Allens

Employment & Safety

Increase text sizeDecrease text sizeDefault text size

Focus: Workplace Relations

25 June 2014

In this issue: we look at the circumstances where a court may not grant an injunction to restrain an employee from working with a competitor; the Fair Work Commission's position on legal representation; a case that helps clarify when restructuring roles will create genuine redundancy; whether a gift to employees who worked during a strike can be construed as adverse action; an assessment of the first six months of the new anti-bullying jurisdiction; and an employer's right to proper information about an employee's illness.

Haste required when enforcing restraints

In brief: The New South Wales Supreme Court has refused to grant an injunction to restrain a former senior employee from working for a competitor, despite arguably reasonable contractual restraints. Senior Associate Veronica Siow and Lawyer Stefanie Duncan report.

How does it affect you?

  • Employers should act promptly to enforce restraint obligations against former employees who breach those restraints.
  • Even if the restraints are reasonable, the court will give weight to undertakings given by former employees when deciding whether or not to grant an employer's application for an injunction.


Background

Mr Harrison was employed by Fairfax as the Group Commercial Director of its Australian Publishing Media (APM) division. He resigned on 10 December 2013, and on the following day, Yahoo!7 announced that Mr Harrison had been appointed as its CEO and would commence in that position in mid-2014.

Mr Harrison's employment contract with Fairfax contained a post-employment restraint of trade clause. The clause prohibited him from:

  • actions intended to entice an employee, contributor, supplier, agent, customer or client of the Fairfax Group away from the Group for a period of 12 months (non-poach); and
  • being involved or associated with any business in Australia that is, or may be, in competition with the business that Mr Harrison had worked in prior to his termination, for a period of six months (non-compete).

Between December 2013 and the commencement of the proceedings, the parties corresponded about Mr Harrison's contractual restraints. In particular, on 19 March 2014 Yahoo!7 wrote to Fairfax, stating that, while it did not consider Mr Harrison's post-employment restraints to be enforceable (and, as such, he would commence employment with Yahoo!7 on 9 April 2014), Mr Harrison would be prepared to give an undertaking to comply with the non-poach provision in his Fairfax contract.

On 9 April 2014, when Mr Harrison commenced his employment with Yahoo!7, Fairfax replied to Yahoo!7's letter of 19 March 2014, indicating that it would seek interlocutory relief if he commenced work with Yahoo!7 prior to 11 June 2014.

Fairfax commenced proceedings on 17 April 2014 and around this time, Mr Harrison offered extensive undertakings to Fairfax, including that he would not contact or meet with any representatives of any advertising agencies prior to 11 June 2014 for any business-related purpose.

The decision

His Honour Justice Ball held that Fairfax had a strongly arguable case, given that Mr Harrison as a senior employee had:

  • confidential information relating to the strategies that APM would adopt to compete with its competitors; and
  • played an important role in developing and maintaining connections with Fairfax's principal advertising customers,

and that until such time as he could be replaced, Fairfax would be at a disadvantage. However, his Honour ultimately concluded that he should not grant the injunction, for the following reasons:1

  • There was no real risk of Fairfax losing contracts to Yahoo!7, since the injunction would only operate for a period of seven weeks and, in view of the extensive undertakings given by Mr Harrison, there would be little risk that he would be able to make use of customer connections during that period. Additionally, the evidence indicated that Yahoo!7 already had strong connections with such media advertising customers and that there were no relevant contracts due for negotiation.
  • The businesses of Fairfax and Yahoo!7 were substantially different and, as such, it was not obvious what confidential information of APM would be of immediate assistance to Yahoo!7.
  • Fairfax's delay in commencing proceedings (despite being put on notice much earlier that Mr Harrison would commence employment with Yahoo!7) resulted in an injunction being of insufficient utility to warrant its grant, given that he had already commenced his employment with Yahoo!7 and the injunction would last for only seven weeks.

A help or a hindrance?

In brief: Consistent with a developing trend, the Fair Work Commission has endorsed the use of legal representation by parties to help improve the efficiency of proceedings. Lawyer Brent Reading reports.

How does it affect you?

  • The Fair Work Act 2009 (Cth) presumes that, in the ordinary course, parties to a proceeding in the Fair Work Commission (the FWC) will not be represented by lawyers or agents.
  • In practice, however, parties in the FWC proceedings are far more likely to be represented than not.
  • This decision supports a developing trend that both parties and the FWC itself benefit from the use of lawyers in proceedings.

Background

This was an application by the employer in an unfair dismissal proceeding for permission to be represented by a lawyer.2 The applicant opposed the application.

The matter had a long and complex history dating back to September 2011. The employee had been represented by four different law firms in that time, but was not represented at the time of this decision.

The decision

The respondent was granted permission to be represented under section 596 of the Fair Work Act.

Deputy President Sams remarked that since the Commission's emphasis had shifted from collective disputes to 'individual grievances', the ordinary course is now that both parties to the hearing of a dispute will be legally represented.

Deputy President Sams said that the supposed risk of legal representation causing hearings to be unnecessarily formal had not been his experience. In fact, a focused, experienced and sympathetic legal practitioner was, more often than not, a welcome relief to the Commission. Whether or not the applicant had legal training, could afford legal representation or pay expert witnesses was irrelevant to the test set out in s596 of the Fair Work Act.

As such, Deputy President Sams was satisfied that the matter was of sufficient complexity to warrant representation.

A similar decision in April this year also found that legal representation improves efficiency in complex cases.3

When will the restructure of a role create a genuine redundancy?

In brief: The Full Bench of the Fair Work Commission recently clarified when the restructuring of an existing role will constitute a genuine redundancy. Senior Associate Andrew Stirling and Lawyer Tegan Ayling report.

How does it affect you?

  • For a termination to be a genuine redundancy, the employee's role must no longer be required to be performed by anyone.
  • A role may no longer be required even if duties performed within that role are incorporated into a new role.

Background

Mackay Whitsunday Taxis (trading as Mackay Taxis) decided to create a new role that required formal bookkeeping qualifications.

It incorporated into this role many duties of an existing position, held by Ms Wilson. Ms Wilson did not hold the qualifications Mackay Taxis required for the new role and it would have taken her 12 months to obtain that qualification. Mackay Taxis claimed it did not have the time to wait for her to undertake the required study, nor could it cover the cost. A qualified applicant was given the job and Ms Wilson was retrenched.

Ms Wilson made an unfair dismissal application. Mackay Taxis argued that the dismissal was a genuine redundancy and so outside the unfair dismissal regime. At trial, the Fair Work Commission (the FWC) found that the new role merely added a new requirement of formal qualifications to Ms Wilson's role, and that her job was still required to be performed.

The appeal

On appeal, the Full Bench held that the new role was not the same as Ms Wilson's role.4 Although a substantial number of duties previously performed by Ms Wilson were incorporated into the new role, formal qualifications were now required, due to the complexity and nature of the new position. These were operational changes for the benefit of the employer.

The Full Bench ruled that it is reasonable for an employer to change the way work is performed by, for example, a redistribution of duties. The fact that duties previously part of Ms Wilson's role were still to be performed was irrelevant. What was important was whether her position actually still existed. Although 70 per cent of Ms Wilson's role would be performed in the new role, the new 30 per cent was a sufficient change such that her role was no longer required.

However, even if a position is no longer required, a dismissal is not a genuine redundancy if the person could have reasonably been redeployed to another position with that employer or with an associated entity. Ms Wilson claimed that she could have performed the new role if she had been able to complete the necessary training at Mackay Taxis' expense. Mackay Taxis considered it unreasonable to place Ms Wilson in the new position because it could not afford the associated time or cost of training her to obtain the qualifications. Ms Wilson also claimed that there was a third role to which she could have been redeployed. As the Commissioner at trial had not made a finding on the reasonableness of redeployment, the matter was remitted to a new Commissioner for determination.

Upon remittal, Commissioner Simpson considered the reasonableness of redeploying Ms Wilson elsewhere within Mackay Taxis' enterprise, but confirmed it would not be reasonable to:

  • require Mackay Taxis to hold off structural change to allow Ms Wilson to obtain the qualifications required for the new role; and
  • oblige Mackay Taxis to cover the cost of Ms Wilson obtaining these qualifications, given the transferrable nature of the training she was completing.5

Commissioner Simpson based his determination on the uncertain timing of the completion of Ms Wilson's training and Mackay Taxis' status as a small business employer. In relation to Ms Wilson's claim that she could have been redeployed into a third role, the Commission considered that as this role did not exist at the time of Ms Wilson's dismissal, it could not be used to assess the genuineness of her redundancy.

Gift voucher was not adverse action

In brief: A company who rewarded employees with a $300 grocery voucher for attending work during a strike was found not to have taken adverse action against the striking employees. Senior Associate Veronica Siow and Law Graduate Sibella Matthews report.

How does it affect you?

  • An employer will be deemed to have taken adverse action against an employee under section 340 of the Fair Work Act 2009 (Cth) if a substantial and operative factor of the decision to take the action was because the employee exercised a workplace right for example, the right to take industrial action.
  • Employers may extend a token of appreciation to employees because they elected to attend work during a challenging period of industrial action, if the decision to provide the gift was to reward those employees and not to punish those employees who went on strike.


Background

Throughout September and October 2011, some employees of Corinthian Industries (Australia) Pty Ltd and its wholly owned subsidiary Baltic Doors Pty Ltd took industrial action during negotiations for a new enterprise agreement.

In April 2012, Corinthian and Baltic gave certain employees who did not go on strike during the September and October 2011 period a $300 gift voucher.

During the industrial action, the employees who had elected to attend work had to cross picket lines, often in the face of abuse and intimidation. Those employees were frequently called on to work longer hours during this period to meet deadlines and fulfil the duties of those employees who were on strike.

Corinthian and Baltic considered that the employees who had elected to work went above and beyond their ordinary duties. Because of this, a decision was made in April 2012 by management of Corinthian and Baltic to provide each of these employees with a $300 Woolworths voucher, with an accompanying letter indicating that the voucher was a token of appreciation for their efforts during a challenging time.

The CFMEU contended that Corinthian and Baltic, by providing some employees with the gift voucher, had discriminated against employees who had exercised their workplace right to take industrial action and that, in doing so, the companies had taken adverse action against the employees who had gone on strike.

The decision

The Federal Court found in favour of Corinthian and Baltic.6

The court was satisfied on the evidence before it that, on a commonsense evaluation of the companies' reasons for the decision, the decision was made to reward the employees who had assisted the companies meet their commercial obligations during a difficult period, and that the striking workers did not qualify for the gift on that basis.

The first six months of the new anti-bullying jurisdiction

In brief: The anti-bullying jurisdiction has been operating since 1 January 2014. The applications that have been considered by the Fair Work Commission since then provide some guidance as to how the system operates. Special Counsel Eleanor Jewell and Lawyer Arlou Arteta report.

How does it affect you?

  • Employers should ensure that their workplace bullying policies are reviewed and up to date, and should monitor the behaviour of employees and managers in the workplace.
  • The Fair Work Commission (the FWC) may consider behaviour that occurred prior to the introduction of the new bullying jurisdiction in determining whether bullying has occurred.
  • It is important that employers act promptly in relation to bullying concerns, to reduce the risk of the FWC making orders that will affect their workplace.


Background

The FWC's new bullying jurisdiction was introduced on 1 January 2014.

Since the jurisdiction commenced:

  • the FWC has received 151 applications for orders to stop bullying in the first three months, significantly less than the volume of applications that were widely expected;
  • the majority of applicants in the anti-bullying jurisdiction were employees who alleged that they were being bullied by their manager or a co-worker;
  • the FWC has found that it can consider acts that occurred before the new anti-bullying jurisdiction came into effect;7 and
  • recent applications have been dismissed on jurisdictional grounds, because an applicant was found to not be a 'worker' (as the applicant was a volunteer),8 and because an employer was found to not be a constitutional corporation under the Fair Work Act 2009 (Cth).9
Orders

The FWC's first substantive order under the new bullying jurisdiction demonstrates the kinds of orders that may be made.10 Following a conference, Senior Deputy President Drake ordered that the co-worker:

  • have no contact with the applicant alone, or send email or text messages to the applicant except in emergencies;
  • not make any comment about the applicant's clothes or appearance;
  • complete any exercise at the employer's site before a particular time; and
  • not raise any work issues without notifying the employer's chief operating officer or their subordinate.

Senior Deputy President Drake also ordered that the applicant not arrive at work before a particular time. The parties have leave to approach the FWC to have the matter relisted for a further conference in case there are any issues with implementing the order.

Employer entitled to understand illness

In brief: The Federal Court recently determined that, in addition to a medical certificate, an employee may be required to provide further information about their illness when requesting sick leave. Senior Associate John Naughton and Lawyer Laura Miller report.

How does it affect you?

  • Employers are entitled to receive information relevant to an employee's fitness for work.
  • Employers may direct employees to provide reasonable additional information about their medical condition and expected return to work, beyond what is set out in a generic medical certificate.

Background

In July 2012, First Officer Gregory Kiernan applied for sick leave from his employer, Qantas Airways Limited. Mr Kiernan submitted a medical certificate stating that he was suffering from clinical depression and would be unfit to perform his normal duties until October 2012. In early October 2012, Mr Kiernan sought to extend his leave and provided a medical certificate simply stating that he was 'suffering a medical condition and will be unfit for normal work' until January 2013.

Relying on provisions of the Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement 2005-2006 (the agreement), Qantas requested that Mr Kiernan provide a written report from his doctor that indicated Mr Kiernan's medical condition, prognosis, capacity to return to work and the timeframe for a return to full duties. The Pilots Association, on Mr Kiernan's behalf, refused to provide Qantas with the information requested. The association contended that Mr Kiernan was only required to provide documentary evidence of his unfitness for duty (in the form of either a medical certificate or statutory declaration) and that he was not obliged to particularise further the nature of his medical condition. Over the course of several months, Qantas made several unsuccessful requests for this information. The association commenced proceedings in the Federal Court, alleging that Qantas had breached the Fair Work Act 2009 (Cth) (the Act) by taking adverse action against Mr Kiernan in response to his exercising a workplace right namely, his right to provide a medical certificate as the only evidence required to confirm that he was unfit for duty.

The decision

The Federal Court dismissed the association's application, finding that under the agreement, Qantas had a right to require a member of its flight crew to produce additional evidence of unfitness for duty when the employee had provided a medical certificate without sufficient detail of their illness and the estimated duration of their absence.11

Importantly, the court also held that, independently of the agreement, Qantas had an implied contractual right to require an employee to provide it with further information in relation to a medical condition, so that it could adjust for the impact of the employee's absence from their duties.

Lessons for employers

Helpfully, this case confirms that:

  • the contract of employment contains implied terms allowing an employer to require an employee to:
    • furnish particulars and/or medical evidence affirming the employee's continuing fitness to undertake duties;
    • (where there is a genuine need to do so and on reasonable terms) attend a medical examination to confirm his or her fitness12; and
    • provide medical evidence sufficient to allow an employer to appreciate an employee's medical condition and expected return to work;
  • such requirements are not unreasonable and will not amount to adverse action.

However, rather than rely on the implied duty, we would recommend a clause be included in written employment contracts entitling an employer to require an employee to submit to a medical assessment, to make disputes about those rights less likely.

Footnotes
  1. Fairfax Media Management Pty Limited v Harrison [2014] NSWSC 420 (23 April 2014).
  2. Applicant v Respondent [2014] FWC 2860 (1 May 2014).
  3. Ms Emily Oratis v Melbourne Business School [2014] FWC 2838 (30 April 2014).
  4. Mackay Taxi Holdings Ltd T/A Mackay Whitsunday Taxis v Wilson [2014] FWCFB 1043 (12 February 2014).
  5. Wilson v Mackay Taxi Holdings Ltd [2014] FWC 2425 (16 April 2014).
  6. Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd [2014] FCA 239 (18 March 2014).
  7. Ms Kathleen McInnes [2014] FWCFC 1440 (6 March 2014).
  8. Arnold Balthazaar v Department of Human Services (Commonwealth) [2014] FWC 2076 (2 April 2014).
  9. Ms Kathleen McInnes [2014] FWC 1395 (24 March 2014).
  10. Applicant v Respondent (PR548852) (21 March 2014).
  11. Australian and International Pilots Association v Qantas Airways Ltd [2014] FCA 32 (6 February 2014).
  12. Blackadder v Ramsey Butchering Services Pty Ltd (2002) 118 FCR 395 (10 May 2002).

For further information, please contact:

Share or Save for later

What are these?

 

To save this publication on your smartphone or
tablet for off-line reading (eg on a plane flight),
we recommend Pocket.

 

 

You can leave a comment on this publication below. Please note, we are not able to provide specific legal advice in this forum. If you would like advice relating to this topic, contact one of the authors directly. Please do not include links to websites or your comment may not be published.

Comment Box is loading comments...