Even though the Fair Work Act 2009 has been in full operation for just over 2 years, we are continually surprised by the amount of outdated employment contracts and workplace policies still in use.
The Fair Work Act introduced the National Employment Standards (NES) and Modern Awards. The NES brought about changes to a number of minimum terms and conditions, which necessitated amendment to many existing employment contracts and workplace policies in order to bring them in line with the NES.
The risk to employers who fail to rectify non-compliant contracts is legal action by the Fair Work Ombudsman for a breach of the NES and/or a relevant Modern Award and the prospect of a civil penalty of up to $6,600 for an individual employer and $33,000 for a corporate employer.
The solution for remedying non-compliant employment contracts is relatively simple - re-issue new compliant agreements. If changes to existing agreements were merely a restatement of applicable Fair Work Act provisions, the consent of affected employees would not be needed. That is because the revised employment contract would be merely recognising the changes automatically brought about by the commencement of the Fair Work Act. Of course, if an employer wished to introduce other terms into a revised contract (unrelated to the Fair Work Act’s changes), those terms would require the agreement of the employee affected.
Ensure Workplace Policies & Employment Contracts are workable
In the 2011 case of Tara Davies v Hip Hop Pty Ltd T/A Hippity Hop Child Care (an unfair dismissal case) Fair Work Australia considered an employer's policy so poorly worded that a breach of the policy could not constitute a valid reason for a dismissal. Thus, the employer's dismissal action was found to be unfair.
A mistake that employers sometimes make is to create unnecessary disciplinary restrictions in their workplace policies. The "3 warnings before dismissal stipulation" is somewhat of an HR myth. Some employers mistakenly include such a precondition in workplace policies as well-intentioned guidance for their managers to follow. In reality, however, such restriction would leave a manager without the necessary discretion to take dismissal action when faced with serious misbehavior, if the requisite amount of prior warnings had not been issued.
Industrial tribunals often take a dim view of an employer’s failure to follow its own procedure, if it resulted in an employee’s dismissal. Where an employee’s dismissal is found to be unfair, an order for reinstatement of the employee or the payment of monetary compensation could follow.
How many warnings are necessary?
The Fair Work Act does not set out any minimum amount of warnings that must be issued in order for a dismissal to be considered fair. If a dismissal related to unsatisfactory performance, Fair Work Australia is required to take into account whether a dismissed employee had been warned about the unsatisfactory performance before the dismissal. However, the Fair Work Act certainly does not set out any minimum amount of warnings as a precondition to a fair dismissal. Whether none, one or more prior warnings are appropriate before an employer may dismiss a misbehaving or underperforming employee, it will depend on the facts and circumstances of each case.
If an employer is unsure of its rights or obligations, advice is always recommended.
Lessons to Take-Away
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