Author: admintra

Restraint of Trade Clauses in Employment Contracts

Woolworths v Banks [2007] NSWSC 45

Restraint of Trade – February 2007
The Supreme Court of New South Wales recently made a significant decision in relation to restraint of trade. In the case of Woolworths v Banks, Woolworths were attempting to enforce a restraint of trade clause in Mr Banks’ written service agreement.

Background to the case

Since 1993, Mr Banks had been employed by Woolworths in numerous positions for over fourteen years. On the 17th of November 2006 he gave notice of his resignation and on the 12th January, ended his employment at Woolworths. Mr Banks was employed on the basis of a written service agreement, which expired on the 18th August 2006. Mr Banks and Woolworths then entered into an additional written service agreement on the 28th August 2006. This agreement defined the terms of his employment and his position as a senior regional property manager. In late December 2006 Mr Banks was given a letter from Woolworths with a cheque for $71 002.76, six months of Mr
Banks’ net entitlements. The letter stated that Mr Banks would be bound by clause 10, the restraint of trade clause, in his written service agreement. On the 15th January, Mr Banks began employment with Myer Limited in the role of general manager, property. As a result, Woolworths attempted to enforce its restraint of trade clause.

Restraint of Trade

Justice McDougall investigated in which circumstances restraints of trade are valid. He examined Kearney v Crepaldi [2006]. This case found that a party seeking to enforce a restraint of trade must show that the restraint is no wider than is reasonably necessary to protect its legitimate interests. He also examined Hartleys Ltd v Martin [2002], where Gillard J stated ‘it is well-recognised that an employer is entitled to impose a restrictive covenant to reasonably protect his business against ex-employees taking customers with them to a business in competition with their former employer.’ Additionally, Justice McDougall examined the cases of Lindner v Murdoch’s Garage
(1950) and Herbert Morris Ltd v Saxelby [1916]. At the conclusion of this examination, he found that restraints of trade were valid where they were ‘reasonably necessary to prevent disclosure of confidential information garnered by the former employee in the course of his or her former employment, or the exploitation of a connection built up by that employee with the former employer’s customers in the course of that employment.’
Woolworths attempted to enforce the restraint of trade clause, by claiming that:
⇒ Myer was a competitive business, and
⇒ Mr Banks was in possession of confidential information.
Competitive Business
Woolworths claimed that Myer was a ‘competitive business’ as defined in clause 10(d)(ii) of the service agreement. It alleged that this
occurred in two main ways:
⇒ Woolworths held that its discount department store Big W competed with Myer, in that it sold goods which overlapped in various areas.
⇒ Additionally, Woolworths believed that it was in competition with Myer for a limited amount of retail space available.
Restraint of Trade Clauses in
Employment Contracts.
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In spite of this, Mr Ralph Robert Kemmler, Woolworths’ General Manager – Property Operations, made a clear distinction in his affidavit. While he acknowledged that there is some competition in the retail property market in Australia, he distinguished between department stores such as Myer and David Jones, discount department stores such as Big W, supermarkets, such as Woolworths, chain operators specialising in particular retail commodities such as Bing Lee or Retra Vision and smaller specialty retail stores. He stated that retailers require different
space depending on the type of retail operations they conduct. Department stores customarily require the largest floor space, with smaller specialty retail stores requiring the least.
Consequently, Justice McDougall concluded that both Big W and Myer’s needs were somewhat dissimilar and stated that Woolworths’ case on this point was not strong. He claimed that there was “no evidence that, as at August 2006, Woolworths and Myer were, or were perceived aslikely to be, in competition for the same ‘boxes’ of retail space,” and “there is no evidence that…the traditional model to which Mr Kemmler
referred in paragraph 17 of his affidavit…was perceived as likely to change.”

Confidential Information

Woolworths alleged that in the course of his employment, Mr Banks was privy to confidential information that would be of use to Myer. They used the Court of Appeal case of Woolworths Limited v Mark Konrad Olson [2004] to put their argument forward. Woolworths believed that a restraint of trade clause may be enforced to protect the employer’s legitimate interest in its confidential information; and may be so enforced notwithstanding the fact that there are other protections – such as clause 5- for that information. However, Justice McDougall believed that Olson was a case where there was a very strong basis for believing that the respondent had misused, and unless restrained might continue to misuse, confidential information of Woolworths.
The question was posed as to whether Mr Banks was actually in possession of any confidential information concerning Woolworths. It was found that Mr Banks’ knowledge of confidential information was associated with Woolworths’ supermarket business. This could, to some extent, also be related to Big W. However, Justice McDougall found that given the differences already established between the two businesses, the likelihood was that the information would be of no or limited interest to Myer.
Hence, the Court found in favour of Mr Banks and rejected Woolworths’ claim for an interlocutory injunction.

Conclusion

This case has further defined the boundaries on restraint of trade clauses in agreements. It identified what a ‘competitive business’ is and clearly labels the difference between department stores, discount departments, supermarkets, and smaller specialty retail stores. Additionally, it has further been taken into account, whether one party is in possession of confidential information that would be relevant, or of any interest to another party, when deciding whether or not to enforce a restraint of trade clause.

Two New Implied Duties in Employment Contracts?

Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007] NSWSC 104

Implied duties in employment contracts

Two new implied duties were recently found to apply to an employment contract in a case heard by the Supreme Court of New South Wales. In Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007], it was found that there was a duty implied by law in Mr Russell’s employment contract that the Church would “act in good faith” towards Mr Russell.
It was also found there was an implied duty that “the Church would not conduct itself in a manner likely to destroy or seriously damage the relationship of mutual confidence and trust between the parties.”
Background to the case Mr Russell commenced employment as Director of Music at St Mary’s Cathedral in 1976. He was responsible for the general management of the choir, including teaching and training members, conducting at church services, concerts and rehearsals. He also arranged and accompanied the choir on various overseas tours. There was no written documentation with any express provisions of the contract of employment.
In 1982 Mr David O’Grady began work as a sacristan at St Mary’s Cathedral. At the Dean of the Cathedral’s request, he lived in Mr Russell’s residence. In 1999, Mr Russell was arrested and voluntarily stood down. The arrest related to sexual misconduct claimed by a former choir member, Mr Buckley. Another former choir member, Mr X, also provided a statement regarding Mr O’Grady’s conduct, whilst he was residing with Mr Russell. Mr O’Grady was charged and convicted. Bail was granted and Mr Russell returned to his duties under the condition he would be supervised. In March 2000 the committal proceeding began. Mr Buckley failed to attend and all charges against Mr Russell were dismissed. He resumed full duties without any conditions or restrictions.
From February to August 2002 there were communications between the Catholic Commission for Employment Relations (CCER) and the New South Wales Ombudsman’s Office. This led the Church to conduct an internal enquiry. In August, the Ombudsman’s office wrote to the Church stating that it would investigate the CCER’s conduct. It required documents and records relating to the Church’s checks of Mr Russell’s performance of duties. Once again Mr Russell conducted his duties under full supervision. He expressed concern at the lack of information that had been provided with. In October 2002, Mr Russell, his advisor, a Church investigator and the Dean of the Cathedral, attended a meeting where Mr Russell denied each of the allegations against him.

By letter, the Dean requested the attendance of Mr Russell at a meeting on 10 December. At this meeting, Mr Russell was informed that the allegation of indecent assault had not been sustained. However, preliminary findings of neglect had been sustained on the balance of probabilities. A review of his suitability to continue employment had been recommended as disciplinary
action. On 31 January 2003, the Dean consulted with the Cardinal Archbishop, who approved the decision to terminate Mr Russell’s
employment.
Mr Russell commenced proceedings for the reinstatement of his employment under section 84 of the Industrial Relations Act 1996
(NSW) on 17 February 2003 in the Industrial Relations Commission. It was concluded that Mr Russell’s termination was unreasonable.
Deputy President Harrison did not consider reinstatement ‘impractical’ and ordered reinstatement with ‘restitution of wages
and continuity of services for all purposes.’ Mr Russell continued his employment after his reinstatement on 1 June 2004, he was
paid income that he did not receive while he was not working.
In the recent proceedings Mr Russell claimed damages for wrongful termination and for breaches of two implied terms in the employment
contract. The damages included the cost of the proceedings, the expenses of a media consultant, injury to reputation
and damages for distress, embarrassment, humiliation and hurt to feelings. Damages were also claimed for negligence. Additionally aggravated and exemplary damages were claimed.
Two New Implied Duties in Employment Contracts?
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Implied Terms – What are Implied Terms?

There are two types of terms in employment contracts. There are those that are expressed by the parties and those implied by law.
There are a number of terms that are implied in contract at common law, for example that parties will not breach other terms of the contract. There are various reasons why implied terms are read into the contract:
⇒ They are rules of law which the parties have taken to be intended as part of their contract;
⇒ From the factual circumstances of their agreement, the law can state that the parties must have tacitly agreed to a particular term; or,
⇒ The law will say that a custom is legally enforceable as part of the contract.
Mr Russell argued that the Industrial Relations Act 1996 (NSW) did not abolish the common law rights that would apply. He claimed
that there were two implied terms in his contract of employment which were breached by the Church. These were:
⇒ There contained a duty implied by law in his contract that the Church would “act in good faith” towards Mr Russell.
⇒ Mr Russell also claimed there was another implied term in his contract, that “the Church would not conduct itself in a manner likely to destroy or seriously damage the relationship of mutual confidence and trust between the parties.”
1) Duty to Act in Good Faith Justice Rothman defined good faith as a ‘requirement that a person doing the act exercise prudence, caution and diligence.’ This would mean taking due care to avoid or minimise adverse consequences to the other party.
Mr Russell’s representatives claimed that in Australia, an obligation to act in good faith was recognised as implied in contracts of employment. The court did recognise that various implied terms and obligations implied upon an employee, which we now take for granted, were originally based upon the obligation to act in good faith. It examined Robb v Green [1895], in which Lord Esher stated that “It is impossible to suppose that a master would have put a servant into a confidential position of this kind, unless he thought that the servant would be bound to use good faith towards him.” Justice Rothman accepted this analysis and came to the conclusion that there is no reason why an employer would be less likely to be bound to act in good faith, then an employee.

As a starting point, Justice Rothman analysed the implication of a contractual duty of good faith in commercial contracts. He examined Renard Constructions v Minister for Public Works (1992) and concluded that in this area, the duty arises because it is predominately reasonable and equitable. This case implied a duty of good faith as both an implication of fact and an implication of law.

Byrne v Australian Airlines (1995) found that ‘rules of construction are not rules of law so much as terms implied, in a sense attributed to the contractual intent of the parties.’ However, the court believed that there may be a distinction without difference as to whether terms arise by construction or implication.
In Vodafone Pacific Ltd v Mobile Innovations Ltd [2004], there is an imposition of law, by acknowledgement of a contractual intent to the parties, and the rule of “construction,” is a rule for imposing in law a meaning on the parties. In Esso Australia Resources v Southern Pacific Petroleum [2005], Chief Justice Warren states that that the test for interference in contractual activity is that the parties relationship must be unequal, with one party vulnerable or at a particular disadvantage. Then the employment relationship would apply. This must occur in the interests of certainty in contractual activity.

Justice Rothman said that apart from various terms relating to wages and an initial trial period, there were no express terms in the contract allowing the parties to regulate their relationship. He understood that both parties envisaged a continuing, indefinite period of employment. He stated that the very nature of Mr Russell’s work, spending large amounts of time teaching and supervising children, inevitably involved circumstances which had direct and binding effects on the Church. Such work was performed without supervision, for example the various overseas tours. As a result, Justice Rothman concluded that it would be impossible to imagine the contract of employment operating without the presence of a duty of good faith.
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2) The Church would not conduct itself in a manner likely to destroy or seriously damage the relationship of mutual confidence and trust between the parties.
Justice Rothman defined the duty of mutual trust and confidence, where there exists a duty not, without reasonable and proper cause, to act in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.
The court examined the case of Thomson v Orica Australia [2002]. In this case Justice Hoeben referred to Justice Allsop in Burazin vBlacktown City Guardian (1996), where he stated ‘there is ample authority for the implication of a term in a contract of employment that the employer will not, without reasonable cause, conduct itself in a manner likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee.’
Additionally the court found that this duty was not a novel concept. Prior to recent findings, for example Hollis v Vabu (2001), the duty formed the rationale for vicarious liability, dating back to Hern v Nichols (1701). This is one of the early examples where vicarious liability depended upon vicarious responsibility, where the employer bestowed trust and confidence upon their employees for the various acts that they were involved in.
The court recognized that it is essential that an employee must have confidence in their employer. They must be able to trust the capacity of the employer to give directions and conduct operations in such a way which allows the employee to carry out the work in safety and without harm. This is an acknowledgment that under an employment contract, an employee submits to the surrounding work environment.
There are co – workers and directions over which they have very little control. Hence in this regard, an employee places trust and confidence in the employer. Similarly an employer places trust and confidence in the employee. The employer must trust everything the employee does in the course of their employment. Hence trust and confidence is fundamental to the contract of employment. If one destroys trust and confidence, and trust and confidence is a necessary and essential ingredient of a contract of employment, then the contract of employment is destroyed. This is demonstrated in the case of Concut v Worell (2000) which described the relationship between employee and employer as ‘importing implied duties of loyalty, honesty, confidentiality and mutual trust.’
Hence, Rothman, J determined that such implied terms do exist under Australian law.

Effect of Implied Terms

A contract of employment may be terminated either by the employer or the employee, by giving reasonable notice of termination, except where there is an express provision in the contract prohibiting this. In spite of finding that both of the above implied terms apply in contracts of employment, this does not deal with whether such duties impact upon the capacity of the employer or employee to terminate upon reasonable notice.
Justice Rothman observed that there is no authority in Australia or England for the proposition that the application of implied terms impinge on the right to terminate. In this case, Mr Russell’s representation submitted that it is possible for the Court to separate the dismissal
from the conduct leading up to the dismissal. In particular, the conduct of the investigation and various events surrounding it.
Justice Rothman believed that the implied duty not to act to destroy the relationship of trust and confidence, will not interfere with the right of a party to a contract of employment to terminate the contract. He determined that it is possible for the implied duty of good faith to operate at the point of termination, however it cannot operate in circumstances where the termination is, as a matter of fact and as a matter of law, without cause. In this case, Justice Rothman found both implied terms operate.
Mr Russell’s representation alleged that there were breaches of the implied conditions, as there was a delay by the Church in responding to the New South Wales Ombudsman’s Office. Additionally, the plaintiff claimed that there was a failure to inform the plaintiff of the inquiries of the New South Wales Ombudsman’s Office. Justice Rothman determined that unless the results would have been different, the timeliness of the response, and the timeliness of the information to Mr Russell cannot have caused damage.
However, when referring to these implied terms, the interests of the employer must be balanced against the adverse effects they may have on an employee. The Church did owe a non-delegable duty to the children who attended St Mary’s College, to ensure reasonable9 care was taken of them while they were on school premises, particularly while attending St Mary’s Choir (this was a condition of their scholarship to attend the college). To support this Rothman J cites Geyer v Downs (1977) and The Commonwealth v Introvigne (1982). Rothman stated that the Church’s actions were required only to satisfy itself that Mr Russell’s employment presented for it an unacceptable risk of injury
or harm to the children in its care. Given the nature of these allegations put forward, where an employer acts on suspicion, it is imperative the suspicion and its reasonableness be proven, as stated in Briginshaw v Briginshaw (1938). The plaintiff complained that Mr X was not interviewed face to face and he should have been, due to his significance to the investigation. They claimed this was a breach of the duty of good faith. Justice Rothman concluded that given the resources and infrastructure it should as a matter of prudence, caution and diligence interviewed
Mr X face to face. Not doing so was a breach of the Church’s duties.

Wrongful Dismissal

In Mr Russell’s case there was no express provision of the contract of employment dealing with the termination of the contract. When these circumstances arise it is implied in the contract of employment, a right of either party to terminate the contract on reasonable notice. Additionally, the common law does not give a right to terminate a contract of employment on payment in lieu of reasonable notice. The immediate termination of Mr Russell’s employment contract and payment in lieu of reasonable notice, was a breach of the contract.

Conclusion

Justice Rothman found in favour of the defendant, the Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor. Despite finding that the Church breached its duty, regarding the implied terms of the contract, the breach occasioned no damage and no damages were awarded. In terms of wrongful dismissal, it was found that the manner of Mr Russell’s dismissal was inconsistent with the implied term that termination could occur on reasonable notice. In spite of this, it was found that no damage had been suffered by the plaintiff as a result of the breach. Due to his reinstatement, there was no loss of income and no damages were awarded.
In making this judgement, Justice Rothman established that the contract of employment had a duty of ‘good faith’ implied, as well as an implied duty of trust and confidence where ‘the Church would not, without proper and reasonable cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between the parties.’ Despite the fact that in this case, there was found to be no damage suffered as a result of the breach, in following cases, the opposite may occur. Perhaps in subsequent cases, additional
implied duties may be read to exist in employment contracts. Hence, the implied duties of ‘good faith’ and for an employer not to “conduct itself in a manner likely to destroy or seriously damage the relationship of mutual confidence and trust between the parties” have been read to apply in employment contracts.

Constructive Dismissal

Due to the fact that Mr Cook’s representation was unable to use unfair dismissal as an avenue in this case, they attempted to establish a termination by CPF Management under s43(4)(c)(i) and proposed using the concept of ‘constructive dismissal.’ This concept is used to portray the idea that “…although the Plaintiff resigned, it was in fact the conduct of CFP which brought about the end of the employment relationship.” Hence, the termination was bought about by the conduct of the employer.

Justice Williams observed that this concept has not been widely used in Australia. The expression has predominately been used in various English decisions. It is not recognised by the common law in Australia and there is no legislation extending the definition of dismissal to incorporate this term. He also stated that where there has been limited reference to this term in Australian cases it has been referring to conduct on the part of the employer which would amount to repudiation of the contract. Justice Williams referred to the English case of Spencer v Dowling and Anor [1997]. In this case Hayne JA found that one must not merely look to the form which the termination took, but rather one should look for what was the substantial cause of the termination.

Did the employer evince an intention no longer to be bound by the contract of employment? If this occurs without formal notice then the employee is ‘entitled to give a notice in effect electing to accept the employer’s repudiation.’ However, Justice Williams, did not believe that constructive dismissal applies and rejected this claim.

Court Findings

Justice Williams considered that in February 2003, control over CPF Management had changed. However, Mr Cook was still employed and that position was to continue for some time.
The Court found that Mr Cook wished to terminate his employment in order to begin employment elsewhere. It could not be said this was because CPF Management dismissed Mr Cook for a reason other than the respondent’s conduct, capacity or performance.
Hence Mr Cook was not entitled to recover any money for long service leave or money in lieu of notice. The appeal was allowed and the judgment at first instance was set aside.

Conclusion

This case further establishes that under Australian law the notion of ‘constructive dismissal’ is not widely used. It is not recognisedby common law and there are no statutes extending the definition of dismissal, in particular s43(4)(c)(i) of the Industrial Relations Act 1999 (QLD).

Termination by or at Instance of Employee

Cook v CFP Management Pty Ltd [2006] QCA 215

Termination by or at instance of employee – February 2007
The Queensland Court of Appeal recently heard a case, relating to the rights and duties of both employers and employees and termination by or at instance of the employee. In the case of Cook v CFP Management Pty Ltd, Mr Cook terminated his own employment and expected to have all outstanding payments, paid to him, including payments in lieu of long service leave.

Background to the case

Mr Cook had a contract of service with Challenger Group. He had been employed by this Group since the 14 April 1994. In October 2002, Mr Cook became aware that Challenger Group was considering a sale of its stockbroking business.
Around the time of November/December 2006 the CEO of Challenger International notified Mr Cook that Challenger First Pacific Ltd had been sold to Bell Potter Securities Ltd. Mr Cook and two other employees (the ‘options team’), were informed that Bell Potter was intending on gradually winding down the stockbroking operations of Challenger First Pacific. However they were told that their employment would continue in accordance with their existing arrangements.
Mr Cook and the options team pursued employment with alternative broking firms. By January 2003 the team had arranged to work for ABN Amro Morgans, another stockbroking firm. On the 5th February Mr Cook submitted a letter terminating his employment with Bell Potter. He made it clear he expected all payments due to be paid to him, including payments in lieu of long service leave.

Trial at First Instance

Mr Cook believed he was entitled to long service leave payments as stated in s 43(3) of the Industrial Relations Act 1999 (QLD). This act states that an employee, who has worked for 7 years continuously, is entitled to a proportionate payment for long service upon termination of services.
The matter was originally heard before the District Court and the Court found in favour of Mr Cook. CPF Management was made to pay $92 168.93, $62 328.82 of this sum was for long service leave and $11 518.06 for payment in lieu of notice.

Appeal

On appeal, CPF Management argued that the trial judge should not have awarded in favour of Mr Cook. They stated that based on the terms of his employment contract and the Industrial Relations legislation in Queensland, he was not entitled to receive any money.
CPF Management relied upon s 43(4)(c)(i) of the Industrial Relations Act 1999 (QLD). This section states that proportionate payment is only payable if the termination is because the employer dismissed the employee for a reason apart from conduct, capacity, performance or in s 43 (4)(c)(ii), because the employer unfairly dismissed the employee. Justice Williams promptly concluded that there was no suggestion of this case being one of unfair dismissal.

Before hiring employment lawyers

If you ever find yourself in a situation where you need to hire employment lawyers there are basic checks you’d want to conduct before calling their office.

This month marks the first anniversary of the Workchoices legislation. One year on, we examine the effect that this legislation has had on employees, employers and the union movement. We also note the reduction in unfair dismissal cases and the effect that this has had on the Industrial Relations Commission.

Additionally, over the past few months there have been some interesting developments in the area of Employment Law. In particular, there are three decisions that have been handed down which are significant.

Firstly, there is the case of Cook v CFP Management Pty Ltd [2006] QCA 215. This case related to an employee terminating their own employment. It considered termination by or at instance of the employee and whether the English common law notion of ‘Constructive Dismissal’ applied in an Australian context.

Secondly, we explore the case of Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007] NSWSC 104. This case, heard in the Supreme Court of New South Wales, introduced two new implied duties to an employment contract.

The case determined whether these implied duties applied to employment contracts. It also examined the impact for both employer and employee upon finding that the duties did apply.

Finally, we look at Woolworths v Banks [2007] NSWSC 45. In this case the defendant left their employment at Woolworths and commenced employment at Myer. The case relates to a Restraint of Trade clause in an employment contract. The court considered where restraint of trade clauses were valid, the nature of a ‘competitive business’ and the nature of confidential information.

Twelve months ago, many in the union movement saw with a certain irony, the Howard Government’s employment legislation as the change that would reverse their decline. An entire generation who had never been unionists would come to the fold. At last, unions would move beyond their middle-aged public sector base, because a new and urgent need for them had arisen. They would get their realistic numbers up above 10% of the private workforce for the first time in two decades.

On the other hand, the Government and their “employer spokesmen,” thought that, after a flurry of scripted outrage, most people would realize that it didn’t affect them ( just as medical matters don’t affect us until we get sick), and the debate would end. The unions would become more marginalized, the demonized wrongful dismissal jurisdiction would never again threaten the zero point one (0.1) percent of employers it had been oppressing, those irritating award minimum standards would disappear and people would stop talking about it. The aim of Australia “achieving” the general level of prosperity we find in New Zealand (this being the aim, according to Ian McFarlane) would be quite on track.

Neither wish has been granted. So, what has actually happened, and how will it really affect us?

The Effect of Workchoices on Unfair Dismissal in NSW

Even if we include the first three months of 2006, before Workchoices commenced, we see that the number of cases before the NSW Commission dropped by 60% when we compare 2005 to 2006 (3708 unfair dismissal cases commenced in 2005, and 1490 in 2006). The “unfair contracts” jurisdiction was down by 54% (473 cases for 2005, against 218 for 2006). That includes the “burst-of-activity- filings” that always happen when legislation is about to change, so we can assume that the numbers will be even lower for 2007. An effect that can’t be ignored, therefore, is that the era of the State Commission may have been closed by Workchoices. Our State Commission has been effectively reduced to a State public sector dispute tribunal. This is not a good thing in many ways, but it is hard to see how a Federal Labor Government would see any advantage in surrendering a “previously State” power it has been presented with.

The unfair dismissal cases concerning “corporations” have all gone to the Sydney Registry of the Australian Commission. Their figures are actually up, 1303 for the twelve months up to February 2006, and 1457 to February, 2007. This reflects the cases that couldn’t start in the State Commission. Don’t forget that the jurisdiction is now closed altogether for corporations with fewer than 100 employees.

The Effect of Workchoices on Employers

A key selling point of Workchoices was that it was to be the saving grace of small business (“most claims were bogus” etc, etc). If you add the State and Federal figures together for the past two years, though, and get the aggregate figures, you will see that the total number of cases for NSW went down by about 40%. This probably tells us what proportion of cases before last March involved “small to medium” employers. There were about 10,000 cases a year Australia wide “before,” so if we broadly cut that by 40%, we can say is that so far, 4,000 people out of
a workforce of about 10 million, have been affected by the unfair dismissal changes. Much fuss about a small number, you may say.

Workchoices hasn’t changed anything for large employers, and it appears to have “solved” a problem that was much exaggerated for small ones. Nor has the law been idle in the meantime. Without quoting at length from learned judgments (as readable as they are) let us just mention some of the legal principles that have appeared in the last twelve months in the ‘courts proper:’ an implied right to procedural fairness; an implied assumption that ‘company policies’ must be followed by both sides (ie, reasonable conduct/ equality of opportunity and so on);
mutual trust and confidence (meaning ‘fair treatment’) and any right of discretion must be exercised with ‘equity and good conscience.’ There are further principles, which have been discussed elsewhere, in this and previous newsletters.

These movements mean that everything previously handled exclusively by the Arbitration Commission, can now more easily be taken to the general courts – without the controls and limitations of the unfair dismissal jurisdiction.

On top of that, we have an increased use of injunctions in the general courts to prevent employers doing certain acts and we have increased use of the State and Federal Anti-Discrimination agencies. In fact, the Local Court, the District Court, the Supreme Court, and the Federal Court have (anecdotally) become employment-dispute tribunals like never before. We also, by the way, have people employed by a corporation with fewer than 100 employees, simply “ticking the box” on the Australian Commission’s form to indicate ‘unlawful termination,’ which is still not
closed to them even though ‘unfair’ is. That gets them as far as the conciliation stage at no cost to themselves, whether or not they have a case. The nuisances, where they existed, persist.

This all means that Workchoices has made it potentially more difficult for employers in the area of dismissal, and increased the potential for loss. It has had the opposite effect to the one the Government, and the “employer spokesmen” were talking up a year ago. The only real difference is, that employers are now liable to pay the other side’s legal costs if someone takes them on and wins in the general courts. There is
also the unlikely saving grace of possibly getting costs out of someone with no money, if they “beat” the applicant. They do not have that risk in the Arbitration Commission.

Loss of Award Minimum Standards

The other serious miscalculation: This has been to place too much store in the fact that the loss of award minimum standards in place of “born again” lower ones with the Orwellian name of “fair pay and condition standards” won’t affect most voters. That is right, but this dramatic change at the lower levels of the workforce has affected the children of the voters! One receives constant enquiries from parents who have been required to witness an AWA for a shop somewhere, which their 17 year old has brought home and which cuts pay and allowances on a take it or leave it basis. Workchoices always was aimed at the restaurant trade and the retail sector. The “spokesmen” and the Government forgot that the young and voiceless workers in those sectors have parents. And parents have barbecues, which are still “stopping.”

None of this has helped the unions. Their numbers have not ballooned. People feel sympathy for them, perhaps, but don’t join. Their marginalization continues unabated.

Conclusion

It is still early days. General wages in the community have not – yet – gone down. A restaurant in Sydney that can’t get staff is hardly going to offer less pay as a way to remedy the shortage. That is a Sydney centric view, admittedly. One assumes this is not true in the poorer states, or in the country. The take up of AWAs in States where incomes were lower to begin with has been higher than in NSW. We must wait and see. What we do know, is that the Government has seriously miscalculated the effects on the population, and on business. It did not predict the resentment it would cause, and for how long that resentment would last. On the other side, the union movement has gained no traction from these changes.