohol.
"But random breath testing is a viable
option and says to workers if you don't
like it, then bad luck."
But Me Noakes said random testing in
the workplaceshould be an optionagreed
upon by employers and employees.
He said in a case where agreement
could not be reached it should be the
prerogative of the employer to establish
random breath testing to ensure the
safety of employees.
He said drunken behaviour on the job
by, fur example, airline pilots or train
drivers, could threaten the safety of col-
leagues.
Mr Noakes said employers were
forced to ensure that stricter measures
were applied at the work place and it was
their responsibility to do the best they
could to'ensure precautions were taken.
 4U4 PART SIX M{/II{/g;lIg hUII/{/1Ire.w/lrces
..t
" t
The availability, jurisdiction and rc~ fur an ~.tlon for unfair dismissal vary
i, .I I
~

from state to state depending on the legislation. Thus, the factors considered by tri-
Ijt bunals in determining a claim will also differ from state to state. However, the fol- \
. iq"f,
t I, I
lowing factors will usually be considered. HR managers should be aware of these
factors so as to avoid claims for unfair dismissal.
~
ii. l ~ . Employer's right to hire and fire. It is the basic right of the management to '. .,
"i
!,
choose employees and to dismiss or retain them. Courts do not pretend to be i
ul '
business experts. Should a court disagree as to the business necessity of a dis- ,~
'. !
"[ (r' I missal, that is not itself sufficient to justify intervention. 15An order for reinstate- ti
.,1
ment will only be made in exceptional circumstances, and only if the employee
.~\
"..
I

has a strong case which justifies overriding the employer's powers. The proper
j;;.,
r~i
<]' II
i.Ik,J test is whether there has been oppression, injustice or unfair dealing on the part
of the employer towards the employee.
,
'
I "
i
'

.\
,l

\,Ii't)!
, I
I.
An example where the New South Wales Industrial Relations Commission
refused to intervene concerned the employment termination and suspension of ~:~
iiI an employee from Blayney Abattoir.16 The man was employed as a labourer on .~~
the mutton slaughter floor. The employer argued before the commission that the ~.~.:
,:1'..t 1
f
labourer had left the abattoir without permission and after several warnings. The
.1, P I
t ~i
Australasian Meat Industry Employees' Union, New South Wales branch, con-
tended that the labourer had not been given a 'fair go', and that he had been f~
."
11 ! ;
,',4 !"
treated in a cruel, harsh and unjust manner by the company. After finishing l
I'
work, the employee had looked for his supervisor but, unable to find him, had
.\
;,':' '

..p
!~ gone home without permission. The commission found that the company had
been very easy on the employee, especially considering his record of walking
-
,,,1, J~,'"
.
,

i'
,

j
.
off the job, fighting, being lazy, abusing fellow employees and incurring 'a
string of reprimands a mile long', including a previous suspension. Having
I
regard to all the circumstances, it was determined that the labourer had been
i~, . "
treated fairly.
.
I

Giving reasons. Management is obliged to give reasons for dismissing an

employee, especially if an employee has good qualifications, long service, a good
! record and there is nothing to damage his or her character. There will be a good
i!
case for unfair dismissal if no reasons for termination are given.
It is also wise to give the employee an opportunity to explain his or her behav-
iour. This may avoid later allegations of unfairness.
. Failure to give warning. Failure to give employees sufficient warning of dis-
missal and the reasons for it, will result in compensation being paid.
. Inadequate performance or misconduct warranting dismissal. The Industrial
Court must ensure that the investigations undertaken on employees by employers
are thorough and fair; that questions directed at the employee are made clear. The
decision maker must take into account the employee's record of service and the
likely effects that dismissal will have on the employee.
The following are examples of conduct amounting to unfair dismissal.
. An employee refused a direction from a foreman on a work site to train another
worker whom the employee regarded as scab labour. He was dismissed on the
spot. The court needed to determine whether the employer's legal right to dismiss
had been exercised so harshly as to be an abuse of that right. Because the
employee had expressed a desire to give forty hours' notice of resignation, the
court found that there had not been any act of unfairness. I?

.,

..
')
.7~--,- '- ~
.
..
 .1
. .
CHAPTER /4 Hllman re.fOurce management and the law 405

. An employee was dismissed because he refused to obey an employer's order to

J

do a job usually requiring two men. The court found this to be unfair because it
was an l1nreasonable exercise of the employer's rights. IS \~
. A storeman was dismissed after a company restructuring which resulted in a per- 1
sonality conflict with the new manager. This was despite eight years of valuable
i. and faithful service to the company.19 The.Commission found that the employee .1
II
t~ had been unfairly dismissed, and ordered that the matter be set down for a later I

e
't ~;
'I"

. ,r
date when the question of compensation could be addressed.

NEWSBREAK '

r ", .'

I
,

t ,

f
i The correct way to sack an employee
The new Industrial Relations Reform
1 Act. . . makes it imperative that
.,-'
employers follow correct proced\lres
when dismissing employees, according
to the law firmArthur Robinson & Hed-
derwicks. . date, the employee should be given
~ The legislation states there are three
valid reasons tor dismissing an
employee: inadequate performance,
misconduct and redundancy.
Employers should ensure they have
adequately briefed employees about the
requirements of the job, kept proper
records of poor performance or breach
of discipline, and counselled employees
about any problems with work or
behaviour. The sooner a problem is
found, the greater the chance of
resolving it. Tackling problems also
indicates to the employee that manage-
ment is treating the matter seriously.
Employees must be given opportuni-
ties to improve performance to the
desired level. After discussing a
problem at a counselling session, they
must sign a copy of a '.record of the
meeting. If they refuse to sign, a wit-
ness should attend. Further counselling
sessions may be necessary.
If the counselling sessions do not
work, the employee should be given
notice in writing. The letter should out-
line the reason for the employer's dis-
satisfaction with the employee's
performance, refer to the previous
counselling sessions, refer to the
employee's explanations and discuss
why they are unsatisfactory. The .letter
should make it clear that if work per-
formance does. not improve, the
employee will be dismissed.
If performance has not improved to
the required level by the specified
one more interview before being dis-
missed. This should be conducted with,
another manager, if possible. The pur':'
pose of the interview is to outline the
employee's performance and' tb
explain that it has been unsatisfactory.
During the interview, the employee
has one last chance to provide an
explanation. ,Employees should be
informed that this is the final interview
to decide whether or not he or she
should be dismissed. It is a good idea
to let the employee be accompanied by
a friend or union delegate.
If at the end of the interview the
employer decides to dismiss the
employee, he or she should make a
minute in the records and deal with
issues of notice or appropriate payment.
Employers should make sure the dis-
missal is handled sensitively and does
not humiliate the employee. Many firms
hire outplacement consultants to
counsel senior employees immediately
after the termination.interview.
Except in the case of serious miscon-
duct, such as theft or assaulting a client,
an employee must be given notice of
termination or pay in lieu of notice.
Both must match the sliding scale,
depending on the length of the
employee's service.

(Source: Business Review Weekly. 11 April 1994. p. 51.)

~-
 to 1
I
406 PART SIX Managing human resource.f

I
l, Unfair contracts
!~ Often, dismissed employeeswill not have a remedy of reinstatementunder the rel-
,j
evant statute (because they either are not members of unions or are not covered by
", awards). Neither do they wish to encounter the long waiting lists to have their claim
for damagesheard by a court. In these instances, people often turn to section 275 of
the Industrial Relations Act 1991.
This section is sometimes more favourable to applicants because it allows the
commission very wide powersto declarevoid,or to vary,a contracton the basis
~ that it is unfair, harsh or unconscionable. In the context of a dismissal, this may 1
,.,.~
involve substituting fairer termination benefits than those contained in the original
,I
contract.

r :
- =--- --l I
it
1.
,~
t
.. f

[ '.-

~~R~

"Sorry about this, Smiggs, but what with the unions and everything you're the
only one left I've got the nerve to fire! ..

Retrenchment
Retrenchments are dismissals which are based on commercial and economic
considerations. The dismissals may arise for a number of reasons, including
technological change, a downturn or seasonality in business, and restructuring of
the enterprise. In all cases the employee is dismissed through no fault of his or
her own.
The respective rights of employers and employees in relation to redundancy
or retrenchment are now almost exclusively governed by awards and legisla-
tion. Of major importance to the law on redundancy is the Termination.
Change and Redundancy Case 1984 which concerned an application by the

~ j
=-=:!Ii.
.....
 .
\ .. '
\

/ CHAPTER 14 Humall resource mallagemellt alld the law

Australian Capital Territory Union to amend the Metal Industry Award.2oThis

was a test case. In its decision, the Industrial Relations Commission (IRC) dis-
407 II

cussed the general principles to be included in a redundancy provision in an

i~ award. The aim was to provide stability and consistency and so avoid conflict
ill
-eM; and uncertainty. The IRC laid down recommendations in relation to consulta-
f1; tion, information, notice, transmission of business, time off during the redun~
~- i
Ie dancy period, an employee leaving during notice period, the transfer to other
lS duties of an employee, severance pay, ordinary and customary turnover of
Y labour, superannuation, incapacity to pay, provision of alternative employment,
and notification to the Commonwealth Employment Service. In a Supplemen- ~'
I
tary Decision, the appropriate levels of severance payments were fixed. From
the case, minimum requirements based on length of service have been set (see
table 14.4). The general standard prescribed in the TCR Case has now found
t
-t- its way (either in full or in an amended fashion) into all major federal and state
~
il industrial awards.

;t Table 14.4: Redundancy requirements

Period of continuous
~ service Period of notice Severance pay

I year or less I week Nil

, 1-2 years 2 weeks 4 weeks' pay
~
2-3 years 2 weeks 6 weeks. pay
3-4 years 3 weeks 7 weeks' pay
4-5 years 3 weeks 8 weeks' pay
5 years and over 4 weeks 8 weeks' pay

An employer must hold discussions with employees and unions once a definite
decision has been made which may lead to redundancies. However, employers are
not required to disclose confidential information about the terminations which
might be contrary to their business interests.

Summary

The law governs the parameters of all employment relationships. Legal obligations
arise from employment contracts, statutes, awards-and the common law. Since igno-
rance of the law is no excuse, HR managers need to be aware of these legal obli-
gations.
Many problems can be avoided by carefully drafting a detailed employment con-
tract. This allows the parties to set out their particular intentions very clearly. It also
forces the employer and the employee to contemplate and solve potential conflicts
before they arise. This ultimately saves time and money.
In dismissing employees, managers need to be aware of the required pro-
cedures and the need to give reasonable notice. A workplace which is free of con-
flict is not only a happier one, but also one which has an advantage over its
competitors.

---L 7