The Albanese Government has announced that if it is re-elected at the 2025 Federal Election, it will limit an employer’s use of non-compete clauses for employees who earn less than the high-income threshold under the Fair Work Act 2009 (Cth) (currently at $175,000).

What are non-compete clauses?

A non-compete clause is a type of restraint of trade that limits the post-employment work activities of a former employee. It prevents or restricts an employee from working for competitors or starting up their own business after leaving their current employer. Employees on the higher end of the threshold may have more access to confidential information and employers risk facing commercial risk and exposure of their business and clients, when employees leave. Therefore, contracts containing non-compete clauses allow businesses to protect their intellectual property, often primarily their client base.

When seeking to enforce a non-compete clause, care would need to be taken to ensure the restraint does not overreach. It is important the non-compete clauses are reasonable and protect legitimate business interests.

Furthermore, lower income employees (those significantly below the threshold) are disproportionately affected by non-compete clauses. Non-compete clauses are increasingly common across various industries of work despite their lack of legal enforceability in such cases. It may be unfair to the employees as they are more likely to have less resources to challenge or defend against employers who seek to enforce non-compete clauses in court. Moreover, employees on low income who are faced with non-compete clauses may experience wage stagnation due to low position availability and reduced job mobility.

For a non-compete clause to be enforceable the clause must be necessary to protect the legitimate business interests of the employer and the restraint itself must be reasonable. When courts consider whether a restraint in an employment contract is enforceable, they will consider:

• the duration of the restraint,
• the area of the restraint,
• the employee’s role and seniority at the business,
• the level of income of the employee,
• the effect of the restraint clause on the employee’s ability to continue earning money.

Ramifications of such a change

 Businesses may see non-compete clauses as beneficial for the protection of their business interests. A common issue amongst employers is that many employees who earn close to the high-income threshold have access to employers confidential and sensitive information. This could create a risk of damage to the employer’s business if the former employee is able to move freely to a competitor in the absence of restraints as no restriction may have been placed on the employee and they are able to use sensitive information from their previous employer against them. Ultimately, the Albanese Government’s proposal could significantly impact an employer’s ability to protect their legitimate business interests.

 However, the proposal could also ensure fairer condition for employees especially those earning lower incomes. This is because there are severe consequences for non-compete clauses being enforced on employees earning less than the threshold. Although non-compete clauses can allow for a business to protect confidential information and intellectual property, employees may also experience negative effects of non-compete clauses being enforced. They may be prevented from moving to better jobs as they are restricted by the non-compete clause in what industry they may continue working in. In addition, employees may experience financial hardship due to an inability to find work in the same field of expertise. Another issue is the uncertainty amongst employees earning a lower income as to whether non-compete clauses are enforceable. This can discourage employees from moving to higher paid and better jobs, despite the clause being unreasonable and unenforceable. By banning non-compete clauses from being applied against the vast majority of workers in Australia, this could ensure that many employees are not burdened with the negative effects of these clauses.

Conclusion

The reforms on non-compete clauses are scheduled to take effect from 2027, if the Albanese Government is re-elected. At PH Solicitor, we have extensive experience in advising both employers and employees about post-employment restraints seen as non-compete clauses. If you are currently experiencing issues with non-compete clauses and require advice specific to your circumstance, please contact the team at PH Solicitor at admin@phsolicitor.com.au or by phone on (03) 9642 0435.

Disclaimer: Nothing in this article should be relied upon as legal advice. The contents of this article should be regarded as information only.

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Employers must now be aware of this recent decision of the High Court, drastically impacting their employment relationship with their employees.

This article provides a summary of the High Court’s decision in Elisha and its impact on the future of employment laws within Australia.

The longstanding position of Addis

Until recently, Addis remained the major impediment to the award of contractual damages for loss in respect to the mental distress, trauma and injury caused by the manner of dismissal of an employee.

In Addis, the court held that damages in contract must ‘flow naturally from the breach’. As such, contractual damages for psychiatric injuries were not available for the manner in which a contract had ended, as these damages were determined to be too remote to the breach.

The award of damages is an integral part of the fair and just processes of the legal system in Australia. There have been few attempts to overturn the principals of Addis throughout the Australian courts, notably in the case of Burazin v Blacktown City Guardian Pty Ltd [1996] IRCA 371, 156. The constraint Addis placed on the courts was significant, meaning contractual damages for unfair dismissal cases were not available in Australia for over 100 years.

To read more about the Addis decision and its implication on the award of damages, please click here.

Understanding Elisha v Vision Australia

The majority decision in Elisha marks the beginning of judicial acceptance of mental stress and injury for an employee following an unfair dismissal.

Facts

• Mr Elisha, a former employee of Vision Australia, sustained a psychiatric injury after he was dismissed from his role in May 2015.
• Vision Australia stood down Mr Elisha, after sending him a stand down letter. The letter invited Mr Elisha to a meeting in which he could provide his response to allegations of improper workplace conduct.
• Vision Australia made findings that Mr Elisha had engaged in aggression while staying at a hotel whilst carrying out work duties. It was described as the ‘latest example in a pattern of aggression’.
• Vision Australia then terminated his employment due to the alleged serious misconduct claim made by the hotel owner.
• The abrupt termination of Mr Elisha’s employment never gave him an opportunity to respond to the allegations. This constituted a breach of the Company’s disciplinary policies which were found to form part of the terms of the employment contract.
• Mr Elisha developed a major depressive and adjustment disorder and he lost his capacity to work for the foreseeable future.

Mr Elisha commenced proceedings in the Supreme Court of Victoria against Vision Australia.

Preliminary issues discussed by the High Court

Did Vision Australia breach Mr Elisha’s employment contract by failing to abide by their Disciplinary Procedure?

The High Court noted that Mr Elisha’s employment contract outlined that his employment conditions will be in accordance with the employer’s policies and procedures, and any breach will result in disciplinary action.

Vision Australia made assurances that if there was a concern of a serious nature, a specific procedure will be followed. The employment contract contained a clause outlining the incorporation of the disciplinary procedure into Mr Elisha’s contract.

The relevant clause stated:

‘Other Conditions: Employment Conditions will be in accordance with regulatory requirements and Vision Australia Policies and Procedures. Breach of the Policies and Procedures may result in disciplinary action.’

The ‘Other Conditions’ clause would suggest to a reasonable person that the intention of this clause was to be contractually binding.

Seeing as the disciplinary procedure formed part of the employment contract, as shown above, Vision Australia had a contractual obligation to follow its own disciplinary procedure.

The High Court explained that Vision Australia’s reliance on the principles of Addis was misplaced, stating that the Addis case never explicitly stated that contractual damages were not available for unfair dismissal claims.

Is liability for a psychiatric injury too remote, nullifying the award of damages?

The High Court affirmed that psychiatric injury falls under a type of injury that can result in damages being awarded to employees for breach of their employment contract. This identifies a major change from the previous position that psychiatric damages were too remote to attract compensation.

Twenty years earlier, Baltic Shipping Co v Dillon (1993) 176 CLR 344 (‘Baltic’) held that damages for psychiatric injury were available for breach of contract claims. The four members of the High Court in Baltic did not outline any exception to this decision for employment contractual claims.

The test for remoteness considers the general type of damage that occurred, and the general manner in which the damage occurred. The High Court described the circumstances of the breach as ‘serious’, as the real reasons for Mr Elisha’s dismissal were not mentioned in the dismissal meeting.

The High Court determined that Mr Elisha’s loss was not too remote. The psychiatric injuries he suffered could have been reasonably contemplated by the parties as a serious possibility, given the disciplinary processes he was subject to.

The High Court found that it is therefore reasonable to expect Mr Elisha would suffer a psychiatric injury as a result of Vision Australia’s actions.

Can damages obtained by breach of contract extend to psychiatric injury?

The High Court decided that psychiatric injury falls under a determination of physical or personal injury of which damages can be recovered for a breach of contract claim.

The High Court upheld that the $1.5 million awarded to him at first instance confirmed the availability of psychiatric damages for breach of employment contract claims.

Scope of employer’s duty of care concerning the manner of dismissal

The majority of the High Court determined the reliance of Vision Australia on the long-standing principles of Addis was “misplaced.”

Alongside his breach of contract argument, Mr Elisha argued Vision Australia should be liable for damages under the tort of negligence. Mr Elisha argued that the duty of care required by a company extends to taking reasonable steps to prevent an employee suffering a psychiatric injury from a disciplinary process.

The modern approach in society would suggest a person’s employment is an integral part of their life, and an unfair dismissal can not only affect a person’s income, but their identity and self-esteem necessary to persevere through the daily troubles of life. The Addis case was decided upon in a different social context over 100 years ago.

Recognising psychiatric injury stemming from breach of contractual claims modernises employment law, and allows employees to pursue claims that may not have previously been available.

How does this affect employers/employees?

The future of employment law has been shaped by the High Court’s overturning of the long-standing Addis principle, with consideration to the changing workplace attitudes from when the House of Lords made the decision in Addis in 1909, to now.

The Australian courts may consider whether companies have followed their own written policies, and whether an employee’s manner of dismissal expressly falls under the contractual obligations outlined in their employment contract.

Employers should review existing employment contracts to ensure that any reference to a policy or procedure is not incorporated as a contractual term. Amending outdated contractual terms is important, as there are now numerous avenues for employees to obtain contractual damages.

Employers must also now consider the possibility of psychiatric illness or mental harm during the termination process of an employee. This is particularly applicable if a medical vulnerability relating to an employee is known to the employer.

Employers may consider reviewing their disciplinary processes to ensure fairness to employees remaining consistent with the organisational policies and procedures.

Employees will now be able to seek damages for a psychiatric injury arising from an employer’s breach of their employment contract. This means that they are now entitled to seek compensation because of their manner of dismissal, allowing them to hold their employers accountable for unfair dismissals.

Mr Elisha’s successful appeal to the High Court of Australia marked a significant shift in social attitudes regarding psychiatric illnesses, and the importance of the employment relationship in the scope of modern-day employment.

This marks a significant step towards the destigmatisation of psychiatric injury as the new employment law precedent reflects the changing social attitudes.

Conclusion

The inability of previous cases to over-turn Addis prior to Elisha reiterates the stranglehold the Addis case had over the availability of damages for psychiatric injuries. The entitlement to damages for psychiatric injury can now be regarded as a further exception to the general   contractual principles which apply because of the unique nature of the employment relationship.

The Elisha case marks the beginning of a new era for employment law.

Disclaimer: Nothing in this article should be relied upon as legal advice. The contents of this article should be regarded as information only, and for specific legal matter, independent advice should always be sought.

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At PH Solicitor we value our clients’ satisfaction above anything else and this is even more gratifying when we are complimented publicly.

Read what our clients have to say about our services here:

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This article aims to provide both employers and employees with context and an insight into:

1. what adverse action is;
2. how to avoid committing adverse action; and
3. the penalties associated with a breach of general protections laws.

Summary of Facts

Willis Brothers Installation (the Employer) operated a business of manufacturing and installing kitchen and bathroom stone benchtops. Timothy Ruttley (Timothy) had worked as a stonemason for the Employer since he was 18 years old. At the time of the termination of his employment he was working as the Employer’s Production Manager. Duncan Willis (Duncan) was the majority shareholder of the Employer. Timothy and his brother Simon had acquired interest as shareholders for the Employer, with Timothy having interest of 17%.

In 2017, Work Health and Safety Queensland directed the Employer to have its employees screened for silicosis. Both Timothy and Simon were diagnosed with lymph node silicosis in November 2018.  WorkCover directed all workers who had been diagnosed with silicosis to refrain from performing work in an environment containing silica dust. Consequently, Timothy ceased being directly involved with the physical installation and manufacturing of stone benchtops. However, he remained active in the administration of the Employer’s business.

Between July 2019 and January 2020, Duncan behaved in a bullying and aggressive manner towards Timothy in an attempt to exit him from the business. The following were some of the allegations levelled at the Employer by Timothy:

1. the Employer had denied him the ability to check his leave entitlements and subsequently reduced his leave entitlements;
2. the Employer altered his position to one in which he received a reduced wage;
3. the Employer failed to pay him his wage whilst he was on personal leave;
4. Duncan requested that he surrender his company car;
5. Duncan diverted his work phone to the office and disconnected his mobile phone;
6. Duncan cancelled his fuel card.

Timothy believed that Duncan had behaved in this manner towards him because of his physical disability of having been diagnosed with silicosis, and because he had exercised workplace rights by seeking information about his leave entitlements.

On the morning of 14 January 2020, Duncan entered Timothy’s office, slammed his fist on Timothy’s desk, and said “I want my fucking shares back you hear me”. Later that morning, Timothy received an email from Duncan demanding the return of his company car or that he pay for it. Timothy angrily told Duncan that his email was a “joke”. He subsequently became very shaken by the events of the morning and left work to see his doctor, who provided him a medical certificate to be absent from work. Timothy was declared unfit for work due to the stress he was suffering from as a result of the bullying he had been subjected to at work. He did not return to work thereafter.

On 11 May 2020, Timothy received a letter from the Employer stating that his employment had been terminated because he had taken excessive leave and his absence was not because he was on WorkCover.

Adverse Action

The Fair Work Act 2009 (Cth) provides “general protections” for employees to ensure they are protected from unlawful conduct by their employers. One type of “general protections” claim is an adverse action claim. Adverse action refers to unlawful and unfavourable conduct which is committed by an employer against an employee. A general protections (adverse action) application is always made by submitting an application to the Fair Work Commission.

In order to make a successful general protections (adverse action) application, the applicant must first establish that adverse action occurred.

Many different parties can commit adverse action against one another, including an employer against and employee (and vice-versa), a principal against a contractor (and vice-versa), and a prospective employer against a prospective employee. However, for the purposes of adverse action by an employer against an employee, adverse action includes:

1. the employer dismissing the employee;
2. the employer injuring the employee in their employment;
3. the employer altering the position of the employee to their prejudice; or
4. the employer discriminating between the employee and other employees.

In Timothy’s case, the adverse action committed against him consisted of all of the allegations listed earlier in this article.

Prohibited Reason

It is not sufficient to merely establish that adverse action has occurred. In order to make a successful general protections (adverse action) claim; an employee must also be able to establish that they were subjected to adverse action by the employer due to a prohibited reason. Two of the most common prohibited reasons for adverse action is that the employee had exercised or proposed to exercise their workplace rights, or that the employee had been discriminated against due to a protected trait.

Once the employee has established that they had a protected trait or had exercised a workplace right, then the employer will bear the onus of proving that the adverse action was not for that prohibited reason.

Exercise of Workplace Rights

Employees are protected from adverse action on the basis that:

1. they have a workplace right;
2. they have proposed to exercise or not exercise the workplace right; or
3. they have or have not exercised the workplace right.

Broadly speaking, a workplace right is a right which could be derived from the law or the employee’s contract of employment. This includes any benefits the employee is entitled to receive, any processes the employee can initiate or participate in, or the employee’s ability to make a workplace complaint or inquiry in relation to their employment.

In Timothy’s case, he had exercised his workplace rights throughout his employment and the Employer had taken adverse action against him for exercising those workplace rights.

1. Timothy exercised his workplace right to make a worker’s compensation claim for his silicosis injury, and this claim was accepted by WorkCover. Consequently, the Employer took adverse action against him by injuring him in his employment by removing his company car, mobile phone and fuel card. It also reduced his wage and failed to pay his entitlement while he was on personal leave.
2. Timothy also exercised his workplace right to make a complaint or inquiry about his leave entitlements. From November 2019 until April 2020, Timothy made multiple inquiries with the employer by seeking information on his leave entitlements. He was not provided with a response to these inquiries. The Court was satisfied that adverse action was taken against Timothy because he had made these inquiries.

Discrimination

Employees are also protected from adverse action on the basis that they are being discriminated against due to a trait they possess. These protected attributes (traits) include: race, colour, sex, sexual orientation, breastfeeding, gender identity, intersex status, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

Adverse action taken because of a protected attribute is only permissible in circumstances where the conduct;

1. would not otherwise breach anti-discrimination legislation;
2. is taken because of the inherent requirements of the employee’s position (e.g. an electrician business refuses to hire a person to be an electrician because the person cannot stand or walk); or
3. is taken in good faith for religious reasons (e.g. a Catholic school refuses to hire a woman as its priest).

In Timothy’s case, the Court found that the adverse action committed against him was partly due to his physical disability of lymph node silicosis. This is because once Duncan was aware of Timothy’s diagnosis, Duncan formed the view that Timothy would be unable to fulfil his duties as production and installation manager. This thought was not justified and no evidence was tendered which suggested that Timothy was unable to fulfil the inherent requirements of his position.

Orders and Civil Penalties

If a general protections action proceeds to Court and is subsequently substantiated, the employee may be able to claim an unlimited amount of compensation. Often, the amount of compensation will have some form of connection with the employee’s ability to seek alternate employment (if they are terminated by the employer), and the level of pain, suffering and detriment the employer’s conduct has caused the employee.

Further to this, breaches of general protections provisions within the Fair Work Act 2009 (Cth) are civil remedy breaches. This means that the employer will be liable to pay fines for each breach of their conduct. As of July 2023, the current civil penalty for company employers for each breach of general protections provisions is 300 penalty units ($93,900). The Court can rule that part of or the full amount of the fine should be paid to the employee.

The Court can also make other orders against the employer (especially in cases not involving dismissal). This can include injunctions to stop the behaviours, or an order for reinstatement if the employee has been dismissed.

In Timothy’s case, he was compensated $142,631 for his past economic loss – including unpaid leave and loss on income. He was awarded $20,000 for the distress, hurt and humiliation he suffered as a result of the Employer’s actions. The Court also eventually ordered that the Employer pay $75,600 in civil penalties to Timothy.

Disclaimer:  Nothing in this article should be relied upon as legal advice. The contents of this article should be regarded as information only, and for specific legal matters, independent advice should always be sought.

The post Ruttley v Willis Brothers Installation: Illustrating a Typical General Protections (Adverse Action) Case appeared first on PH Solicitor.

With more than twenty years experience in the sporting industry, together with our expertise in employment law, we are well suited to support the VAFA organisation in the ongoing changing landscape of community sport.

We welcome you to read further details via the announcement by the VAFA:

https://www.vafa.com.au/news/2023/03/31/vafa-partners-with-sports-lawyer/

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This article summarises some of the key changes of which all employers need to be aware, a breach of which may lead to significant financial penalties against the employer. The key topics covered below are:

1. pay secrecy prohibition;
2. advertising unlawful pay rates;
3. flexible working arrangement related to pregnancy and domestic violence victims;
4. new categories of discrimination (protected attributes relating to gender, breastfeeding, and intersex status);
5. sexual harassment in connection with work to be prohibited under the Fair Work Act with broader application; and
6. unpaid parental leave.

Pay Secrecy

From 7 December 2022, employees have new workplace rights to:

1. share information about their pay or employment terms and conditions with other people, including fellow employees; and
2. ask other employees about their pay or employment terms and conditions.

Employees may choose not to provide this information to other employees if they do not wish to do so.

Furthermore, employers are also prohibited from including “pay secrecy” clauses in employment contracts. A “pay secrecy” clause is a term in an employee’s employment contract which denies employees and future employees the new workplace rights as described above. Any pay secrecy clauses included in an employment contract entered into or varied on or after 7 December 2022 will be void. Further, from 7 June 2023, the inclusion of a pay secrecy clause in a new contract entered into on or after 7 December 2022 could also result in the employer being subject to significant fines.

The Fair Work Ombudsman will begin enforcing this requirement from 7 June 2023.

Job Advertisements

From 7 January 2023, employers cannot include pay rates which would breach the Fair Work Act 2009 (Cth) (FWA), a modern award, or an enterprise agreement in their job advertisements. This prohibition applies from 7 January 2023 regardless of when the job ad was posted.

A breach of this provision could result in significant fines for employers.

Flexible Work Arrangements

From 6 June 2023, the existing right to request flexible working arrangements under the FWA will be extended to include, in addition to other eligible employees, any employees who are:

1. personally (or whose member of their immediate family or household is) experiencing family and domestic violence; or
2.  pregnant.

If an employer agrees to a request for flexible working arrangements, they are required to confirm their acceptance of the request in writing within 21 days of the request.

Employers may only refuse a request for flexible working arrangements if:

1. they have discussed the employee’s request for flexible working arrangements with them;
2. they have genuinely tried to make an agreement with the employee to accommodate the employee’s circumstances by finding alternate working arrangements (but an agreement did not eventuate);
3. they have considered the consequences to the employee if they refuse the employee’s request; and
4. the refusal is based on reasonable business grounds (e.g., any changes would be too costly for the employer or impractical).

If an employer has validly refused a request for flexible working arrangements, the employer is required to provide a written response to the employee within 21 days. This response must:

• provide an explanation of the reasonable business grounds for why the employee’s request was refused, and explain how those grounds relate to the employee’s request;
• explain any other changes the employer is willing to make to try to accommodate the employee’s circumstances to an extent, or otherwise, state that there are no such changes which can be made; and
• provide information to the employee about how the employee can refer a dispute the Fair Work Commission.

New Protected Attributes

From 7 December 2022 onwards, three further attributes have been added to the list of attributes under the General Protections provisions of the FWA in relation to prohibited discrimination. Employers are now also prohibited from discriminating against employees for the following new protected attributes:

1. breastfeeding;
2. gender identity; and
3. intersex status.

Employers who take adverse action against an employee on the basis of these attributes, may be subject to a general protections (discrimination) application by the employee.

Sexual Harassment

From 6 March 2023, sexual harassment in connection to work will officially be prohibited by the FWA. This means that sexual harassment in connection to work will come under the jurisdiction of the Fair Work Commission, allowing the Commission to deal with disputes on such matters. Therefore, not only can complaints be made to the Australian Human Rights Commission for sexual harassment under the Sex Discrimination Act 1984 (Cth), there is now a further venue for people to make an application to deal with such behaviours.

This prohibition covers sexual harassment suffered by:

1. workers, which includes (but is not limited to) employees, contractors, work experience students and volunteers;
2. future workers;
3. anyone conducting a business or undertaking.

The protection does not apply to workers who start at a workplace before 6 March 2023.

Under this protection, an employer may be held to be vicariously liable for any sexual harassment committed by an employee or agent which is in connection with their work. This does not apply if the employer is able to prove that they took all reasonable steps to prevent the sexual harassment. For more information on this, please see our previous article on the new workplace sex discrimination laws.

An employer who is found to be in breach of this protection, may be liable to pay significant fines.

Unpaid Parental Leave

From 6 June 2023, employers will need to respond to requests for an extension of unpaid parental leave in a specific way.

If an employer makes a request for an extension of their unpaid parental leave, the employer may choose to agree to the request as is, or discuss the request with the employee and agree to a different extension period. If the employer agrees to some form of extension, then they will need to confirm this in writing to the employee within 21 days of the request.

An employer may only refuse the request if:

1. the employer discussed the request with the employee;
2. the employer genuinely tried to reach an agreement with the employee about the extension (but an agreement did not eventuate);
3. the employer considered all the consequences to the employee of refusing the extension; and
4. the employer’s refusal was on reasonable business grounds.

If the employer refuses the request, the employer is required to provide a written response to the employee’s request within 21 days. The response must provide:

1. an explanation of the reasonable business grounds for why the employee’s request was refused, and explain how those grounds relate to the employee’s request;
2. an alternate period of extension the employer is willing to agree to, or otherwise, state that they will not agree to any extension; and
3. information to the employee about the Fair Work Commission’s powers to hear a dispute on the matter.

If the matter proceeds to an arbitration by the Fair Work Commission, and the Commission makes an order which is unfavourable to the employer, the employer will be subject to significant fines if the employer breaches that order.

PH Solicitor understands that many employers and employees will have questions about these new laws and the implications they will have on their workplace, and that staff may need training as to what type of workplace conduct is unlawful, so as to reduce the chances of a claim against the employer for unlawful or discriminatory actions on an employee. Please contact us on admin@phsolicitor.com.au or phone (03) 9642 0435 to discuss any matter or to arrange an appointment.

Disclaimer:  Nothing in this article should be relied upon as legal advice. The contents of this article should be regarded as information only, and for specific legal matters, independent advice should always be sought.

The post New Changes to Workplace Laws which Your Business Needs to Know About appeared first on PH Solicitor.

On 28 November 2022, the Australian Federal Parliament passed the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill. This bill implements the remaining recommendations of sex discrimination commissioner Kate Jenkins’ 2020 Report, Respect@Work: National Inquiry into Sexual Harassment in Australian Workplaces. As stated in our first article on sex discrimination in the workplace, the previous Federal government decided not to implement some of the proposed changes.

These new laws will significantly re-shape the legal obligations of businesses and employees in the way they respond to sex discrimination in the workplace. Key changes made in these new laws include:

1. making it unlawful for a person to subject another person to a hostile workplace environment on the grounds of sex;
2. imposing a positive duty on businesses to eliminate unlawful sex discrimination from the workplace; and
3. the removal of procedural barriers for representative bodies to initiate actions in the federal courts.

This article explains these changes and how they will affect employers in how they manage their workplaces, and employees who wish to make a complaint of sex discrimination against their employer or colleagues.

Hostile Workplace Environments

Hostile workplace environments have been a problem for workers according to the 2022 AHRC survey. Of those surveyed, the most common forms of sexual harassment experienced by workers were inappropriate comments or jokes (40% of women, 14% of men), and intrusive questions about a person’s private life or appearance (32% of women, 14% of men).

A major change to the law which seeks to address this is that it will now be unlawful for a person to subject another person to a workplace environment which is hostile on the ground of sex.

A person will be deemed to have subjected another person to a hostile workplace environment if they:

1. engage in conduct (including the making of an oral or written statement) in the workplace;
2. the other person was at the workplace at the time of the conduct, or after the conduct occurred; and
3. a reasonable person would have anticipated that the conduct may result in a workplace environment which is offensive, intimidating, or humiliating to members of the other person’s sex based on the other person’s sex, or a characteristic that generally appertains, or is generally imputed to persons of that sex.

Put simply, a person cannot make another person feel offended, intimidated, or humiliated because of their sex by making inappropriate oral or written statements in the workplace. An example of when this might occur is where a male employee makes an inappropriate joke about women at work whilst a female colleague is present. It does not matter if the workplace was hostile for another reason that was more (or less) substantial than the sex of the other person. The workplace will be considered hostile if the sex of the other person was one of the reasons.

In determining whether a person has created a hostile workplace environment, the following factors must be taken into consideration:

1. the seriousness of the conduct (the more serious the conduct, the more likely the person has behaved unlawfully);
2. whether the conduct was continuous or repetitive (if the conduct is repeated and persistent, then it is more likely to have created a hostile workplace as opposed to a single isolated incident);
3. the role, influence or authority of the person engaging in the conduct (the more senior the person involved, the more likely it is that their conduct was unlawful); and
4. any other relevant circumstance.

Any person who is found to have created a hostile workplace environment on the basis of sex may be subject to the same complaints and dispute resolution procedures as other instances of unlawful sex discrimination.

Employers should have discrimination policies (including those covering sex discrimination and sexual harassment) which are known and understood by their employees. They should also supervise their employees and reprimand any behaviour which may create a hostile workplace environment. They must be prepared for any possible complaints made by employees against colleagues if this behaviour occurs in the workplace, and respond appropriately in accordance with their complaints procedure.

Positive Duty

Another change to the law which employers must take note of is the obligation imposed on businesses to take reasonable and proportionate measures to eliminate unlawful sex discrimination (which also includes victimisation).

Importantly, the use of the word “business” encapsulates both employer-employee relationships and principal-contractor relationships. The essential element is that work is being performed by one party for the other’s business. This duty also applies to the business’ agents.

In determining whether a business has taken all reasonable steps to eliminate sex discrimination, the following factors must be taken into consideration:

1. the size, nature and circumstances of the business (the bigger the business, the more likely it will be that they have to implement more measures to eliminate sex discrimination);
2. the business’ financial or other resources (if the business has greater financial and other resources, then the more likely it will be that they have to implement more measures to eliminate sex discrimination);
3. the practicability and the cost of steps to eliminate unlawful sex discrimination (depending on the resources, size and nature of the business, it may be that implementing certain measures will be deemed disproportionately expensive and/or impractical); and
4. any other relevant matter.

In order to enforce the positive duty, the AHRC has been given powers to make inquiries about whether a person is complying with their positive duty to eliminate sex discrimination from their business. The AHRC will make such inquiries if it reasonably believes that the person is not doing so.

After finalising its inquiries, if the AHRC believes that the person has not complied with their positive duty, then it can issue a compliance notice to the person setting out the details of their failure to comply with their positive duty and the steps they must take within a specified period to remedy the breach of duty. If the AHRC believes that a person has failed to comply with a compliance notice, it may apply to the Federal Court or Federal Circuit and Family Court of Australia to make an order directing the person to comply with the notice.

Employers must be aware of this new positive duty as it could have significant consequences for their business’ reputation (if found to be breaching this duty). Employers need to make an assessment on whether they are currently implementing adequate measures to eliminate sex discrimination in the workplace. They should do this by weighing up what measures they are currently implementing to prevent sex discrimination against the considerations outlined above. They should bear in mind that larger and better-resourced employers will be expected to have implemented more comprehensive steps than smaller and less-resourced employers.

If the employer does not believe that they have done enough to prevent sex discrimination in their workplace, they should assess what measures they can reasonably implement within their means and then implement those measures.

Some measures which most employers should be able to implement include:

1. implementing a policy for sex discrimination (if they have not already done so) and ensuring that the policy is readily accessible and understandable by persons from all backgrounds and cultures;
2. requiring employees to attend regular training and/or education seminars regarding what conduct is unacceptable or unlawful in terms of sex discrimination;

PH Solicitor can provide our services to your business by conducting such training and educational seminars for your employees.

3. displaying factsheets and posters in the workplace reminding employees of their obligations regarding sex discrimination; and
4. ensuring that employees have read and understood the employer’s sex discrimination policies. To do so, the employer may wish to allocate time during their employees’ day for them to review the policy. After doing so, the employer should require the employee to sign a document stating that they have read and understood the policy.

Implementing such measures will help ensure that you and your business comply with the new positive duty.

Representative Applications

The new laws now remove the procedural barriers experienced by representative bodies, such as a union, who can now initiate an action on behalf of a group of people where the matter is not resolved in the AHRC. Previously such representative bodies were unable to initiate an action in the federal courts on behalf of a group of people. This is no longer the case with these laws.

Further Changes Likely

It is likely that in the future there will be further changes made in relation to the awarding of costs  where court proceedings are necessary in relation to a complaint. The suggested default position is to not expose complainants of sex discrimination to adverse costs orders by having each party bear its own costs no matter the outcome of the dispute. This matter is currently being considered by the Attorney-General’s Department and could have important implications for employers accused of breaching sex discrimination laws.

Conclusion

These new sex discrimination laws are likely to fundamentally impact how businesses and employees respond to sex discrimination in the workplace, making it even more crucial from a legal-compliance perspective that businesses are taking active steps to eliminate sex discrimination in the workplace.  These laws put greater personal responsibility on individuals (but also on employers) to be aware of their behaviour and the workplace environment they create. Employers must now ensure that they remain proactive in the fight against sex discrimination and to be aware of the behaviours of their workers. Doing so would help them avoid the reputational and financial consequences of breaching the law.

PH Solicitor understands that many employers and employees will have questions about these new laws and the implications they will have on their workplace. Please contact us on admin@phsolicitor.com.au or phone (03) 9642 0435 to discuss any matter or to arrange an appointment.

Disclaimer:  Nothing in this article should be relied upon as legal advice. The contents of this article should be regarded as information only, and for specific legal matters, independent advice should always be sought.

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Whilst it may be the ‘most wonderful time of the year’, for work functions and professional networking events, it can get out of hand, particularly where there is complimentary alcohol offered. Employers need to ensure that they clearly articulate to employees the behavioural expectations at work Christmas functions and networking events for end of year celebrations.

It is a busy time of year for most, which also leads to a greater number of employees taking the opportunity to ‘let their hair down’ at work functions. This is exacerbated where alcohol is involved, and even more so, where the alcohol is provided complimentary.

Some employers may have a misunderstanding of their responsibility to provide a safe work environment for all employees where a function is held off-site. However, as we have seen in cases before the Fair Work Commission and Federal Courts, the responsibility of the employer extends beyond the physical workplace (for example, see Rose v Telstra Corp Ltd [1998] IRCommA 1592). Conversely, some employees may not turn their minds to the fact that whilst functions off-site may be a cause for celebration, they still have obligations and are expected to adhere to the standards of behaviour, just as if they were at work.

When organising a work Christmas function, it is important to remind staff of their responsibility to conduct themselves in a manner in accordance with the company policies and standards that are expected of all staff. One way to approach this, is to provide a reminder of the expectations of employees in the invitation to the Christmas party. Alternatively, a friendly reminder can be sent to staff in the days leading up to the function about the expectations of their conduct at the event. This can be coupled with providing a copy of the relevant company policy documents, which may include those regarding harassment and discrimination as well as the complaints process for employees if they have a grievance.

Some steps that employers can take at the function include:

• Providing transport to and from work related functions and Christmas parties;
• Set specific start and finish times for Christmas parties, even for individual team Christmas events, as well as larger company events;
• If providing alcohol, ensure that there are non-alcoholic beverages served, as well as providing food;
• Nominate a senior executive to monitor the function and behaviour of employees, to step in, if required.

While it is impossible to eliminate all possible risks at work functions, taking steps to remind employees of their obligations and behaviour expectations, as well as implementing strategies outlined above, those associated risks can be decreased.

If you are seeking to review workplace policies or enforcement of policies, as well as the process involved in conducting investigations, please contact us to speak with one of our employment lawyers.

For further information and specialised legal advice, please call (03) 9642 0435.

Disclaimer: This article contains information of a general nature and should not be relied upon or taken to be legal advice. You should speak with a lawyer about your situation before applying any of this information.

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Independent contractors are individuals or legal entities which carry out their own business or trade and are engaged by a third party to work in accordance with a relevant contract for services which usually involves the achievement of a specified result.

Conversely, an employee is an individual who performs work for a business under the control and discretion of the business, and in accordance with a contract of employment.

The recent High Court decisions of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel decision) and ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors [2022] HCA 2 (Jamsek decision) shed light on the issue of classifying workers as either employees or independent contractors.

The Multifactorial Test

Prior to the Personnel and Jamsek decisions, the Courts applied a “multifactorial test” in order to determine whether a worker was in fact an employee or an independent contractor. The multifactorial test involved assessing the circumstances of the relationship between the business and the worker by reference to a number of factors. These factors all varied in their relative importance to the determination of the relationship between the business and the worker.

The Court would make an assessment on whether the classification of the worker was weighted more towards being an employee or an independent contractor.

The Personnel and Jamsek Decisions

However, the Personnel and Jamsek decisions from earlier this year changed the approach of the Courts.

Personnel Decision

In the Personnel decision, the worker entered into a contract with Personnel, which operated a labour hire business. The contract stated that the worker was a contractor and Personnel would provide work opportunities to the worker after consultation with its clients. The worker would then provide his services to the client, but be paid by Personnel.

Personnel offered the worker an opportunity to provide his services to a client construction site. The worker supplied basic manual labour services to the construction site. Personnel then paid the worker at an hourly rate. The CFMMEU argued that the worker was a casual employee and not a contractor, and therefore, Personnel owed him entitlements pertaining to casual employees, including a casual loading to his pay. A majority of the High Court held that the worker was an employee.

The Court stated that where there is a complete and valid written contract, the nature of the relationship will be determined by the rights and obligations set out in the written contract, rather than the subsequent conduct of the parties during the life of the contract. However, it will still be necessary to consider the totality of the relationship as expressed in the contract. This includes the assessment of factors such as some of those included in the multifactorial test, such as control, delegation, tools, equipment and taxation.

The Court found that Personnel had a right to control over the worker’s work, including whether the worker was provided any work at all. The worker was also obligated to work for Personnel’s client, and it was for this work that he was paid his salary. This type of arrangement was pivotal to Personnel’s business of labour supply to its clients. The worker’s provision of labour to the client construction site was ancillary to Personnel’s business.

Jamsek Decision

The reasoning for the Jamsek decision was similar. In that case, two truck drivers had been employed in that capacity by the ZG’s predecessor company since 1977. In 1985, the company told the truck drivers that it could not provide them with further work unless they agreed to become independent contractors. The truck drivers subsequently entered into partnership arrangements with their spouses, and bought new trucks so that they could continue to receive work from the company. The partnerships then entered into a “Contract Carriers Arrangement” with the company.

The contract stipulated that the drivers were responsible for maintaining the trucks. However, the trucks also displayed the company’s logo and the truck drivers wore the company’s uniforms. This arrangement continued when the company changed ownership. In 2017, ZG terminated the contract with the truck drivers, who subsequently argued that they were employees and sued ZG for employee entitlements.

The High Court ultimately held that the truck drivers were independent contractors. The Court found that the rights and duties of the parties under the contract needed to be considered. In this case, the truck drivers had not entered into the contract with ZG, rather it was the partnerships which had entered into the contract. Therefore, the truck drivers had set up a business of their own, and it was their businesses which earned income and incurred expenses with regards to their work.

Lessons for Employers

Both the Personnel and the Jamsek decisions tell employers that whether or not a worker is an employee or an independent contractor is determined by the terms of the contract. However, the fact that a worker is described as an “employee” or a “contractor” in the contract is not determinative of the relationship (although it is an important consideration). Rather, an objective assessment of the status of the relationship when viewing the contract in totality is what is required.

An objective assessment of the terms of the contract can be aided by considering some of the factors from the multifactorial test, including: the level of control the worker has, their ability to delegate work, whether they needed to provide their own tools and equipment, and the worker and business’ obligations regarding taxation. Another useful indicator of a worker’s legal status is whether they contracted as an independent business or as themselves. If they contracted with the business as an independent business, this will be more likely to indicate that they were a contractor.

In most cases, it is not appropriate nor necessary to assess the conduct of the parties after the signing of the contract when determining their status as employees or contractors.

Furthermore, the only cases where the terms of a contract will not be determinative of a worker’s status as an employee or independent contractor are cases which involve a sham contract, or cases in which the contract is ineffective under the law. In such cases, the multifactorial test may be useful in assessing the legal status of the worker.

In order to avoid possible confusion with contractors about their legal status as contractors, businesses should consider the following:

1. Ensure that the worker does not perform substantially the same duties as an employee would at your business. Having a degree of separation between employees’ duties and the duties required to be performed by the contractor will help distinguish between the two roles.
2. Ensure that the worker is aware of the level of control they have over performing the work, including their ability to delegate work and decide how they will perform the work. Reflect this in the contract for services with the worker.
3. Pay the worker once they have performed the required work at a satisfactory quality. Include terms in the contract that they must meet certain standards or achieve specified outcomes before they are paid. Avoid paying at a set rate of pay.
4. Require the worker to provide their own tools and equipment for performing the work. Reflect this in the contract for services with the worker.
5. Ensure that tax obligations with the worker reflect that of a contractor-principal relationship. Reflect this in the contract for services with the worker.
6. Try to avoid contracting with individual persons, and instead contract with incorporated entities (for example, those using an Australian Business Number).

Conclusion

PH Solicitor understands that it may be difficult for businesses and workers to discern the differences between an independent contractor and employee. If you would like to discuss your employment rights or your business’ rights in the workplace investigation process, we are here to help.  Call our office on (03) 9642 0435 or email admin@phsolicitor.com.au for a confidential discussion with our team.

Nothing in this article should be relied on as legal advice. The contents of this article should be regarded as information only, and for specific legal matters, independent advice should always be sought.

The post Assessing the Independent Contractor Relationship appeared first on PH Solicitor.

This article provides a summary of the case and its impact on work health and safety laws in Australia.

Facts of the Case

Ms Kozarov worked as a solicitor for the Victorian Office of Public Prosecutions (OPP) from June 2009. She worked in the Specialist Sexual Offences Unit (SSOU). Her work in the SSOU involved regular exposure to child sexual assault cases. This included observing graphic images as evidence and dealing with traumatised complainants who were both children and adults. Some of the complainants Ms Kozarov dealt with were the same ages as her own children.

In September 2009 or March 2010, Ms Kozarov attended one of the OPP’s workshops on vicarious trauma. During the workshop, Ms Kozarov gave examples of how her work had affected her as a mother, and how she had become uncomfortable leaving her children with their grandparents because she had thoughts of inappropriate behaviour.

By late 2010, Ms Kozarov had become increasingly outspoken during staff meetings about how the work at the SSOU was affecting the lives of staff members.

On 30 March 2011, Ms Kozarov attended an after-hours staff meeting at which “significant concerns” were raised about the struggles of SSOU staff and the fact that they felt they were not being provided with adequate support. Management was not present at this meeting.

On 18 April 2011, Ms Kozarov signed a staff memorandum which set out the “stress-related symptoms experienced by solicitors”.

On 20 April 2011, Ms Kozarov attended a resilience training session for SSOU staff. The session was run by a psychologist who also provided counselling services to OPP staff members on behalf of the OPP. During the session, Ms Kozarov spoke about her vigilance for paedophiles at swimming pools and her discomfort with strangers looking at her children.

On 9 June 2011, Ms Kozarov unsuccessfully attempted to resist the allocation of a further case file to her as she was unable to handle the new case due to her existing high workload.

On 11 August 2011, Ms Kozarov became ill and took two weeks of sick leave from work. She had an out-of-character dispute with her manager on her return to work on 29 August 2011. The dispute related to her heavy workload and how it was affecting her.

In January 2012, Ms Kozarov took pre-planned annual and long-service leave. In February 2012, Ms Kozarov was diagnosed with post-traumatic stress disorder (PTSD) as a result of the vicarious trauma she had suffered from her work. She requested an immediate transfer out of the SSOU. She was later also diagnosed with major depressive disorder.

The OPP requested that she provide medical evidence to support her request to be transferred out of the SSOU. After a number of unsuccessful attempts at redeployment, the OPP terminated Ms Kozarov’s employment.

Ms Kozarov sued the OPP in negligence, alleging that they had breached their duty of care to ensure her health and safety by failing to protect her from the risk of psychiatric injury.

The Decisions of the Supreme Court and Court of Appeal

At first instance, the Supreme Court of Victoria decided that the OPP had breached its duty of care towards Ms Kozarov by failing to implement its vicarious trauma policy and awarded her $435,000 in damages.

The vicarious trauma policy required the OPP to recognise that people would develop mental health issues within two years of being within the SSOU. It further indicated that individuals should be rotated and that welfare checks should be conducted on employees, the result of which would trigger the OPP to take action in accordance with the policy. However, as the policy was not well known, it was never followed.

The Court held that the OPP was aware of the serious mental health risk for Ms Kozarov and by the end of August 2011, the OPP had been put on notice to take reasonable steps to mitigate the risk (such as by rotating Ms Kozarov out of the SSOU). The evidence pointed to Ms Kozarov accepting such an offer if it had been forthcoming.

The Court of Appeal allowed the OPP’s appeal against the decision. It held that the exacerbation of Ms Kozarov’s psychiatric injury after August 2011 was not caused by a breach of duty. It disagreed that Ms Kozarov would have cooperated with taking steps to be rotated out of the SSOU.

Ms Kozarov appealed the decision to the High Court of Australia.

The High Court Decision

The High Court unanimously allowed Ms Kozarov’s appeal, setting aside the Court of Appeal’s decision, reinstating the Supreme Court’s decision, and awarding Ms Kozarov her costs.

Justices Gageler and Gleeson held:

• The OPP had a duty to maintain a safe system of work, and to exercise reasonable care to avoid a foreseeable psychiatric injury to its employees.
• Both the trial judge and the Court of Appeal were correct in finding that Ms Kozarov’s “genuine distress” in her dispute with her manager was a significant indicator of a possible work-related psychiatric injury.
• The OPP had been put on notice that there was a risk of psychiatric injury to Ms Kozarov due to a number of “evident signs” which indicated that she may be experiencing vicarious trauma in the workplace. Those signs included:
  • The staff memorandum she signed on 18 April 2011.
  • Her statements at various staff meetings, the September 2009, and the April 2011 training session about her abnormally overprotective parenting of her children and hypervigilance.
  • Her excessive work load and propensity to overwork.
  • She had demonstrated an unhealthy emotional involvement in some of her cases.
  • She had demonstrated difficulties managing her existing case load and had resisted being allocated an extra file in June 2011.
  • The fact she took a period of two weeks’ sick leave in August 2011.
  • The fact she had experienced a recent significant traumatic event in the form of an attempted suicide by a child complainant in August 2011.
  • Her manager and others had formed the view that she was “not coping” with her work.
  • The fact she had a highly emotional and agitated response to her dispute with her manager in August 2011.
• The Court of Appeal had erred in concluding that Ms Kozarov would not have accepted being rotated out of the SSOU in August 2011. Ms Kozarov had requested to be rotated out of the SSOU in February 2012. Expert evidence also suggested that a person who was suffering from a serious illness would be more likely than not to accept medical advice on how to mitigate or remove the cause of the illness. Thus, the Court of Appeal had failed to consider the inherent likelihood that a reasonable person advised of the risks of serious psychiatric injury may have, on the balance of probabilities, accepted advice on such risks.

Justices Gordon and Steward agreed with the decision of Justices Gageler and Gleeson. They held:

• The OPP were put on notice that there was a risk of psychiatric injury to Ms Kozarov in August 2011 at the latest.
• The Court of Appeal had erred in concluding that Ms Kozarov would not have cooperated with taking steps to being rotated out of the SSOU. In fact, she would have cooperated with these steps. Her exposure to trauma would have been reduced if she had been properly informed of the risks of vicarious trauma and PTSD by further training or proper diagnosis by a clinician.

Chief Justice Kiefel and Justice Keane, and Justice Edelman agreed with Justices Gageler and Gleeson. In particular, Chief Justice Kiefel and Justice Keane noted that the OPP should have appreciated the serious risk posed to Ms Kozarov’s mental health because of its vicarious trauma policy (which the OPP had failed to implement).

Impact of the Decision

The Kozarov case confirms that employers have a duty to recognise psychiatric injury risks in their workplace and take steps to protect employees from these risks. This is particularly relevant to employers whose employees perform work which inherently exposes the employee to a high-level of risk. Examples of such employees include: lawyers working within certain areas of law, police officers, prison and detention centre officers, paramedics, social workers and mental health care professionals. Whether an employer will be held liable for a breach of duty will be highly dependent on the circumstances of the case. Depending on the circumstances, employers may have to go beyond offering employees counselling, seminars or training programs in order to show that they have discharged their duty of care.

The Kozarov case also confirms the importance of employers taking steps to follow their own work health and safety procedures. An important reason for the Court’s finding that the OPP had breached its duty was the fact that it did not follow its own vicarious trauma policy. This demonstrates that it is vital that employers not only adhere to their legal obligations under work health and safety laws, but that they also know, understand and act on their own work health and safety policies.

Conclusion

PH Solicitor understands that the Kozarov decision may affect many employees and employers around the country.

If you would like to discuss your employment rights or your business’ rights about a workplace psychiatric injury, we are here to help. Call our office on (03) 9642 0435 or email admin@phsolicitor.com.au for a confidential discussion with our team.

Sources:

Kozarov v Victoria [2022] HCA 12

https://www.abc.net.au/news/2022-05-25/zagi-kozarov-psychiatric-injury-at-work-law-report/101081728

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