When you get it wrong, 3 mistakes an employer made leading to a general protections order of $85K

There are a number of well documented workplace problems continuing to persist as we continue on this year – sexual harassment and bullying claims, underpayment of wages, the vaccination – mandate or not to mandate, redundancy and termination of employment claims and the end of JobKeeper.  Many clients we have spoken to say there hasn’t been many problems, others have had problems and issues coming at them left, right and centre. 

Yet ignoring the problems or hoping a problem goes away will not solve the issue. 

When you get it wrong in people management (and it happens) there needs to be mitigation almost right away.  If this doesn’t occur getting sage legal advice to head off a claim is imperative.  Miss this step and receiving an application whether it be for underpayment of wages, general protections or unfair dismissal should be defended.  Fail to defend a claim and a default judgement could be laid against you. 

For a Marble and Natural Stone Supplier there “wrong” actions and later inaction has led to an order against them in the Federal Circuit Court of Australia of over $85K.

In the case of Ertekin v Euro Natural Stone Pty Ltd [2021] FCCA 512 (Euro Case) a General Manager was successful in suing his former employer and the director to the tune of more than $85K!

Mistakes made by the Employer

Mistake 1 – Unilateral reduction of salary

In the Euro Case the employer amongst a number of other issues unilaterally reduced the salary of the general manager from $167,128 per annum to $115,960 per annum. The rationale for such a reduction although flimsy was because:

  • There was a reduction in duties with sales, marketing and production taken from his portfolio of responsibilities; and
  • With the reduction in responsibilities came a reduction in overall salary.

The employee (not surprisingly) was upset at the nature of the reduction, the amount of the reduction (more than $50K a year) and the lack of a clear explanation for the reduction.

Such a reduction in salary is a variation to a key and important term of an employment contract – any reduction in salary on this basis should have been agreed by both parties.  It was not.

There also may have been an argument around redundancy of the position.

The employee claimed  in the general protections application that the termination of employment was because he complained or at least made an enquiry about the unilateral reduction in salary.  Although this was later rectified with backpayment the decision by the employer to unilaterally reduce the salary of an employee without agreement (and it seems little discussion) put the company at a great disadvantage.

Mistake 2 – Are you feeling better today princess?

Another mistake by the employer was how they treated the employee when he took sick leave (personal/carers leave).

As a result of or as a response to the unilateral reduction in salary the employee took sick leave providing a medical certificate to the employer.

What followed was a text message from the director saying:

“are you feeling better today princess?”

This action by the director was probably taken out of spite, frustration or/and anger.  Whatever the reasoning for such action obviously it did not work in the employer’s favour.  The issue around dealing with medical and sick leave issues is a recurring theme amongst employers. Many of whom, believe and potentially correctly that the employee may be taking a “sickie” however without medical expertise to the contrary the Courts and Tribunals have taken very dim views against employers who assume that an employee is taking a “sickie”. 

There are ways to challenge the legitimacy of a medical certificate (read our article on Challenging Suspected Falsified Medical Certificates).

In any event, using language that might be considered offensive or even sarcastic when describing or commenting on an employee’s sick leave should be avoided.  In the Euro Case, the employee added this as another reason for the dismissal, that is, the termination was taken because he exercised a workplace right to take personal/carers leave.

Mistake 3 – Ignoring a General Protections Claim

Eventually the employer and employee had a cessation of employment – the employer claiming (quite wrongly) that the employee resigned from his employment.  This may have played a part in why they decided not to defend a claim.

By not defending the general protections claim a default judgement was entered and accepted. 

To be clear the Employer defaulted by:

  • Failed to provide a response to the claim; and
  • Failed to provide a defence to the claim; and
  • Failed to provide a response or defence in the times set by the Court; and
  • Failed to attend the hearing.

Did the Employer simply ignore the claim?

Potentially.

Why? No idea but as a result here is a breakdown of the penalties and compensation set out against the Employer and the director:

 

There is an array of lessons to learn from the Euro Case:

  • Unilaterally changing an employee’s contractual terms will lead to a number of liability concerns
  • Sick leave and any other type of leave for that matter is a workplace right and should be treated with care
  • Take claims and potential claims seriously – failing to do so will lead to adverse claims of compensations, penalties, embarrassment and negative branding.

Are you concerned about a potential General Protections or Unfair Dismissal Claim?  Have you received an unfair dismissal or General Protections claim – get legal advice immediately to ensure you understand the legal risks, liability and obligations as soon as possible. NB Lawyers – Lawyers for Employers undertake and offer an obligation free consultation.  Reach out via service@nb-lawyers.com.au or +61 (07) 3876 5111 to book an appointment.

If you got value out of this article email service@nb-lawyers.com.au or click on this link to subscribe to our value added newsletter. 

Written By 

Jonathan Mamaril 

Director

NB Lawyers – Lawyers for Employers 

jonathanm@nb-lawyers.com.au 

+61 (07) 3876 5111 

Views: 119

Add a Comment

You need to be a member of HR Daily Community to add comments!

Join HR Daily Community

© 2021   Created by Jo Knox.   Powered by

Badges  |  Report an Issue  |  Terms of Service