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Update: Key Matters for Employers to be aware of in 2018

Employers Beware:  New labour hire licensing laws commenced this month.

This month has seen the commencement of Queensland’s new Labour Hire Licensing Act 2017 (‘Act’).  The Act describes its main purpose as being to:

(a)          protect workers from exploitation by providers of labour hire services; and

(b)          promote the integrity of the labour hire industry.

Essentially, the Act now requires ‘providers’ of ‘labour hire services’ to obtain (for a fee) a labour hire license before providing labour hire services.

The Act makes it unlawful (without reasonable excuse) for a person to enter into a labour hire arrangement with a labour hire provider unless the provider is the holder of a license.  The Act also makes it unlawful to enter into arrangements that seek to avoid obligations under the Act.

The penalties for contravention of the Act are significant, with maximum penalties for some contraventions of up to $378,450 for a corporation or $130,439 (or three years imprisonment) for an individual.

Critical to employers is the definition of what is a provider of labour hire services, as this has been defined very broadly.  The general definition is as follows:

“A person (a provider) provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a worker to do work.”

The Act itself, and the recently released Labour Hire Licensing Regulation 2018, provide a number of exceptions to coverage under the Act, and include potential exemptions for arrangements, including but not limited to, certain construction industry arrangements, secondments and also service company arrangements where all relative entities are part of one recognizable business.  However, employers should not assume that their specific arrangements are exempt, and employers with arrangements in place that could be potentially interpreted as the employer providing labour hire services should seek legal advice regarding potential coverage under the Act.

Similarly, employers who operate in the labour hire industry should seek advice regarding their obligations under the Act, and take steps to apply for the relevant license.  The Act essentially requires that current providers of labour hire services make an application for a license within 60 days of commencement of the Act (commencement being 16 April 2018). 

Appeal decision reinforces importance of consultation with employees during restructures

In a recent decision, the Full Bench of the Fair Work Commission has upheld an appeal by an employee whose unfair dismissal application was dismissed following Deputy President Bull’s initial finding that whilst the dismissal was not for genuine redundancy reasons, the dismissal was not unfair.

The employee in this case was employed by the relevant employer for 19 years.  His position was made redundant due to a business decision to change the direction of the employer’s operations.  The employer argued that the dismissal was for ‘genuine redundancy’ reasons, but this was rejected by DP Bull, who found that the employer had not complied with relevant award provisions on consultation, which required the employer to provide the employee with information in writing about the changes that were to effect his employment.

The Deputy President was also critical of the ‘perfunctory’ consultation process undertaken by the employer, where the employer:

  • gave 4 hours’ notice of the consultation meeting;
  • did not inform the employee what the meeting was about;
  • held a 15 minute meeting to explain the decision being made by the employer and its effects, and to host a discussion with the employee about ways to mitigate adverse effects on the employee;
  • then held a similarly perfunctory meeting the following day where the redundancy was confirmed.

Despite this finding, the Deputy President found that these process failures by the employer did not have any effect on the fact that the position was redundant (although not a ‘genuine redundancy’ as defined by the Fair Work Act 2009).   Relevantly, the Deputy President stated in the original decision:

“[71] I have considered all of the evidence and find that the position occupied by the applicant was redundant. The failure to provide the applicant with written advice regarding his redundancy as required by the Award has not been demonstrated in the applicant’s circumstances to have caused unfairness to the extent that the redundancy could be found to be harsh, unjust or unreasonable.

[72] The applicant conceded during the hearing that had the respondent provided the written advice as required under the Award, it would have made no difference to the outcome.”

The employee appealed the decision on a number of grounds, but the subject matter of the appeal was reduced to the employee’s contention that the Deputy President erred in finding that the employee conceded that had the employer provided written advice in accordance with the award, it would have had no effect on the outcome of the process.  The employee argued that the employer had not properly considered all the available options to redundancy, and in particular argued that redeployment options were not discussed with him.  He contended that if the award consultation provisions had been strictly followed then other alternative options and roles would have been discussed with him.

The Full Bench agreed with the employee.  The Full Bench found that the employee had not in fact conceded that a written advice would not have changed the outcome, and in fact it was clear from the transcript of the hearing that he gave evidence that it could have changed the outcome.  In particular, the employee contended that had he been provided with written advice, then other redeployment opportunities would have been discussed (as he contended there were opportunities available that were not canvassed with him).  He also argued that it could have been raised that he had 6 months of annual leave accrued at the time of his termination, and that as an alternative to redundancy, he could have taken that leave and then further work may have then been available to him.

The Full bench found that the Deputy President was in error in taking an alleged concession (that written advice would not have made a difference) into account when making his decision, and also found that the Deputy President was in error in failing to consider other relevant information (being the employee’s position on potential redeployment and the annual leave consideration).

Accordingly, the appeal was upheld, and the application was remitted to a single member of the Fair Work Commission for rehearing.

Lessons for employers

This decision reiterates some important matters for employers to consider when undertaking a restructure process:

  • Where a modern award applies to an employee being affected by restructure decisions, then the employer should consider and comply with the modern award’s ‘Consultation’ clause. As a general rule, this clause will require an employer to provide the employee with written advice as to all relevant information about the proposed changes, including the nature of the changes proposed, the expected effects of the changes on the employee and any other matters likely to affect the employee.  Employers are not required to disclose confidential information which would be contrary to the employer’s interests.  Failure to follow a prescriptive consultation clause where it applies may result in a redundancy failing to meet the definition of a ‘genuine redundancy’ and could mean that an employer will fail in its defence of a subsequent unfair dismissal claim.
  • Employers need to consider redeployment of the employee as part of the consultation process – if the employee has the skills, qualifications and experience to fill an available role, then an employer must offer that role to the employee. This includes when the available role is of a different status (including part-time or casual), or where the role carries less responsibility, or is subject to a lower level of remuneration.
  • Genuine consideration needs to be given to alternatives to redundancy where such alternatives are put forward by the employee to be affected. In this case, the suggestion of the employee (in hearing) that he could have accessed his annual leave and then redeployed at a later date, was considered a reasonable suggestion by the Full Bench.  Please note there is nothing in the legislation that compels an employer to accept such a suggestion – but consideration must be given (and ideally such consideration should be documented).
  • Employers cannot be seen to be ‘going through the motions’ during the consultation process – genuine and thorough consultation with the employee must be undertaken. This decision reflects an expectation that employers should retain evidence of matters such as what positions were considered for redeployment, etc.

Employers should also remember that a restructure or redundancy should not be used as a mechanism to remove an employee for other reasons.  Doing so will put an employer at risk of the employee having increased prospects of success in a post dismissal claim (such as unfair dismissal or general protections claims).

It is important to ensure that a clear and compliant process is followed in effecting a restructure/redundancy and Aitken Legal strongly recommends that employers seek advice before commencing a restructure process.

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