COVID-19 has put employers around the world in difficult positions. Many employers have had to reduce employee salaries and benefits, direct employees to take annual leave, access government support schemes, take money out of their own pockets, and even terminate employment when all else fails. Employment lawyers can be crucial in helping an employer review employment and termination processes and laws, understand employee rights, and assess employer risks. While it is always best to engage an employment lawyer at the earliest stage, this past year has shown us that it is not always possible to expect the unexpected.
Employment Contracts and Balancing Rights and Obligations
As an employer, you must meet your statutory and contractual obligations to employees. Employment contracts outline the terms and conditions of employment, and while they can be verbal, writing is best practice to avoid any miscommunication or misunderstanding. Importantly, you are not able to contract out of employment standards. This includes the legal minimum wage and awards entitlements, which are outlined in Australia’s National Employment Standards. It is important to familiarise yourself with these standards when you are starting a business, and to keep an eye on any awards changes over time. However, you are able to create a contract that works for your business. This includes outlining whether the employee is full time, part time, or casual, as well as some control surrounding flexible working arrangements (though certain employees are always permitted to request changes in their work arrangements). You can also create reasonable social media policies and other conduct expectations.
If you think a mistake has been made with the legal minimum wages and awards entitlements, you can discuss this with your employee and rectify the error. However, it is not always possible to compel an employee to sign a new employment contract. You may wish to contact an employment lawyer to work out how to proceed in these circumstances and to assess what, if any, liabilities you may have incurred. Contraventions of the National Employment Standards can be more than $13,000 for individuals and $66,000 for companies.
Termination and Avoiding Unfair Dismissal
In Australia, employees are protected from unfair dismissal by the Fair Work Act. This does not apply to contractors, who are not considered employees, as well as a limited number of other groups such as apprentices and trainees, high-income earners, and redundancies. It also does not apply to employees who have been working at the relevant place of employment for less than six months, or twelve months if it is a small business. However, in most other circumstances, harsh, unjust, or unreasonable dismissal may be considered to be unfair. This can result in hefty penalties for the employer, particularly if the case is not resolved prior to court proceedings.
In cases of serious misconduct, such as theft, fraud, or assault in the workplace, the employer has some rights to dismiss an employee without warning. In other cases, such as poor performance, employers are generally expected to provide notice to the employee and opportunity for them to review and alter their behaviour. If no warning is provided in these circumstances, grounds for unfair dismissal may be made out.
COVID-19 has also created the question of general termination and redundancy policies. Normally, this requires up to 5 weeks of notice of termination, and up to 16 weeks redundancy pay. The total amount depends on the length of time that the employee has been at your place of employment. Redundancy pay will not be required if the employee in question has been employed for less than 12 months, or if your workplace employs less than 15 people and the employment contract did not provide for redundancy payment. Redundancy payments may be altered if you can’t afford to pay redundancy and have applied to Fair Work for an order the reduces or erases redundancy payment, or if you have offered the employee in question another job and they have not accepted it, and Fair Work orders that the redundancy pay be reduced or erased. However, it is important that you make an employee redundant for genuine reasons. This does include business slowing down or business restructuring, which we saw a significant amount of during COVID-19. However, if your employee believes that their redundancy was ingenuine, they may have a claim for unfair dismissal.
If you are in the process of building a business, or circumstances have compelled you to review your business structure and employment needs, an employment lawyer can help you assess your risks and avoid unnecessary costs and liabilities at any stage.
