Three decisions made by the Fair Work Commission this year have highlighted that despite clearly abhorrent behaviour by an employee, employer’s may still may be found to have unfairly dismissed their staff on procedural grounds. This is warning to employers that, in providing any disciplinary action, or in coming to decisions to terminate employees, it is imperative that a proper process is both followed and documented.

Robert Solin v Chevron Australia Pty Ltd [2017] FWC 2584

Chevron Australia, a large mining company, was ordered to reinstate a former employee (Mr Solin) who had been fired for making extremely derogative racist and sexist comments. Following his termination, the employee applied to the Fair Work Commission to be reinstated, who found that despite the Human Resources manager of Chevron holding an investigation into the incident, the employee had been unfairly dismissed. This decision was made on the basis that the employer had failed to follow the correct process in their investigation and termination procedure. In this case, the Commission took into account that in undertaking their investigation, Chevron had failed to consider that Mr Solin:

• had an otherwise unblemished three-year employment record;
• was apologetic for the statements he made;
• had not realised others would overhear his comments; and
• did not realise the comments he made were offensive, until after the fact.

The Commissioner in this case also highlighted the importance of not appearing to come to a decision before the investigation is complete. This case provides a clear example that despite the thorough nature of an investigation, it is imperative that all considerations are not only taken into account, but given adequate consideration.

West v Holcim (Australia) Pty Ltd [2017] FWC 2346

Similarly, in the case of West v Holcim (Australia) Pty Ltd, an employee was dismissed on the basis that he had engaged in dangerous and reckless behaviour. Specifically, he was found to have allowed a casual labour hire employee, who had no experience or training in crane operation, to operate a crane and then failed to report a near miss incident in which another employee was almost struck by large metal pieces held by the crane. The Commission ordered that West be reinstated after considering the evidence before them that he had engaged in such conduct in the past and suffered no reprimand or warnings.

This case highlights the critical importance that employers ensure they address misconduct and issue warnings each and every time they arise, for example by giving a written warning.
As this decision indicates, regardless of how clear the misconduct may appear, without evidence to provide that an employee was aware that their former actions constituted a breach of policy or misconduct, a failure to give warnings may provide evidence that such conduct was acceptable.

Walker v Salvation Army (NSW) Property Trust t/as The Salvation Army – Salvos Stores [2017] FWC 32

Another recent case, Walker v Salvation Army, highlights the importance of providing employees an opportunity to clearly see all the evidence that the employer has against them, to allow them to adequately respond in an investigation procedure. In this decision, Walker was alleged to have stolen money from the till of her employer, the Salvation Army. The evidence of this was in the form of CCTV footage. The Commission found that the employee was not provided with an adequate opportunity to view or respond to the CCTV footage. Due to the employer’s failure to provide the employee with an adequate opportunity to view the CCTV footage, the Commission formed the view that Ms Walker had been unfairly dismissed. The Salvation Army was ordered to pay the employee $22,405. This case highlights the importance of ensuring an employee is awarded procedural fairness throughout the disciplinary process and given access to all the evidence before them, prior to coming to any decision, as a failure to do so may see any response made to the allegations as insufficient.

It is easy to see why employer’s come to decisions to terminate where there is misconduct involved. However, each of these recent cases highlight the imperative nature of employer’s following proper procedure, as despite the severity of an employee’s actions, even if they are as obvious as making racial and sexual slurs or stealing money, a failure to do so may result in you paying unfair dismissal claims, being ordered to reinstate an employee and paying hefty fees to defend your business in the Fair Work Commission.

At Cube Workplace Solutions, our experienced team can provide you with detailed advice on the steps you should take before you consider dismissing an employee. Contact our team today on 1300 122 823.

Is an employee restraint of trade clause legally enforceable? Can you restrict employees during and after their employment with your business?

What is Restraint of Trade Clause?

A restraint of trade clause is commonly included by employers in employment contracts to prohibit an employee from engaging in specific conduct during and after their employment. The motive behind such a provision is to provide employers with a way to protect their own business’ interests. However, the law has prohibited restraint of trade clauses from being enforceable on the basis that imposing a restriction on one’s ability to use their skill and experience in another place of employment would be against public policy. Nonetheless, through common law we can see examples of circumstances where the judiciary has held the restraint of trade clause to be enforceable.

Who has the Onus of Proof?

Generally, the onus of proof lies with the plaintiff to show that considering the nature of the employer’s business and the employee’s role within that business, that the restraint clause was reasonable. However the onus is on the employee to demonstrate that a restraint of such kind was unreasonable on the grounds of public interest and as a matter of public policy.

Construction of a Restraint Clause

Queensland does not have specific legislation regarding the application of restraint of trade clauses, accordingly, the common law serves as precedent towards distinguishing whether a clause is likely to be rendered valid or invalid. The principle from Nordenfelt v Maxim Nordenfelt Guns & Ammunition [1894] AC 535, provides that a clause may be reasonable if in the relevant circumstances it was in the interests of both parties, if the primary objective of the covenant was to protect the employer’s business interests and the clause was not contrary to public interest. As such, the wording and construction of the clause, relative to the time the contract was formed is fundamental. The elements of a restraint of clause which determine its enforceability include the:

• duration the employee is expected to be restrained;
• location and surrounding proximity of the employer’s business;
• type of conduct which is restrained;
• role the employee had in their employment;
• public interest; and
• bargaining power of the employer and employee.

Type of Restraint

It is common for restraint trade clauses to be drafted with a number of levels, on factors such as location, time, distance, and on the nature of activities that are restrained. The objective is that each element is to function as an individual provision, so that if one part of the clause is deemed inequitable or unjust, the employer can use a separate tier to restrain the employee’s conduct. Take for example, a case related to the insurance industry, OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 (OAMPS), where Mr Hanna had been a long-term serving employee at OAMPS for approximately 20 years. After leaving OAMPS, Mr Hanna began working for another insurance broker. Pursuant to a schedule in Mr Hanna’s employment contract, he was subject to a restraint clause which had 9 separate restraints which had a cascading effect on factors including, location and duration. The clause covered the locations of Australia and Sydney, prohibiting employment in similar work for ’15 months across Australia’, or alternatively, ’12 months in metropolitan Sydney’. Mr Hanna’s contention was that the clause was void because it was uncertain and not substantive enough to qualify as a clause drafted with the intention of protecting OAMPS legitimate interests. This view was rejected in the Court of Appeal, where it was held that in the circumstances, it was reasonable for OAMPS to exercise the restraint of 12 months, for this guaranteed that Mr Hanna could not pursue his former OAMPS clients into entering an insurance policy in his new place of work, thus enabling OAMPS to hold onto its established clientele. This case exemplifies that the duration of restraint following termination must be appropriate, and is likely to be considered as reasonable where its objective is to prevent a former employee, or another party from gaining an unfair advantage

Keep Employment Contracts Up-to-date

The importance of ensuring employment contracts are kept up-to-date was reflected in Fishlock v The Campaign Palace Pty Ltd [2013] NSWSC 531, as in this case, the employee’s primary activities had significantly changed since Mr Paul Fishlock had fist commenced his employment, however the employer failed to change the contract. As such, the Court held that the contract was invalid, and the restraint clause that formed part of the original contract was consequently unenforceable.

Ultimately, a restraint of trade clause aims to prevent former employees from taking knowledge acquired in their employment or clients into a rivalry business. The reality of the commercial world, is that even where a former employee has true intentions to act in good faith by maintaining any information acquired in a previous place of work, there is a genuine risk that the employee may take that information elsewhere, which would be detrimental to the former employee but beneficial to a competitor. Whether a clause is enforceable will depend upon the individual circumstances and will rest with the restraint of clause is ‘reasonable’ to protecting the previous employee’s business interests. A clause that is too harsh or unjust will be deemed inequitable and void.

TAKE HOME MESSAGE

For Employees

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Through company policies, agreements and codes of conduct, employers have the discretion to issue written warnings for minor employee misdemeanours, and in circumstances of extreme employee misconduct to immediately terminate the employee’s contract. However, a recent unfair dismissal claim demands a closer look at whether written warnings and on the spot termination is in fact delivering the right message to employees.

Employers have a duty of care to ensure that all employees feel safe whilst at work. It is common for companies today to enforce codes of conduct which highlight the importance of employees adhering to company values and mandate that every person is treated with respect, irrespective of race, religion, or culture. Given the recognised importance of equality in the workplace, any evidence of workplace bullying or harassment must always be investigated by employers.

The disciplinary action served against the employee should however be proportionate to the misconduct. This presents a difficult situation for both employers and employees for there is no middle ground in punishment, generally a breaching employee will either be provided with a formal warning or immediately terminated.

A recent example of this involved the termination of an operator at Chevron Australia who was on a bus traveling to a work project. During this time, the employee was discussing a sexual encounter that a friend had with an Aboriginal woman. The employee made reference to the woman as a ‘young gin’ with co-workers in rows in front overhearing the conversation. A complaint was lodged with employees on the bus claiming that they had felt uncomfortable hearing such comments. Chevron Australia proceeded to terminate the operator’s employment on the grounds that the conduct of the operator was a breach of the company’s anti-discrimination policy.

The operator contended that he had been unfairly dismissed for he did not realise that the word “gin” was derogatory in any context. The Fair Work Commission found that the “gin” reference constituted inappropriate workplace behaviour for it was offensive to the other employees in the vicinity. However, the immediate dismissal of the technician for that conduct was deemed by the Commission to be “harsh and unreasonable”. The Court reinstated the worker, however the employee was not entitled to claim for lost wages. The Court determined that it was important that the employee bear some financial consequence for the comment did effect his colleagues and he was in breach of company policy, therefore the financial consequences already suffered were to reduce the likelihood of the employee making another offensive comment in the future.

There is currently no precise definition of ‘disciplinary action’. Rather, it is up to the employer to exercise their own discretion based on Modern Awards, Enterprise Agreements and Employment Contracts. The above case however is evidence of the need for alternative forms of disciplinary action for misconduct, as sometimes immediate termination can be too harsh but a written warning is inadequate. It is for these reasons, that employers should consider going beyond the traditional forms of disciplinary action to incorporate in-between types of disciplinary action into their company policies. Some forms of action which may deliver a stronger take home message to employees following misconduct include denying the contravening employee of certain rights/benefits, demotion to a lower position, suspending that employee for a temporary period without pay, or withholding future bonuses. Ultimately, it is the duty of employers to find a balance in punishing employees for misconduct and to ensure that the workplace remains a safe place for all employees.

More people are now considering working two jobs to help meet the high cost of living. However, working a second job can affect your ability to satisfactorily perform your duties at your primary job which may be concerning for your employer.

Employee well-being is a necessity. The Work Health and Safety Acts in each Australian jurisdiction demands that employees take reasonable steps to take care of their own health and safety, and for employers to ensure that they are not placing undue stress on the welfare of their employees by expecting them to work excessive hours. This means that if an employer becomes suspicious of a worker’s capacity to work safely, they must take reasonable steps to deal with the risks.

Possibility of Workplace Fatigue arising from two jobs

Under the National Employment Standards (NES) provided under the Fair Work Act 2009 (Cth), an employer must not request an employee to work more than 38 hours in a week, unless there are reasonable circumstances warranting additional work. A 38-hour working week is accepted for it is said to achieve balance for employees, maintains one’s fitness for work, and, arguably reduces the likelihood of mental-health issues arising.

The case of G v Waverly Council (No 2) [2017] NSWIRComm 1020, concerned a council employee who had sustained a wrist injury. The employee was working as a cleaner for the council whilst simultaneously working full time at Woolworths. The Council became aware that the employee had systematically been working 78 hour weeks. As such, they requested the employee to fill out of a secondary employment form which was a valid request pursuant to s353 of the Local Government Act 1993. The Council also invited the employee to a meeting to discuss their concerns. At this said meeting, the employee did not disclose any information regarding his employment with Woolworths and stated that he did not believe his sleeping patterns and health had not been compromised. Under the respective award, the Local Government (State) Award 2014, the employee was subject to 12 hour working days. As a result of the cleaner’s injury, as well as the cloud over the employee’s position at Woolworths, the council requested the employee to undergo a functional assessment of his injury to show that he qualified as being “fit for work” with the Council. Until such an assessment took place, the Council reduced his duties as a cleaner. The employee consented to undertaking an assessment, which subsequently identified that due to lowered amount of sleep directly arising because of two jobs, there was real risk of re-injury which had the potential to be detrimental to both the employee’s safety and to those around him. After numerous requests for the cleaner to give information on his second employment at Woolworths, and a pattern of failing to comply with those directions, the Council dismissed him.

At the Commission hearing, the cleaner claimed that his dismissal was unfair. The Commission, however, took the view that the Council had clearly requested information about the cleaner’s employment outside the council on a few separate occasions as they were concerned about his well-being. The employees continued failure to disclose and act in accordance with the mandatory show-cause process, was substantive enough for the Council to warrant the termination.

Similarly, in a more recent case, Jacob v West Australian Newspapers Ltd [2016] FWC 5382, Mr Jacob was an employee of West Australian Newspapers, and had taken up a second job working for ride-sharing company, Uber. Pursuant to a clause under Mr Jacob’s employment contract with West Australian Newspapers working elsewhere was only permitted if he sought permission first. As rumours began to circulate that Mr Jacob had a second job, supplemented with more personal leave days taken and a downfall in recent performance, Mr Jacob was asked to lodge a formal request with West Australian Newspapers to a grant permission for him to work for Uber. Mr Jacob did not comply with the request, thus West Australian Newspapers dismissed Mr Jacob on the basis he had been presented with opportunities to respond, and to be open about his second job but he had intentionally not complied. The dismissal was held to be valid for West Australian Newspapers had been reasonable in their requests, had provided Mr Jacob with a number of chances to disclose his employment with Uber, and he had intentionally not complied with formal directions.

Conflict of Interest

Another important consideration prior to engaging in a second job is to ensure that there is no chance of a conflict of interest arising. The chances of this enhanced if the second job is within the same type of work or industry as the employee’s primary job. It is important to note that if there is a conflict of interest, your employer may have grounds to terminate your employment if your employment contract explicitly provides a conflict of interest clause. Alternatively, your employer may be able to argue that by working elsewhere, you have breached the implied duty of good faith which is essentially a view that employers and employees should act fairly and honestly.

Express Restraint Clause

Employers may be able to prohibit employees, from engaging in a second job, by providing an express restraint clause in their employment contracts. Generally, this clause must be drafted reasonably for the courts to hold it enforceable, for it would otherwise generally be void for it would be against public policy. In Bradford Pedley v IPMS Pty Ltd T/A Peckvonhartel [2013] FWC 4282 (PVH), Mr Pedley owned his own business which was essentially a side job to working for PVH. Pursuant to his employment contract, Mr Pedley was expressly prohibited from using his cliental basis acquired in his primary job in his side business, however he had sent an email to clients of PVH regarding his side job. Consequently, his employment with PVH was terminated by his employer on a breach of the express terms of the contract.

Recommendations

Ultimately, employers should not unduly prohibit employees from taking on supplementary work given that some employees simply cannot live on one income. Thus, to mitigate the risks, employers should invite their employees to be open and frank about taking on a second job and implement strategies to ensure that employees are not putting their own health and safety at risk, or putting other employees in harm’s way. It is important to regularly train employees on their duties pursuant to the Work Health and Safety Acts of their respective jurisdiction, how it necessitates an obligation on employees to take responsibility for their fitness for work and mandates that employees comply with any instructions that are related to their fitness for work.

If you think one of your staff members are, or are considering, working a second job and you have concerns, call Cube Workplace Solutions on 1300 122 823 to discuss the appropriate course of action with a member of our experienced team.