Aussie Rules

The legal risks associated with using social networking sites, like Facebook, at work are becoming a growing concern for many employers. With Australia having the fifth-largest number of Facebook users worldwide, the Web site is opening up a plethora of potential legal risks for companies who allow their employees to access the site at work. Benefits there may be, but these are a few of the possible risks employers are exposed to.

Productivity Loss
One major concern for most employers is the substantial productivity loss Facebook is causing when used during working hours. A report conducted last year by Internet filtering company SurfControl estimated that the site may be costing Australian businesses $5 billion a year.

Security and Privacy Concerns
Another growing concern is the potential for confidential company information to be disclosed or leaked online by employees. Although most employees primarily use the site to “keep in touch” with friends, there is the risk of employees discussing company business and corporate affairs online and leaking company trade secrets. There is also the fear that employees using the site at work may make company systems vulnerable to hackers to infiltrate company networks since many Facebook profile pages contain users’ current employment details.

Risks searching Facebook to make recruitment decisions
There have been reports that some companies use these sites to “validate” recruitment decisions when recruiting new employees. This can lead to discrimination claims being brought against them.

Inappropriate content and behaviour online
Another serious legal concern is that vicarious liability may be attributed to employers for the bullying, harassing, discriminating or defamatory conduct engaged in by employees online, since this type of behaviour is essentially occurring at work, during working hours and using company property. Employees who upload inappropriate content at work could also be breaching email and Internet usage policies already in operation at the workplace.

IT issues
Employees downloading/uploading video or photo content online while at work can also affect the overall performance of the computer network system at the office.

Some suggest it is only a matter of time before these types of cases are brought before the courts. If employers are concerned about being exposed to these risks, they should either block Facebook access altogether, monitor usage and moderate its content or at the very least implement policies regarding the usage of Facebook and other social networking sites at work to ensure employees are not putting their businesses at risk.

Recent penalties handed down by the courts as a result of underpayment investigations by the Workplace Ombudsman should serve as serious warnings to employers to comply with employee Awards. A Sydney meat market was recently fined $93,600 by the Federal Magistrates Court for underpaying one of its employees approximately $9,400 and breaching multiple terms of the Award that governed the employee’s contract.

The employee, a 21-year-old apprentice butcher, was not paid the correct wages, overtime, weekend and public holiday allowances, pay in lieu of notice, annual leave, sick leave, meal allowances and superannuation.

The severity of the penalty handed down was exacerbated by the failure of the employer to act promptly to remedy the breaches of the award. The initial investigation began in March 2006 following a complaint made by the employee, but the underpayments were not rectified until January 2008. The substantial penalty therefore pointed to the “significant and ongoing failure” by the responsible managers “to be properly informed as to the effect of the Award”. The breaches were considered “serious and inexcusable” by the Court because of the large size of the company (it employs approximately 9,000 employees across various retail butcher stores, abattoirs and smallgoods outlets) and its associated business structure in the industry.

In other recent cases, a Hobart hair and beauty business was fined $28,000 for underpaying one of its employees approximately $9,000. Another company was fined $66,000 for underpaying its employees’ approximately $14,000. Company directors have also been found liable and ordered to pay $40,000 relating to breaches of the Workplace Relations Act. It is imperative therefore, that employers are aware of their obligations at law and abide by the terms and conditions set out in applicable awards or instruments that apply to their employees.

When employees leave your business, there is a potential risk that they may take your key clients, confidential information and intellectual property with them. To prevent this occurring, restraints are used to prohibit or discourage employees from removing, copying, using or disclosing confidential information and from soliciting customers, suppliers and other employees. However, in order to be effective the restraint must be reasonable. When and under what circumstances will a restraint be found to be unreasonable? The following case provides guidance on this issue.

AMP Services Ltd (”AMP”) operated a financial planning business as a subsidiary known as AWM. The defendant, a senior adviser, was one of several employees who left AWM to work for a competitor. AWM sought to recover a substantial amount of alleged lost revenue from the former employee, claiming that she had breached the post-employment restraint in her employment contract. The contract restricted the employee for a period of 12 months following termination or resignation, from approaching, enticing away or soliciting any of AMP’s clients or employees. AWM claimed the former employee improperly encouraged a group of employees to leave the company by putting them in contact with people at the competitor company.

The Federal Court found that although the former employee did not induce other employees to move companies, she did facilitate the move to some degree. Prior to leaving, the employee contacted most of her clients informing them of her departure, and most of those clients followed her to the competitor company. AWM alleged that by engaging in this conduct, she acted in breach of the restraint. The Court however, found the restraint to be unreasonable and void due to the fact that it was wider than necessary, covering all AMP clients, many of whom did not have any connection with the employee. AWM could not rely on the restraint in the employee’s employment contract because she had gone to work for a competitor of AWM and the restraint only referred to competitors of AMP.

This case highlights the importance of drafting accurate restraint clauses, by ensuring they reflect the relevant company the employee works for and the particular clients they are in contact with in order to guarantee these restraints will be enforceable and provide sufficient protection.

AMP Services Ltd v Manning [2006] FCA 256 (March 24, 2006)

A recent case serves as a warning to all employees to be aware of “zero tolerance” policies that apply at their place of work and ensure their conduct does not contravene those policies. In May 2007, Woolworths dismissed one of its store managers for drinking two beers during his lunch break. The store manager, who had over 20 years of service with Woolworths was dismissed because the consumption of alcohol during working hours (including meal breaks) was strictly prohibited and was expressed in several company policies as well as the manager’s employment contract. Woolworths’ decision to terminate the employee’s employment was upheld by the Australian Industrial Relations Commission (AIRC) in October 2007 and the application was dismissed. Woolworths’ decision to terminate was further upheld by a full bench of the AIRC on appeal in February 2008.

Does the punishment of dismissal really fit the “crime” in this instance? If you are generally an exemplary employee, in a position of seniority and have been in a position for several years, should one slight break of the rules cost you your job? In this case, the AIRC upheld the dismissal and found that it was not harsh, unjust or unreasonable because the manager had breached an express term and condition of his employment contract. This strict approach suggests that a wilful disregard of zero tolerance policies will not be viewed lightly by the courts. This decision further highlights the fact that employers are entitled to take appropriate disciplinary action when their employees are found to have breached express terms and conditions of employment.

Selak v Woolworths Limited [2008] AIRCFB 81 (8 February, 2008)

Bullying may often be associated with school days, but there is no doubt it is also a significant problem in today’s workplaces as well. The NSW WorkCover Authority defines bullying at work as “aggressive behaviour that intimidates, humiliates and/or undermines a person or group. It is repeated, less-favourable treatment of a person by another or others in the workplace.” Although it is difficult to estimate the prevalence of bullying in today’s workplaces, a Morgan poll conducted in 1998 found that 46 percent of Australian employees had been verbally abused or physically assaulted by a co-worker or manager.

Workplace bullying can include anything from direct or indirect baiting, humiliation or practical jokes to more serious behaviour such as verbal threats or abuse, intimidating behaviour, harassment and physical abuse or violence. Although there is no specific statutory prohibition of workplace bullying, these types of behaviour could result in prosecutions under criminal law, occupational health and safety legislation, anti-discrimination laws, breach of contract and/or duty of care and unfair dismissal. Under most of these laws the employer can also be held vicariously liable for the bullying behaviour of its employees.

The courts have been willing to hand out heavy penalties to employers if found to have breached their duty of care in providing a safe system of work for all employees. In 2001, the Queensland Industrial Relations Commission awarded an employee AU$10,000.00 for suffering hurt, humiliation and distress related to bullying¹. A more recent case found an employer liable for the behaviour of one of its employees in bullying the employee of another employer². Both employers in the case were found negligent. Damages were awarded against the bully’s employer for almost AU$2 million. Unfair dismissal claims have also been brought against employers where their employees have been forced to quit after being subjected to bullying by those in managerial positions.

Employers should not tolerate any form of bullying and need to be proactive in developing anti-violence, harassment and bullying policies and ensure these are clearly communicated to employees. Employers should also look into developing a workplace violence policy and grievance process to manage this type of behaviour if it occurs.

¹ Serratore v Doyles Construction Lawyers (No 2) [2001] QIRComm 137; 168 QGIG 9 (28 August 2001)
² Naidu v Group 4 Securitas Pty Ltd & Anor [2006] NSWSC 144 (15 March 2006)

Is the Department of Education liable if one of its teachers sexually assaults a student? Can a security provider be held liable for an unlawful assault by one of its security guards on a member of the public? These are scenarios that Courts have recently considered in relation to employer liability.

The common issue in many of the cases is determining how far an employer’s liability extends for illegal acts committed by its employees.

In general, the rule is that an employer will be liable for a criminal act when it was:

• incidental to the employee’s employment (ie, the act was within the scope of the work the employee was employed to perform); and
• in furtherance of the employer’s interest.

A recent case came before the NSW Court of Appeal (Sprod bnf v Public Relations Oriented Security Pty Ltd [2007] NSWCA 319) where two security guards of a pizza shop assaulted a man who was drunk and acting aggressively towards the shop’s customers. The guards took the man to a nearby alleyway, assaulted him and left him in an unconscious state, which resulted in him sustaining permanent brain damage.

Although an improper and unauthorised attack, this assault was found to be incidental to the employment of the guards in fulfilling their duties “by ensuring that the assaulted man would not again make a pest of himself at the shop … and molest the customers.” The court also found that the assault was committed in furtherance of the security company’s [employer’s] interest. The criteria set down by the High Court above was satisfied which resulted in the security company being liable for the intentional wrongdoing of its security guards.

The nature and seriousness of the acts committed will also be considerations taken into account by the court in seeking to attribute liability to employers. It is likely that this issue will be looked at on a case-by-case basis and employer liability will depend on the particular facts in question.

So you have suffered the pain and nuisance of a work-related injury, and now it looks like you’re also about to lose your job! You may be asking yourself, can my employer really get away with this? A number of recent cases have looked at whether an employee can legally be sacked (or have their hours excessively reduced) for sustaining a work-related injury.

Last year a company was fined AU$8,500 for discriminating against an employee with a visual impairment by excessively reducing his hours after receiving medical safety advice.

In another decision, the Federal Magistrates Court found that employees who take workers’ compensation leave and are absent due to injury are protected from unlawful dismissal under the Workplace Relations Regulations.

Evidently however, not all injured workers are protected. The legislation does not come to your assistance if you have been absent from work for more than three months, unless you are on paid sick leave.

However, employers who follow the employee’s medical restrictions and accommodate the worker’s injury by restricting their duties, will generally not be found to have forced the termination of the employment. In a decision by the Queensland Anti-Discrimination Tribunal, an employer who dismissed an employee who was injured at work and was unable to return to work indefinitely, did not discriminate against the employee on the grounds of his impairment.

Employers should be aware that it is unlawful to dismiss an employee because of a temporary absence from work due to illness or injury within the meaning of the regulations. However, as the cases indicate, it largely depends on the individual circumstances of the case.

With the “Kevin 07″ victory behind us, the workplace relations landscape is set to change again in ‘08. It is expected that workplace relations in Australia will undergo a third round of changes since 2006. The current Labor government is seeking to restore the balance in the employment relationship but do Australian businesses understand the effect these changes will have on the operation of their day-to-day business?

Australian businesses have just gotten used to workplace agreements (AWAs), now they are to be wiped from the landscape by the new Labor Government. Labor is going to abolish individual AWAs (although incrementally) and place collective bargaining at the forefront of the workplace model.

Employers should prepare to bargain collectively “in good faith” with unions (if supported by a majority of employees) for wages and conditions above minimum standards. The ALP will also reinstate unfair dismissal protection for all employees, with a remedy based on a “fair go all round”.

It seems that many employers are unprepared for how these anticipated workplace relations changes will affect the operation of their businesses. Recent research undertaken by workplace relations specialists in my firm indicates that Australian businesses are ill-equipped to operate in a Labor IR system that relies on the written common law contract.

The efficient operation of Fair Work Australia (the primary body which will administer the majority of Labor’s proposed changes) will be critical to the success of the changes proposed by the ALP.

Regardless of whether the transition to Labor’s workplace relations system is an easy one or not, businesses should be prepared for big changes in 2008.

Right now, workplace relations laws in Australia allow employers and employees to make individual agreements known as Australian Workplace Agreements, or “AWAs”. The law prohibits an employer from coercing or applying duress to an employee to enter into an AWA, and the government’s Workplace Inspectors are cracking down on employers who force their employees to sign AWAs.

In a recent decision, the Federal Magistrates Court found a Tasmanian tavern applied unlawful duress to an employee to sign an AWA in order to avoid obligations under the Award. The tavern removed the employee’s regular shifts and told her that she wouldn’t be employed if she didn’t sign the AWA. Staff were threatened that if they didn’t sign the AWA, the tavern would be run like a concentration camp and no benefits such as drinks, cheaper meals and smoko breaks would be provided to the employees. The tavern was hit with a penalty of AU$24,750. The part-owner and manager also received penalties of AU$4,950 and AU$1,980.

This decision followed a Federal Court finding that another Tasmanian tavern had coerced employees into signing AWAs. In this case the tavern was fined AU$170,000 in respect of 10 contraventions.

What factors will be considered in determining whether an employee has been forced to sign an AWA and the amount of any penalty?

• the serious and offensive nature of the conduct;
• a lack of contrition;
• the strain on the employee, particularly given their age, sex, position, reliance on income and employment status; and
• the need for general deterrence and the protection of young people.

Managers need to be aware of their duties and obligations under the law as the penalties don’t stop with the employer.

With the back-to-work blues now a distant memory, it’s time to make way for a new year of success, profitability, and productivity at work. Employers may not however be able to achieve these goals if faced with employees that consistently arrive late, are unproductive, have a disruptive influence over other employees, disregard appropriate workplace policies and procedures or have a generally bad attitude. Employees like this can also significantly impact staff morale.

Managers in Australia who have had their patience tested for too long and decide to dismiss a difficult employee need to be aware that they could potentially face an unfair or unlawful dismissal claim. With Labor soon to remove the “fewer than 100 employees” unfair dismissal exemption, employers need to establish thorough policies and procedures if they are seeking to dismiss an employee.

Some possible strategies that can be put in place to help prevent and manage difficult employee behaviour include:

• ensuring employees are aware of their duties and responsibilities and are appropriately trained and experienced for the job;
• implementing procedures to alleviate the overloading of work;
• ensuring consistency in work standards amongst all employees and avoiding unreasonable work expectations with particular employees;
• having regular meetings to monitor performance in order to minimise the likelihood of employees being unproductive (ie, performance-based reviews)
• checking whether there are any out-of-work circumstances affecting the employees ability to perform and attempting to accommodate them in order to reduce high levels of stress and tension affecting their performance at work;
• assigning each employee a “go-to person” or mentor to discuss issues with and provide feedback;
• being proactive in dealing with an issue of concern immediately rather than allowing it to continue unabated;
• if confronting an employee about particular behaviour, encouraging open communication, acknowledging the employee’s concerns, focusing on the issue at hand and not on their personality, and suggesting ways the issue can be improved;
• documenting counselling and/or warnings provided to employees;
• dealing consistently with employees who exhibit unsatisfactory conduct or behaviour;
• providing an employee with the opportunity to explain their poor performance and/or conduct; and
• seeking appropriate legal advice before deciding to dismiss an employee.

Is your organisation aware of the challenges arising from changing unfair dismissal laws? How are you dealing with them?