The Fair Work negotiation nightmare

The Fair Work Act will have unexpected consequences for employers around their usual negotiations with employees and prospective employees, and contractors and prospective contractors.

Any negotiation that involves dismissing or terminating, altering the employee or contractors’ position to his/her/its prejudice or discriminates against it, or refusing to use or stop supply (last two just contractors) will be illegal, give rise to penalties and permit injunctive relief.

Worse still, the employer will bear the onus on the balance of probabilities that it didn’t take such threatened or actual “adverse action” despite the application for relief being made by the employee.

There is a growing trend to insert protections in workplace law for employees. In Victoria there is a new protection for OH&S representatives in the OH&S Act, new Equal Opportunity protection for employees with family responsibilities and the workers compensation regime will include greater anti-discrimination protection for injured workers.

The new Fair Work regime “Workplace Rights” test for who can claim “Adverse Action” certainly includes all three jurisdictions (OH&S, Workers Compensation and Equal Opportunity), thus increasing the scope and ease of protection for employees and expanding the armoury of union weapons.

In the WorkChoices era, the “adverse action” (then described in WorkChoices as prohibitions) required the employer to have the sole or dominant purpose to prosecute the prohibited action. Under Fair Work – it need only be one reason.

Workplace rights for employees include the right to negotiate “flexible working arrangements” (offset clauses against an Award or Enterprise Agreement terms after 1 January 2010) and engage dispute resolution. Therefore, any strong bargaining in respect of those workplace rights creates risks around adverse action claims.

A large portion of Australian workers are paid a grossed-up sum to offset leave loading, penalties and the like. The Fair Work regime requires Flexibility Arrangements to comply with the Act on 1 January 2010 (that is to specify the exact clause of an Enterprise Agreement or Award which is being set off).

But how can employers achieve this? What happens if an employee says: “I want what I have now but will not sign a Flexibility Arrangement Agreement.” The effect will be the employees grossed-up hourly rate will become his or her base rate. Frightened yet?

How do you negotiate with a prospective contractor on the “take it or leave it” basis and say if you don’t drop your rate we will not use you? Is that a potential breach?

It is clear Fair Work massively erodes management prerogative and leverage.

Finally, the prior tests around coercion and misrepresentation in respect of Workplace Rights has by definition been broadened and the tests for the application of these provisions lowered. For employers this simply means it will be easier to breach and harder to defend.

Much of the above is known, but the greatest fear for employers has been quietly hidden, hardly discussed. The Fair Work Act unquestionably permits a union to seek an injunction in the Federal Court or Federal Magistrates Court to prevent dismissal.

The reverse onus upon the employer, the expense in having to call all key business decision makers and the complexity around the relevance of the reverse onus means great care needs to be taken in termination, particularly of union delegates. Imagine the termination of a union delegate being drawn out over several months and you having the burden of proof. This is a critical tool for unions and one which will be exploited.

So what are the protections an employer can put in place?

• Limit decision makers to skilled managers with discrete authority (limit witness cost and ease of proof).
• Keep careful notes including objective facts relied upon in decision making. These must be clear to permit rebutting reverse onus.
• Move swiftly but fairly to deprive the union of the opportunity to take injunctive proceedings.
• Be open about the changes in the law and always explain employee/contractor entitlements to employees or contractors.
• Never threaten.
• Always act with procedural fairness.
• Plan all meetings with prospective employee/contractors or actual employees/contractors and remove all offending language that could point to an adverse action claim.

That should cut out the crazy applications to the Court but the remaining problems with the new Act will remain a nightmare.

Andrew Douglas is the founder, principal lawyer and managing director of Douglas Workplace & Litigation Lawyers. Andrew is an experienced commercial litigation and workplace lawyer, who acts both as a solicitor and advocate.