2-1 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev This is the prescribed textbook for your course. Available NOW at your campus bookstore!

2-2 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Employment law Chapter 21

2-3 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Learning objectives At the end of this chapter you should understand: the types of business organisations and industry sectors in Australia the importance of employment law in the commercial sector the distinction between public-sector and private-sector employers the major features of government administration and public- sector employers the legal characteristics of both an employer and an employee the legal principles used to determine if an employer–employee relationship exists how to distinguish an employer–employee relationship from other work arrangements involving independent contractors how to compare and contrast the rights of employees and contractors

2-4 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Learning objectives (cont.) the impact that outsourcing and the use of labour-hire companies have on the employment relationship how to recognise the employment relationship as a contract and explain the elements of that contract the legal duties of employers and employees, both express and implied, and the sources of those duties how to distinguish between common-law and statutory duties of employers and employees the legal impact of duty statements and job descriptions the legal remedies available for breach of an employment contract the rights and obligations of employers and employees to terminate the employment relationship the scope that employees have to recover unpaid employment entitlements on the insolvency of their employer

2-5 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Learning objectives (cont.) the remedies available to an employee arising from the termination of employment the operation of the statutory unfair dismissal jurisdictions and their interrelationship with common-law principles of employment law the liability of an employer to third parties for torts and crimes committed by employees what the concept of ‘vicarious liability’ means in the employment relationship key rights and obligations of employers and employees for work-related injuries, occupational health and safety, equal opportunity, superannuation and information privacy, and the sources of those obligations.

2-6 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Introduction An important and distinctive component of Australian business law is employment and workplace relations law. Employment law primarily deals with the individual relationship between an employer and an employee—the employment contract. Workplace relations law concerns the broader legal framework that affects individual employment contracts, such as the systems and bodies that regulate wages and employment conditions.

2-7 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Structure of business organisations Public sector –Federal –State –Local Private sector Types of industry –Primary sector –Secondary sector –Tertiary sector

2-8 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev The employer–employee relationship Recognised by law as being a contract of employment The existence of this relationship is central to both employment law and workplace relations law. Rules have developed for establishing the relationship. Distinguished from other legal relationships such as: –Independent contractor: contracts for service –Agent: makes a contract on behalf of another with a third party

2-9 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Court-made rules to identify employment relationship Control test—nature and degree of control able to be exercised by a person over the manner in which the work is to be performed by another Delegation test—discretion of service provider to delegate work to another party Business test—commercial factors showing whether working on own account or for someone else Integration test—is the work being performed an integral part of the business operation of the person engaging the services of the worker? Pragmatic tests—see next slide

2-10 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Pragmatic tests Ownership of tools, equipment or stationery Method of remuneration Payment of superannuation, insurance or workers’ compensation Deduction of PAYG income tax Use of business name or business structure Ratio of money spent to money earned after deduction of expenses Whether invoices must be submitted prior to payment Responsibility for losses or for rectifying errors or mistakes in the quality of work done Freedom to work for other people Whether the work is simply an identifiable job for a specified period of time

2-11 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Statutory rules In recent years, a number of statues have gone beyond the court-made rules in distinguishing between employees and independent contractors. For employees, statutory compliance is required: –Income tax laws –Superannuation guarantee laws –Workers’ compensation laws –Payroll tax laws –Workplace relations legislation –Occupational health and safety laws

2-12 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Contractors have protection against unfair contracts Independent Contractors Act 2006 (Cwlth) –Provides power to the court to strike down or vary contracts with independent contractors which are unfair, harsh or unconscionable. Competition and Consumer Act 2010 (Cwlth) –Section 51AE: industry codes mandatory –ACL Section 22: unconscionable conduct in business transactions

2-13 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Outsourcing and labour-hire employment Employee Contract of service Labour Payment Labour-hire company Supply Payment labour Business

2-14 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Formation of the contract of employment Intention to create legal relations Offer and acceptance Consideration Capacity of parties to enter into contract Reality of consent Legality of object: –Restraint of trade

2-15 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Terms of the employment contract Express terms (spoken/written): Nature of work Location of work Wages Remuneration Hours of work Statement of duties/position description (employee responsibility)

2-16 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Terms of the employment contract—employer’s duty Implied terms (from circumstance of offer and acceptance) to: –To provide work –To provide remuneration –To not destroy or seriously damage the relationship of trust –To ensure the safety of employees

2-17 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Terms of the employment contract—employee’s duty Implied terms (from circumstance of offer and acceptance): –To work in a skilful and competent manner, and to exercise reasonable care –To obey an employer’s lawful and reasonable directions –To provide faithful service (also known as the duty of fidelity) –To not prejudice an employer’s interests or act in a manner hostile to the employer’s interests –To maintain confidentiality (e.g. not to disclose trade secrets) –To account for moneys and property received on behalf of the employer –To hand over inventions made during the course of employment –To disclose to an employer information relevant to the business of the employer

2-18 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Terms of employment created by the workplace relations system In addition to the common-law express and implied terms of the employment contract, there are other legally recognised terms of employment contracts. These are prescribed by the workplace relations system, which can take one of three forms: –terms set by statute –terms set by industrial bodies –terms set by employment agreements made under workplace relations legislation (statutory employment agreements).

2-19 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Terms set by statute Federal Fair Work Act 2010 (Cwlth) –National Employment Standards, freedom of association, rights on termination of employment, etc. State examples: Annual Holidays Act 1994 (NSW) Long Service Leave Act 1922 (Vic)

2-20 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Terms set by industrial bodies e.g. Fair Work Australia: –Minimum wage rates –Classifications –Leave entitlements

2-21 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Lawful termination of employment contract Termination by death Termination by dissolution or bankruptcy of the employer Termination by sale of business by the employer Termination by frustration of contract Termination by abandonment of contract Termination by breach of contract Termination by notice Termination without notice Redundancy Suspension of employees

2-22 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Unlawful dismissal—Fair Work Act 2010 (Cwlth)—prohibited reasons Temporary absence from work because of illness or injury (of a kind set out in the relevant regulations) Trade union membership or activities, or non- membership Acting, or seeking to act, as a representative of employees Filing a complaint or participating in proceedings against an employer Engaging in legally protected industrial action or refusing to engage in industrial action Seeking to conduct a secret ballot of employees

2-23 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Prohibited reasons for dismissal (cont.) Being entitled to the benefit of an industrial instrument or order Temporary absence due to voluntary emergency management duties Temporary absence due to carer’s responsibilities Race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin (unless the reason for termination is based on the inherent requirements of the job or the employee is a member of the staff of a particular religion and the termination is made in good faith to avoid injury to that religion) Absence from work during maternity or parental leave Remedies may include order for reinstatement or compensation

2-24 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Unfair dismissals Allows a dismissed employee to seek independent review of the reason or method of dismissal. Is the dismissal 'harsh, unjust or unreasonable‘? –Assessment based on objective analysis of all circumstances applicable to employer and employee, using 'reasonable person test’ based on contemporary standards of industrial fairness –Fair Work Act applies principle of ‘fair go all round’ –Reason for dismissal and procedural fairness considered Constructive dismissals

2-25 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Remedies for unfair dismissals Fair Work Act 2010 (Cwlth) Employee must be within included categories. Been employed for at least 6 months or 12 months if employed in a small business. (Note Small Business Fair Dismissal Code) Must apply to Fair Work Australia within 14 days of the alleged unfair dismissal Process of conciliation and arbitration if necessary If successful, employee may be re- employed in the same or alternative position, or paid compensation. –.

2-26 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Remedies for breach of the employment contract Employer’s remedies: –Termination of employment –Damages –Injunctions and specific performance –Suspension of an employee –Orders by an industrial tribunal –Retraining –Disciplinary procedures –Contract negotiation –Private mediation –Withdrawal of discretionary benefits –Reallocation of duties or hours of work

2-27 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Remedies for breach of the employment contract (cont.) Employee’s remedies: –Resignation –Damages –Injunctions and specific performance –Unfair dismissal proceedings –Unlawful termination claim –Claims for sums due –Orders by an industrial tribunal

2-28 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Liabilities and rights of employers and employees to third parties Vicarious liability: –Employer is liable to a third party for negligent acts or omissions of an employee, carried out in the course of employment, where these acts or omissions cause loss or damage to a third party. Liability for contracts: –Employer is liable for contracts entered into by an employee as agent of employer. –Employee liable for contracts if they act outside of authority given by employer.

2-29 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Liabilities and rights of employers and employees to third parties (cont.) Liability for criminal acts –Criminal acts of employee conducted in course of employment in strict liability cases without intention to commit the act results in vicarious liability.  Employer liable—where at direction of employer  Employee liable—no employer direction but intention to commit the acts

2-30 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Examples of statutory regulation of employment relationship Workers’ compensation Occupational Health and Safety Discrimination and equal opportunity legislation Occupational superannuation Workplace privacy

2-31 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Workers’ compensation Federal and state legislation Provides wage and salary maintenance and prescribed benefits for injured workers, e.g. –Pensions –Lump sums –Medical expenses

2-32 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Workers’ compensation— coverage Work-related injuries 'Worker' as defined in legislation Insurance obligations: –Mandatory workers’ compensation insurance required by employers with 'WorkCover’

2-33 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Workers’ compensation— employee benefits Weekly benefits for initial period Medical and hospital benefits are covered Economic and non-economic losses, (usually based on impairment levels or estimated future earning capacity) Retirement provisions

2-34 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Workers’ compensation— obligations Employer’s obligations are to: cooperate with rehabilitation programs keep the employee’s position open for a specified period provide suitable alternative employment where practicable keep records. Employee obligations are to: make reasonable efforts to return to work.

2-35 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Workers’ compensation (cont.) –Common law access: depends on relevant legislation –Dispute resolution: depends on relevant legislation

2-36 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Occupational health and safety At common law, employers have an implied duty to protect the health and safety of employees. Employer owes a duty of care to employees. These laws have been supplemented by specific occupational health and safety legislation that expands the common-law obligations.

2-37 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Duty of care

2-38 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Discrimination and equal opportunity legislation (federal) Human Rights and Equal Opportunity Commission Act 1986 Equal Employment Opportunity for Women in the Workplace Act 1999 Racial Discrimination Act 1975 Sex Discrimination Act 1984 Disability Discrimination Act 1992 Workplace Relations Act 1996

2-39 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Types of discrimination Race Sex Marital status Pregnancy Sexuality Political or religious belief Disability Physical impairment Intellectual impairment Age Family responsibilities Also note prohibition against sexual harassment.

2-40 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Discrimination and equal opportunity complaints and disputes Conciliation resolution at disputes Tribunal

2-41 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Affirmative action Equal Employment Opportunity for Women) Act 1999 (Cwlth) Employers with 100 or more employees must: –develop and implement an equal opportunity program –take measures to promote equal opportunity for women in employment matters –regularly report to a statutory office holder on the development of these programs.

2-42 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Age discrimination In July 2004 federal parliament enacted the Age Discrimination Act 2004 (Cwlth). This outlaws both direct and indirect discrimination in employment on the grounds of age. There are important qualifications and exemptions.

2-43 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Occupational superannuation To fund and maintain living standards for an ageing population in the future. Requires employers to make superannuation contributions on behalf of their employees at a prescribed percentage of the employee’s wage or salary, as defined by the legislation, to a complying fund. –Rate since 2002–03 = 9%

2-44 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Workplace privacy In December 2001, new Commonwealth laws came into operation that impose privacy obligations on private sector organisations. They regulate the manner in which private sector organisations (including employers) handle ‘personal information’. Ensure that collection, security and disclosure processes are compliant