Insights & News

October 10, 2024

With effect from 1 July 2025, Queensland employers will be required to comply with broadened anti-discrimination laws, including new attributes, definitions and an expanded positive duty to eliminate all discrimination, harassment and objectionable conduct.

The Queensland’s Respect at Work and Other Amendment Bill 2024 (Qld) (Respect@Work Bill) adopts a broader approach than the national standards, by introducing a new positive duty to take reasonable and proportionate measures to eliminate discrimination on the basis of all protected attributes, as well as sexual harassment.

Key legislative changes at a glance

The Respect@Work Bill introduces several critical changes to the Anti-Discrimination Act 1991 (Qld) (AD Act) and the manner in which discrimination matters are to be handled. At a glance, the legislative changes include:

• introduction of a broader positive duty, covering all forms of unlawful discrimination, harassment and objectionable conduct;
• introduction of new protected attributes of ‘expunged convictions’, ‘homelessness’, ‘irrelevant criminal record’, ‘irrelevant medical record’, ‘physical appearance’ and ‘subjection to domestic or family violence’;
• modernising existing attributes, such as replacing ‘pregnancy’ to ‘pregnancy and potential pregnancy’;
• protection for a combination of two or more attributes;
• shifts the burden of proof to the respondent in anti-discrimination applications. This means the complainant only needs to establish the asserted discrimination, then the burden shifts to the respondent to prove the reason for the conduct was not because of the attribute;
• introduction of investigative powers to the Queensland Human Rights Commission (QHRC) into systematic issues involving discrimination on the basis of sex and new enforcement powers to ensure employers’ compliance with positive duties;
• redefining ‘direct discrimination’, where the attribute causing discrimination need only be one of the reasons (as opposed to being the substantial reason) for the unfavourable treatment (as opposed to less favourable);
• redefining ‘indirect discrimination’ to imposing a condition, requirement or practice that has, or is likely to have the effect of disadvantaging another person because of the attribute and such imposition is not reasonable. This can include creating an environment in which a person with an attribute is disadvantaged. The considerations of reasonableness have been expanded;
• an aggravating sentencing factor where an adult offender has used violence or caused physical harm to a person in their workplace. This includes sexual assaults;
• extended timeframe to file a complaint regarding harassment and discrimination to two years;
• new prohibitions of harassment based on sex and hostile work environments; and
• permitting representative complaints which will commence on 1 December 2024.

Positive Duty: extending beyond sexual harassment

The Respect@Work Bill adopts the national standard of a positive duty, however expands it to cover all forms of unlawful discrimination, harassment and objectionable conduct. This means employers must take reasonable and proportionate steps to eliminate all unlawful discrimination, including direct and indirect discrimination.

The Explanatory Memorandum provides guidance on how an employer can comply with its positive duties, such as:

• implementing policies that promote respectful workplace behaviour;
• ensuring easily accessible information is available;
• conducting surveys to assess awareness and experiences of discrimination or harassment in the workplace;
• addressing disrespectful or unlawful behaviour through informal or formal disciplinary actions; and
• ensuring leaders regularly communicate and reinforce respectful behaviour expectations.

New QHRC Investigative Powers

Like the Australian Human Rights Commission, the Respect@Work Bill grants the QHRC expanded investigative powers, allowing it to intervene when it suspects non-compliance with positive duty obligations, or where there is, or suspected to be, systematic issues relating to a work-related contravention on the basis of sex.

In circumstances where the QHRC finds non-compliance with positive duties, the QHRC has the powers to:

• enter into enforceable undertakings with the duty holder;
• issue a compliance notice; and
• seek tribunal-ordered compliance.

For investigations into systematic work-related contraventions on the basis of sex, the QHRC may prepare a report to be provided to the Minister to be tabled within six sitting days of receiving it.

Prevention Plan

The new legislative requirements will also interact with the recent amendments to the Work Health and Safety Regulation 2011 (Qld) (WHS Regulation) which requires PCBUs to prepare, consult and implement a sexual harassment prevention plan by 1 March 2025.

The plan must outline and assess the risks related to sexual harassment, control measures to mitigate those risks and clear procedures for reporting and handling harassment incidents. The plan must be accessible to all employees, and reviewed regularly after an incident, requested by a WHS representative, or otherwise every three years.

Failure to comply can result in fines of up to $9,678 for an individual (or $48,390 for corporations).

We consider it possible that the obligation to prepare a prevention plan will be taken into account when considering whether an employer has met the positive duty under the Respect@Work Bill. Employers will need to consider preparing a prevention plan which not only deals with sexual harassment but all forms of unlawful discrimination.

Takeaways for 2025

With the commencement of the new legislative changes approaching, Queensland employers and any organisation that has Queensland operations must take immediate action to ensure compliance with the new laws. This will include:

1. Preparing a Prevention Plan, addressing the risks, control measures and reporting procedures in accordance with the WHS Regulation and regulations. Consider conducting workplace surveys and undertake risk assessment to tailor the plan to the business’ specific risks. This plan must be implemented by March 2025. 
2. Reviewing workplace environments to ensure that employees are not exposed to a hostile work environment on the basis of sex. 
3. Reviewing and updating workplace policies and trainings to ensure it aligns with the new AD Act, incorporating new protected attributes, distribution and training of the prevention plan and positive duties. Managers should actively promote and model respectful behaviour, setting a tone that aligns with the new legislative requirements. 
4. Preparing for QHRC oversight by training relevant employees to cooperate with any QHRC investigations and keep through documentation of preventive actions.

Given Queensland’s broader approach, it is possible that other states may follow suit, adopting similar measures to address discrimination and harassment more comprehensively. Employers across Australia will need to keep an eye on these developments, as the landscape of workplace compliance continues to evolve.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

The past few months have seen significant developments in workplace law, with one of the most notable being the administration of the Construction and General Division of the CFMEU. Mark Irving KC has taken on the formidable task of cleaning up Australia’s most notorious union, amidst shocking allegations of bribery, corruption, and links to outlaw motorcycle gangs.

These revelations have sparked widespread controversy, igniting urgent calls for reform, and exposing a troubling picture of union leadership plagued by criminal influence and self-interest. In response, the government introduced legislation to streamline the path to administration, ultimately resulting in:

1. approximately 280 officials being removed from their union positions;
2. an interim investigation by Geoffrey Watson SC revealing that the Victorian branch has been infiltrated by organised crime and embroiled in a “cycle of lawlessness” where violence has become a part of the culture; and
3. Mr Irving taking several key steps, including:
   • requesting Mr Watson to continue his investigation and submit a final report to Mr Irving by 1 December 2024;
   • establishing an anonymous whistleblower service; and
   • creating an integrity unit to investigate both existing and new allegations against the CFMEU.

These developments raise pressing questions about the state of workplace law in Australia, sparking renewed debate over union oversight and regulation, and reinforcing the need for stronger mechanisms to prevent and address misconduct within unions.

In addition to these headline events, several important legislative changes came into effect on 26 August 2024, including:

1. empowering the Commission to address disputes regarding the right to disconnect;
2. redefining casual employment and establishing a clear conversion pathway;
3. giving the Commission authority over ‘employee-like’ workers in the digital platform space, allowing it to set minimum standards and resolve disputes over unfair deactivation; and
4. expanding the Commission’s jurisdiction to tackle disputes concerning unfair contract terms for independent contractors.

Meanwhile, the Full Bench has initiated work on developing a standard working-from-home clause for the Clerks – Private Sector Award 2020, which will likely serve as a model term for other modern awards.

The Commission has also reviewed its procedures for paid agents, with President Hatcher endorsing all five recommendations from a working group, including a requirement for paid agents (and, oddly, lawyers) to disclose costs upfront before any conciliation or hearing.

Lastly, Professors Mark Bray and Alison Preston have been appointed to lead an independent statutory review of the Fair Work Amendment (Secure Jobs, Better Pay) Act 2022. The review, due in January 2025, will assess the effectiveness of the amendments, identify any unintended consequences, and determine whether further legislative change is required.

As we approach the final months of 2024, it’s shaping up to be a busy period in the workplace law landscape. With many other significant developments unfolding, we’ll continue to keep you updated on the key issues impacting workplaces across Australia.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

Spruiked as unlocking a regime historically unused, heralded as creating efficiencies and promoting ease of transferability of skills, criticised as a punitive policy intervention that will make it substantially harder and more costly to do business, and now tested by the Full Bench of the Commission (Commission) in a heavily contested setting, multi-employer bargaining is off and racing.

After a reasonably slow (and mostly, non-adversarial) uptake, the recent decision involving four major black coal industry operators and the Association of Professional Engineers Scientists and Managers Australia (APESMA) has compelled the Commission to put Labor’s multi-employer bargaining provisions under the microscope in the first significant contested application of its kind since the commencement of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth).

Whilst the battle is not over (noting that three of the four employer respondents to APESMA’s application have lodged judicial review proceedings in the Federal Court on 20 September 2024), the Commission’s consideration and application of the single interest employer authorisation provisions set out in the Fair Work Act 2009 (Cth) (FW Act) gives some present guidance as to how these provisions will likely be applied in practice.

The battlelines are drawn…

The battlelines identified in the Commission’s 148 page decision in APESMA v Great Southern Energy Pty Ltd t/as Delta Coal, Whitehaven Coal Mining Ltd, Peabody Energy Australia Coal Pty Ltd and Ulan Coal Mines Ltd[1] can best be summarised as a contest as to whether:

• a majority of the employees, who were employed by each of the respondent employers at a time determined by the Commission and who would be covered by the agreement, wanted to bargain for the agreement;
• each of the respondent employers had clearly identifiable common interests;
• it was not contrary to the public interest to make the authorisation;
• the operations and business activities of each of the respondent employers were reasonably comparable with those of the other employers that would be covered by the agreement;
• one of the respondent employers was excluded from the scope of the APESMA application as they had an enterprise agreement that has not yet passed its nominal expiry date.

In short, the Commission was not satisfied that any of these factors warranted a finding that the authorisation sought by APESMA should be dismissed.

Of particular note is the Commission’s consideration of the identifiable common interests and comparable business activities criteria set out in the FW Act.

What are “common interests” for the purposes of multi-employer bargaining?

Without a definition under the FW Act, the Commission found that the term “common interests” should be given its ordinary meaning. That is, “common” means “shared, joint, united” and “shared or joint” consistent with previous decisions. Similarly, “interests” means “concernment”, “business, concerns or cause”, “goals, principles and business concerns” and “characteristics or matters that impact or influence the organisation”.

That is to say that where the employers have shared or joint business, concern, goals or principles (among others), it will be difficult to argue against the common interest.

The Commission also identified that the “common interests” must be clearly identifiable, or plainly discernible or recognisable, however they need not be self-evident.

Despite the extensive evidence led by the respondent’s employers which articulated points of distinction by reference to location, mine life, mining method, equipment, transport considerations, geology, customers, production and conditions of employment, the Commission held that the respondent employers had not drawn the necessary connection between these distinctions and the facilitation of bargaining which would arise under the authorisation. The Commission went on to say that the claimed differences between them, such as conditions of employment, upon closer examination, revealed them to be attributes, rather than interests, and gave rise to interests that were common.

The outlier…

The outlier in this regard was the fourth employer respondent. That employer, by virtue of its sole commercial purpose of covering its costs of providing a reliable supply of thermal coal to one of its related bodies corporate in the generation of electricity, was found to be comprehensibly different to the commercial purpose of the other three employers who undertook their mining activities to make a profit from the sale of coal.

This, in turn, revealed different retention, attraction, price and bargaining priorities which distinguished its interests from the interests of the employers in a bargaining setting.

The reasonable comparability test

In respect of reasonable comparability, the Commission held that test is concerned with the respondent employer entities, and the enquiry is targeted at the ‘operations’ and ‘business activities’ of those specific entities. The Commission did, however, accept that the operational and business activities of the respondent employers may be influenced by their relationship within the broader corporate group structure and this context may have some relevance in understanding what the respondent employers do and why they do it.

Further, the Commission held that greater weight should be given to differences in operations and business activities of the respondent employers to the extent that these relate to the proposed coverage of the authorisation. In other words, greater weight should be attached to the operations and business activities of the respondent employers to the extent that they relate to the work performed by the employees proposed to be covered by the agreement and are connected to bargaining.

Distilling these points down, the interesting feature of the case is that the Commission took steps to anchor the considerations in new provisions to bargaining for the enterprise agreement which would occur under the proposed authorisation and the relevant employees who would be covered by the terms of any agreement which would be a product of that bargaining. As such, broader distinctions were able to be sidelined by the Commission once a focussing on bargaining with a particular group of employees occurred.

It was through this lens that the Commission was able to find that the authorisation by APESMA, in respect of 3 of the 4 employer respondents, should be granted.

Key takeaways for employers

If you are an employer who is faced with an application for a single interest authorisation, understanding the differences and similarities between you and your co-employers is important.

However, the next layer of that analysis needs to be on developing how these matters impact bargaining interests, goals and objectives such that it may be a point of distinction from another entity who may be at the bargaining table.

Through this approach, a more refined defence to an application, which not only goes to distinguish an employer from its counterparts, but also informs how those distinctions will impact an employer’s bargaining stance, interests, goals, objectives and drivers and ultimately militate against a finding that multi-employer bargaining should occur, will be possible.

Whether this line of reasoning prevails before the Federal Court is yet to be seen. However, Kingston Reid will keep you across the latest in this space as it unfolds.

Stay tuned to see whether the Federal Court walks back what some commentators have regarded as a return to centralised wage fixing not seen since the 1980s or whether enterprise level bargaining, focussed on single enterprise agreements as between employers and their employees, will remain as a core, primary objective in Australia’s industrial relation system.

[1] [2024] FWCFB 253

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

On 13 September 2024, the Full Bench of the Fair Work Commission (FWC) ruled on the jurisdictional scope of the FWC to deal with disputes under section 240 of the Fair Work Act 2009 (Cth) (FW Act) in Qube Ports Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union[1].

The decision sheds light on what the FWC will deem to be a dispute “about the agreement” for the purposes of section 240, and when it can be said that those parties are “unable to resolve the dispute”.

Defining Disputes: what does section 240 cover?

Section 240 of the FW Act allows bargaining representatives to apply to the FWC to deal with disputes about proposed enterprise agreements if they are unable to resolve the dispute themselves. Relevantly, section 240 gives the FWC jurisdiction to deal with a dispute “about the agreement”.

This naturally raises the question: what constitutes a dispute “about the agreement”? Until now, there has been a lack of clear authority which has considered this question.

What did the Full Bench have to say?

Qube Ports was engaged in bargaining for 19 proposed enterprise agreements, covering its stevedoring employees at various port facilities across Australia. Qube Ports insisted on a port-by-port bargaining method, which the union (MUA) argued was inefficient and costly. The MUA sought a unified approach to discuss common terms before addressing port-specific issues.

The MUA made an application to the FWC under section 240 of the FW Act, seeking assistance in resolving the dispute. At first instance, Deputy President Slevin held that the FWC had jurisdiction to hear the matter. Qube Ports appealed to the Full Bench of the FWC.

On appeal, Qube Ports contended that the FWC lacked the jurisdiction to deal with the dispute, because it was about the bargaining process, rather than the content of the proposed agreements. Additionally, Qube Ports asserted that the parties had not demonstrated that they were “unable to resolve the dispute”, a prerequisite to enliven the FWC’s jurisdiction under section 240.

The central issue before the FWC was whether the dispute was a dispute “about the agreement”. Qube Ports argued for a narrow interpretation that only disputes concerning the substantive content of an agreement, not the bargaining process, should be considered.

The FWC rejected the narrow interpretation advanced by Qube Ports, affirming that a dispute about the manner in which bargaining is conducted is indeed a dispute “about the agreement”. The FWC emphasised that the purpose of section 240 is to facilitate good faith bargaining and the making of enterprise agreements, which includes resolving procedural disputes that could impede the bargaining progress.

The FWC further observed that Qube Ports’ refusal to negotiate common terms collectively was a dispute about the agreement’s content, not just the bargaining process and that Qube Port’s refusal to negotiate was in breach of the good faith bargaining requirements under the FW Act.

On Qube Ports’ argument that the parties had not made sufficient efforts to resolve the dispute independently, the FWC found evidence to the contrary, noting that the parties had engaged in multiple bargaining meetings and correspondence without reaching a resolution. The FWC concluded that the requirement under section 240(1) was met, as the parties were unable to resolve the dispute at the time assistance was sought.

What’s the difference Between process and content?

The FWC distinguished between disputes about the bargaining process and the content of enterprise agreements. While Qube Ports argued the dispute was purely procedural, the FWC determined it was inherently linked to the agreement’s content, as the method of negotiation directly impacted the terms being discussed.

The evidence showed that Qube Ports’ insistence on port-by-port negotiations was driven by concerns about the applicability of the MUA’s claims to specific ports. This indicated that the dispute was not merely procedural but also related to the substantive content of the agreements.

Key takeaways for employers

Broad Interpretation of Section 240

The decision confirms that section 240 encompasses disputes about both the content and the process of bargaining.

Employers should be prepared for the possibility that disputes about the bargaining process, not just the content of agreements, can be brought before the FWC. This means that procedural disagreements, such as the method of bargaining, may be subject to the FWC’s intervention. However, it is important to note that the FWC can only make a recommendation and cannot arbitrate an outcome without the agreement of all parties.

Encouragement of Efficient Bargaining

By recognising procedural disputes as legitimate grounds for the FWC’s intervention, the decision encourages parties to make use of the section 240 process in complex negotiations involving multiple agreements and parties.

Employers will need to develop more comprehensive strategies to address both procedural and substantive differences in bargaining and consider where a section 240 application could be used as a strategic tool in negotiations.

Clarification of “Unable to Resolve”

The decision clarifies that demonstrating an “inability to resolve a dispute” does not require exhaustive efforts over an extended period. Instead, it is sufficient to show that the parties have made reasonable attempts to resolve the dispute without success.

[1] [2024] FWCFB 370

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

There is a popular misconception within organisations and across industries that obtaining a work health and safety accreditation (such as ISO 45001) equates to compliance with health and safety legislation.

While an argument may be made that there is generally a correlation between organisations having their health and safety systems accredited and experiencing fewer workplace incidents, there is often an over reliance on, and false sense of security provided by ‘set and forget’ paper-based safety systems that accreditation requires.

What is accreditation?

In Australia, organisations can hold various health and safety accreditations, including:

1. ISO 45001: which is an international standard for occupational health and safety management systems;
2. AS/NZS 4801: An Australian / New Zealand standard for work health and safety management systems;
3. SafeWork Accreditation: Specific to certain industries such as construction;
4. Federal Safety Commissioner Accreditation: for companies working on Australian Government building and construction projects; and
5. WorkSafe Certification: state-based certifications such as through WorkSafe Victoria.

Generally, obtaining and maintaining these accreditations requires:

1. Implementation of Safety Management Systems: Structured approaches to managing safety risks;
2. Regular Audits and Inspections: Ensuring compliance and identifying potential hazards;
3. Employee Training and Engagement: Increasing awareness and promoting a safety culture;
4. Continuous Improvement: Encouraging ongoing evaluation and enhancement of safety practices.

The way these accreditations are generally obtained and maintained is through paper and desk top audits of the documentation that is rarely a true indication of the way hazards and risks are assessed and controlled.

The requirements of these accreditations treat all risks as equal and do not distinguish between those risks that are critical and those that are non-critical.

Why the misconception?

While the effort required to obtain and maintain a health and safety accreditation demonstrates a commitment to better health and safety outcomes, ultimately it is a demonstration of a paper-based system that often do not reflect what is practically happening on the ‘coal face’ (i.e. work as imagined versus work as done).

The requirements of accreditation are based off the words on the pages within the health and safety management system rather than the ways in which risks, and in particular critical risks, are actually and practically assessed, managed and controlled.

Work health and safety legislation is risk based and not outcome based. Put simply, an incident does not automatically equal non-compliance, but sans an incident having incomplete documentation that forms part of a health and safety management system will certainly demonstrate non-compliance.

An example of this, is the concept of Safe Work Method Statements (SWMS) for high-risk construction work. In theory, and from a regulatory compliance perspective, these documents are a tool for workers to assess and manage risks associated with particular work activities in the context of the specific workplace.

In practice, generic SWMS are provided as part of tender processes that get ‘signed onto’ by workers and never thought about again unless or until there is an incident or it is time for an audit to maintain accreditation. Not having a SWMS will generally be a regulatory breach (provided the workers have considered the risks and put controls in place) but having a generic SWMS that is not a true indication of the way the work was being done is generally a breach of the primary duty of care under the Model Work Health and Safety Act and in certain circumstances could lead to breaches and/or prosecutions.

A workplace would ultimately be safer where risks are proactively managed and controlled as part of the way work is done without the burden of an overly bureaucratic paper-based system of documents to be signed or forms to be filled out that relies on work being carried out in the way those sitting in the glass towers imagine.

Part of the problem is that when a regulator calls, it is almost always case that the first thing they do is demand to see the paper safety system rather than taking the time and effort to understand how hazards and risks are practically managed and controlled.

What can organisations do?

Organisations need to accept that the regulatory landscape has changed in recent years and accreditation is no longer the health and safety silver bullet it once may have been.

Hand in hand with accreditation, organisations can:

1. Adopt a less legalistic approach in the system documents and to adopt a more outcome / people focused approach that concentrates particularly on critical risks. Adopting a less legalistic, less is more approach to the documentation does not reduce overall compliance;
2. Make the safety management system less complex while focusing and relying less on documentation, and focusing on the systems and processes that underpin the content of the documents (i.e. work as imagined versus work as done);
3. Develop and implement the system in a way that does add unnecessary bureaucracy that ultimately leads to health and safety adding to the workloads of individuals; and
4. Clarify the connection between physical hazards, and psychological hazards, and their associated risks (e.g. acknowledging that a risk arising from a physical hazard may also create psychological risks that also need to be managed).

Key Takeaways

We are certainly not advocating organisations doing away with their accreditation/s or that accreditations are a wasted endeavour. Instead, organisations should not be lulled into a false sense of security that holding accreditation means their work or workplace are safe or compliant with risk-based health and safety legislation.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

September 27, 2024

A new legal hunting ground?

The Federal Government has passed the Australian Human Rights Commission Amendment (Costs Protections) Bill 2023 which introduces a radical new costs regime into Australia’s federal anti-discrimination laws.

Kingston Reid Partners Duncan Fletcher and Beth Robinson outline the nature of these changes and what we might expect to occur once they take effect.

The New Costs Provisions

One of the issues identified in the landmark 2020 Respect@Work report into sexual harassment in Australia was a perception that individuals who experienced discrimination and sexual harassment were deterred from commencing legal proceedings under anti-discrimination law due to the risk of being ordered to pay the other parties’ legal costs if a claim was unsuccessful. To address this, a recommendation was made to introduce costs neutrality provisions into anti-discrimination laws, like those provided for in the Fair Work Act 2009 (Cth) (FW Act), where each party to a proceeding is responsible for their own legal costs[1].

The government has now acted on this recommendation, introducing new costs protections for applicants in court proceedings that relate to an application made under anti-discrimination laws.

However, the changes go beyond the costs neutrality position recommended by the Australian Human Rights Commission (AHRC)[2] and the Respect@Work report, introducing instead a ‘modified equal access model’.

The new provisions provide:

• If the applicant succeeds on one or more grounds, the court must order each respondent to pay the applicant’s costs on an indemnity or other basis. The only exception is if the applicant’s unreasonable act caused costs to be incurred, in which case only those costs are excluded.
• If the respondent succeeds, the applicant must not be ordered to pay costs, unless the applicant acted vexatiously or unreasonably, and then the costs are limited to costs flowing from the unreasonable act.

The outcome of these changes is a respondent now effectively underwrites the legal costs of a claim brought against them under anti-discrimination law, and applicants are largely insulated from costs exposure, other than in very limited circumstances.

This significantly shifts the risk in proceedings under anti-discrimination laws to a respondent and creates strategic and legal advantages for individuals commencing claims in that forum.

Notably, the regime is broadly drafted and captures court proceedings “that relate to” a discrimination application. This means that the benefit of costs protection for applicants will not be limited only to a discrimination aspect of a claim but will likely extend to all aspects of claims where any anti-discrimination law is used as a vehicle to commence the application (which may include, for example, breach of contract). This is already a common practice under the FW Act.

In practice, we expect that similar to the Fair Work Commission (FWC), claims will be commenced with the AHRC to enliven this jurisdiction and protection. If a claim is not resolved in the conference process within the AHRC, and the complaint is terminated, an applicant is then able to proceed with a claim in the federal court jurisdiction. The costs protections will then apply to the entirety of that claim, irrespective of what other allegations or claims are included in the application.

The likely consequences of this change are:

An increase in the number of claims commenced under anti-discrimination laws against employers and individuals. Discrimination claims being used more often as a vehicle for broader related claims (including in substitution for workers’ compensation claims). General protections claims becoming the adjunct, rather than primary claim in the employment jurisdiction creating confusion about which costs regime will apply. Higher applicant settlement expectations. Increase in applicant appetite for litigation (including representative/class actions). Increased use of accessorial liability provisions to rope in individual respondents. Higher legal fees being incurred earlier in proceedings. Increases to insurance premiums for employment liability policies.

Reduced likelihood of achieving early, commercial and realistic settlements. Less issues being resolved at a workplace level before litigation is commenced. Decrease in use of the new Fair Work Commission (FWC) jurisdiction to resolve sexual harassment matters in a cost neutral and conciliatory environment.

A new legal hunting ground

The FW Act costs neutrality regime has several demonstrable positive impacts, reflected in the effectiveness of the Fair Work Commission in dealing with disputes. The provisions:

1. Effectively incentivise settlement at an early stage: Over 90% of claims in the FWC settle at conciliation[3], with costs implications used as a lever to promote compromise by both parties. This is supported by a system within the Fair Work jurisdiction which schedules facilitated conferences and conciliation within weeks of a claim being commenced.
2. Promote efficiency and objective assessment of claim prospects: Parties are generally motivated to run claims efficiently, as they are more aware that the costs they are incurring are usually not recoverable. This promotes objective assessment of claim prospects by both parties on an ongoing basis.
3. Encourage commercial settlements: Settlement proposals are generally reflective of reasonable loss and not blown out with claims for unrecoverable or excessive legal costs, again providing an incentive for compromise and resolution. This results in commercial settlements being achieved in most matters.

By contrast, claims brought through the AHRC under federal anti-discrimination laws are currently far less common. This reflects that:

• discrimination laws are historically highly technical resulting in expensive and prolonged proceedings where cost neutrality protections did not exist;
• the process within the AHRC is not currently as efficient as that offered by the FWC; and
• recourse if a matter does not resolve is to the federal court system with its attendant complexity and cost.

To the extent that discrimination claims are currently pursued, they usually form part of a claim commenced under the FW Act’s general protections provisions, in order to obtain the benefits of the FWC processes as well as the costs neutrality protections, a reverse onus of proof and civil remedy provisions.

The changes introduced to change the costs arrangements under the Australian Human Rights Commission Act 1986 (Cth) mean that costs burdens of a discrimination claim now sit heavily with respondents.

This beneficial change for applicants, combined with the wide ranging and foundational changes particularly to the Sex Discrimination Act 1984 (Cth) (SD Act) over the last 18 months, (including new provisions intended to guard against a “hostile work environment” and the positive duty to prevent sexual harassment) makes the AHRC a much more attractive forum for an applicant commencing a claim. It also means that discrimination claims are now attractive as a vehicle for commencing more expansive applications of which discrimination is only a part, in order to obtain the costs benefits. This is an approach that is already common with general protections provisions under the FW Act.

As the default costs liability extends to each respondent, it would also be reasonable to anticipate an increase in the use of accessorial liability provisions to ensure senior managers and officers are named as parties to claims, particularly where they are able to influence settlement, or activate protective insurance policies, noting of course that an insurer will assess all risks, including costs exposure in determining potential settlement parameters.

“Representative” or class action claims also benefit from this default costs protection, again incentivising the funding and making of large-scale claims. While individual applicants are protected, respondents must assume that they will carry a greater proportion of the legal costs incurred. This is recognised in the new provisions expressly referencing representative actions and providing express protections against costs being ordered against individual applicants in these claims. This will have the consequent effect of increasing the attractiveness of this type of claim for litigation funders whose risk profile has now been reduced.

Exceptions to the rule?

For employers or individuals responding to a discrimination claim, having a clear legal strategy, from the beginning of the proceedings, will now become more critical than ever to not just understand the potential legal risk on the merits of a claim, but to establish a basis to meet an exception to the costs regime and mitigate the potential for costs exposure.

The limited exceptions to the default costs position in terms of the respondent’s exposure are where:

• the respondent wholly succeeds, meaning all claims against them are dismissed; and/or
• the applicant has engaged in an unreasonable act or omission that has caused the applicant to incur costs.

It is this second limb with should be closely considered remembering that this is the criteria for a move from the default outcome that the respondent be ordered to pay the applicant’s costs.

This assessment considers not whether the applicant’s unreasonable act caused the respondent to incur costs, but whether the applicant’s own unreasonable act or omission caused the applicant to incur costs. If this can be established, the respondent will not be ordered to pay those unreasonably incurred costs, this is a limited protection.

An ‘unreasonable act or omission’ for the purposes of a costs provision will always be contextual but well accepted “unreasonable acts” include a failure to accept a reasonable offer of compromise, especially where it provides for a better outcome than that ultimately achieved, or a failure to participate in a process such as a conciliation.

However, the Explanatory Memorandum[4] to the Bill seeks again to remove this incentive for compromise and genuine assessment of prospects and outcomes. The Explanatory Memorandum instead adopts a submission of the ACTU[5], and states that for the purposes of this provision an ‘applicant’s unreasonable act or omission” which caused the applicant to incur costs is ‘intended to be a high threshold and reserved for rare cases. For example, a mere refusal of a settlement offer, (or) refusal to participate in a conciliation… are not intended to amount to an unreasonable act or omission…” (our emphasis).

This is inherently problematic. If this explanation informs the application of these new provisions, the outcome is effectively that a respondent remains liable for an applicant’s costs, even in circumstances where those costs could or should have been reasonably avoided. It removes the imperative for genuine consideration of reasonable settlements, or participation in alternative resolution mechanisms.

Of course, how the courts choose to exercise its discretion in each matter will be determined by the facts in each case and context remains critical.

When is an applicant liable for costs?

The basis for an applicant being ordered to pay the respondent’s costs are even narrower. An applicant may only be ordered to pay costs :

• If the proceeding was commenced vexatiously or without reasonable cause.
• When the applicant’s unreasonable act or omission caused the other party to incur costs.
• When the respondent is wholly successful but does not have a significant power or financial advantage over the applicant. This is intended to protect true small businesses and individual respondents where there is no power differential with an applicant.

Proving an application to be vexatious is a very high bar and one that is not commonly met. For a matter to be commenced without reasonable cause, this requires there to be evidence that, on the facts objectively known at the commencement of proceedings, there was no reasonable cause of action or prospect of success. Again, this is a high bar.

Interestingly, the ‘unreasonable act’ provision in this subsection adopts similar wording to section 570 of the FW Act, as it considers where the applicant has caused the other party to incur costs through an unreasonable act or omission. This provision is not addressed in the explanatory memorandum to the Bill, but it must be assumed that ‘unreasonable act or omission’ will be given the same meaning throughout this new provision.

This leads to an outcome where, if it can be shown that an applicant engaged in an unreasonable act or omission resulting in costs for either party, that this becomes a basis firstly for the respondent to obtain protection against costs arising from that act or omission, and secondly, becomes a basis for the ordering of costs against the applicant in relation to that same act.  This costs provisions will accordingly become a key issue within legal proceedings and strategy.

Impact for Respondents

When assessing a legal claim and how to approach it, consideration is usually given to the merits of the claim and potential outcomes, the likely legal costs and the time and disruption required to participate in legal proceedings.

As outlined above, these changes impact this assessment.

To best protect itself against potential costs exposure, a respondent  to discrimination proceedings should, as early as possible, and throughout proceedings:

• Consider the merits of each aspect of a claim, including any which should not proceed due to legal or factual deficiencies, and making this clear in writing in a response and any settlement communications with the applicant. By necessity, this involves investigating the claims made, an often intensive and costly process.
• Determine what a reasonable offer of compromise would be, based on the circumstances of the case and its merits. The offer should be made in writing and make clear that failing to accept the offer of compromise is unreasonable. Relevantly, being prepared to factor in these new costs risks as part of whether an offer is reasonable will be necessary and may require higher offers to be made to meet this threshold. Our expectation is settlement proposals will now routinely include claims for applicant legal fees.
• Act on unreasonable acts or omissions during proceedings by raising them in writing. This may include deficiencies in compliance with technical legal rules around pleadings and compliance, or the introduction of irrelevant materials, such as large volumes of evidence that are not relevant to the matter.

The necessity for these additional steps means that time and costs, which may previously have been deferred in the interests of obtaining an early commercial settlement are now incurred earlier. Respondents are likely to need to engage with their lawyers to properly understand and respond to discrimination-based claims and the increased settlement expectations that they will bring.

Where to now?

Discrimination claims are likely to significantly increase over the next few years as these changes come into effect. This is an intended outcome of this change, and other recent legislative changes.

This will be driven by the cumulative effect of the changes to the SD Act which have lowered the threshold for providing sexual harassment and discrimination and now the beneficial costs protections for claims brought under anti-discrimination laws which make this an attractive jurisdiction to commence claims.

For employers, these changes represent a significant shift and will require reassessment of where discrimination issues are classified in the organisational risk matrix. The focus as always should be ensuring that the workplace is as compliant as possible, including having proactive and practical strategies to prevent discrimination, or to identify and de-escalate potential claims early.

If a complaint is made or a claim is received, organisational response becomes much more important right from the inception of the claim. Given the higher costs stakes, respondents can limit their exposure by seeking early legal advice to avoid prejudicing their position. A strategic response, which responds quickly to mitigate against potential costs implications, is critical in this new hunting ground for applicant litigation.

[1] Australian Human Rights Commission (AHRC), Respect@Work: National Inquiry into Sexual Harassment in Australian Workplaces (2020) Recommendation 24 at p 45

[2] AHRC Submission to the Senate Legal and Constitutional Affairs Legislation Committee, 19 December 2023

[3] Taken from statistics in the FWC Quarterly Reports which show the number of applications made and the number that settle at private conference, here: https://www.fwc.gov.au/about-us/reporting-and-publications/quarterly-reports

[4] Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 Explanatory Memorandum  

[5] Cost Model for Commonwealth Anti-Discrimination Laws. ACTU submission to the Attorney-General’s Department on the Review into an appropriate cost model for Commonwealth anti-discrimination 2022 at p 20

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

September 5, 2024

A recent decision by the Australian Privacy Commissioner has highlighted the need for employers to tread carefully whenever they receive personal information, particularly sensitive health information, about their employees.

Current state of the law on employee records

The Privacy Act 1988 (Cth) (Act) is the main federal source of privacy protections in Australia.  The Act provides for several Australian Privacy Principles (or APPs), which govern the standards, rights and obligations around the collection, use and disclosure of personal information and sensitive information.

Private sector employers are exempt from compliance with many of the APPs where an act or practice is directly related to:

• a current or former employment relationship; and
• an “employee record” (defined in the Act) held by the employer and relating to an individual.[1]

Importantly, the exemption only operates once an “employee record” is held by an employer.  This means that organisations with an annual turnover of $3 million or more[2] are not exempt from the need to comply with APPs when initially collecting an employee record, such as recording personal details on an onboarding form or registering a fingerprint to implement digital attendance scanners at a workplace.[3]

Relevantly, these APP obligations require that such organisations only collect personal information that is reasonably necessary for, or directly related to, one or more of its functions or activities and, if that personal information is also sensitive information (such as health information), then the organisation must also obtain the individual’s consent.

Despite the drastic increase in the collection, storage, use and disclosure of employee records since the employee records exemption was introduced in 2000,[4] there is still a lack of awareness about the exception[5] and uncertainty about its scope, given the infrequency of published decisions considering it.

ALI and ALJ

This privacy complaint[6] (determined by the Commissioner in June 2024) arose after an employee suffered a medical episode whilst they were at work in their employer’s car park. They were given CPR by colleagues until an ambulance arrived and transported the employee to a hospital.  Following the episode, a staff member contacted the employee’s husband and asked that he contact their manager to provide an update on the employee’s condition.

The husband sent a text message to the manager providing an update on the employee’s condition and that manager conveyed this message to the managing director of the employer.  The managing director then proceeded to send an email to over 100 head office employees, disclosing that the employee had experienced a medical episode, providing details about her health status and including the full names of her and her husband in the email.

The employee ultimately resigned from the organisation and lodged a complaint to the Commissioner in respect of the disclosure.

Under APP 6, an organisation must not disclose or use personal information for a purpose other than what it was initially collected for.  In responding to the complaint, the employer argued that it was exempt from the APPs, due to the employee records exception.

The Commissioner rejected the employer’s argument.  It determined that the employer had interfered with their employee’s privacy, had breached the APP 6.1 and ordered it to pay to the employee $3,000  for non-economic loss and a small amount for reasonable expenses.

In reaching this conclusion, the Commissioner considered that the primary purpose of the collection of was to ensure the welfare of the employee and to meet work, health and safety obligations concerning incident reports.  However, the information was then used instead to update staff about the employee’s condition, which was not the primary purpose for which it was collected.

The Commissioner also:

• did not consider that the employee had implicitly consented for the secondary use of their information, despite her husband willingly sharing that information;
• rejected the argument that a reasonable person would expect the employer to disseminate her health information in the manner that it did; and
• did not agree that the Work, Health and Safety Act 2011 (NSW) authorised the employer to act in the way it did.

The future of the employee records exemption

In late 2023, the Federal Government formally responded to a 2022 review from the Attorney General’s Department into the Act, which had suggested amendments to the employee records exception, with the aim of:

• improving employer transparency about how they use the personal information of their employees and former employees;
• ensuring employers can still “collect, use and disclose” employee information but only when it is “reasonably necessary to administer the employment relationship“;
• requiring employers to consider whether they need employee consent for the particular collection, use or disclosure of employee information;
• protecting employee information from “misuse, loss or unauthorised access”, and ensure the information is destroyed when employers no longer need it – in a way that is consistent with the employer’s other legal obligations; and
• guaranteeing that employees and the privacy regulator are notified of any data breaches involving employee personal information that are likely to result in serious harm.

The Government agreed, in principle, that further consultation should be undertaken with employee and employer representatives on how enhanced privacy protections should be implemented in legislation.  However, as at the date of this article, no public consultation process has been commenced.

Takeaways

The recent decision of ALI and ALJ is an important reminder about the need for employers to exercise caution when collecting, handling, using and disclosing employee personal information, despite the existence of the employee records exemption.

It also underscores the regulatory burden on organisations — driven largely by uncertainty about what conduct is and is not regulated by the Act — who are now in possession of increasing of volumes of personal information from their workplace.

Until further clarity is provided by the Government in the form of legislative change fit for the modern workplace, employers will continue to be forced to speculate about what kinds of information need to be handled carefully and how.

[1] Section 7B(3) of the Act.

[2] Sections 6C(1) and 6D of the Act.

[3] See Lee v Superior Wood Pty Ltd [2019] FWCFB 2946.

[4] Privacy Amendment (Private Sector) Bill 2000 (Cth).

[5] In a 2023 survey conducted by the Office of the Australian Information Commissioner, 81% of respondents were unaware that businesses collecting work-related information about employees were exempt from the privacy obligations under the Act.

[6] ALI and ALJ (Privacy) [2024] AICmr 131 (20 June 2024)

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

August 14, 2024

In a recent Fair Work Commission decision[1], an employee of Fedex Express Australia (Fedex) lodged a flexible working request asking to work remotely four days a week. The request came following a series of similar requests made in accommodation of his family care duties and off the back of him already working remotely for much of the working week.

Like many current cases, the employee had continued working remotely from home following the lifting of COVID-19 restrictions. When directed back to the office two days a week, the employee commenced a pattern of taking leave on each of the days he was supposed to be in the office. When the requirement to work from the office increased to three days per week, the employee submitted a number of further flexible working requests, culminating in the dispute before the Commission. While some of the employee’s requests were agreed upon with the employer, his request to work from home four days a week indefinitely, was refused by Fedex. Instead, Fedex proposed alternative arrangements which in turn, were not accepted by the employee.

Notwithstanding Deputy President Lake’s observations that Fedex could have considered concerns regarding the employee’s wellbeing, and noting the full time working from home arrangements would be “isolating, particularly in potentially stressful home environment”, the Commission found that Fedex did not have reasonable business grounds to refuse the employee’s request, as it could not demonstrate a significant loss in efficiency or productivity, or a significant negative impact on customer service.

While Fedex was found to have genuinely tried to reach an agreement, and although it led evidence of the benefits of working in the office, the Commission ruled that Fedex was not able to prove the detriment to the business in refusing the flexible working arrangement and that accommodating such a request was in the employer’s interest for employee retention and job security.

This decision struck me as placing an incredible high bar on employers embroiled in disputes regarding flexible working arrangements.

Increasingly, we are seeing employees making flexible working requests to work almost exclusively from home. In a recent matter of mine, an employee in question had moved during the COVID-19 pandemic and was located more than an hour from her employer’s premises. She argued that because she had worked 100% remotely during the pandemic, there was no detriment to her continuing to do so, indefinitely. She cited carer responsibilities and a disability arising from the ‘stress’ of being directed back to the office two days a week.

While remote work has enormous benefits for all, the trend in employees resisting the call to return to the office, even for two or three days a week, may soon be up.

In our last edition of Kingston Reidable, Special Counsel Shannon Walker offered her insights on the Commission’s flexible workplace arrangement regime (you can read her previous article here). Notably, in the case of Shane Gration v Bendigo Bank [2] the FWC refused a working from home request in which the employee sought to work 100% of his 5 days working week from home.

In that case, the Commission upheld the reasonableness of the employer’s refusal, noting the importance of face-to-face interactions and attendance.

Echoing the Commission’s observations in the Gration case, one of the enormous downsides of employees working much of their week remotely is the decline in the cultural capacity of an organisation.

Another, the drain of on-the-job training opportunities; that intrinsic osmosis of being ‘in the thick’ of things and leaning into corridor conversations with more experienced colleagues. We’re also seeing a decline in resilience or what is often referred to as psychosocial or ‘brain’ capital—the cognitive, emotional, and social resources that employees bring to their roles and interactions with others. Fostering resilience, particularly in our younger workers, cannot be overstated.

As employers, we must recognise that the jobs of the future will increasingly demand these brain skills. Whether it’s for roles that require high levels of cognitive function or for positions where automation has shifted the nature of tasks, the value of an individual’s psychosocial capital is paramount. This is especially true as we witness the integration of artificial intelligence and robotics into our workplaces, which will inevitably reshape the skills required for success.

However, psychosocial capital is not a static asset. It can be nurtured and strengthened, or it can deteriorate in the face of unhealthy work environments. It is our responsibility, as employers, to ensure that our workplaces are conducive to the development of this capital, offering stimulation and positive dynamics that empower our employees. Conversely, we must be vigilant against the erosion of this capital through negative interactions, such as bullying or discriminatory behaviours, or in some cases, high levels of remote work.

The recent Fedex decision serves as a poignant reminder of the changing dynamics of work, whilst placing a significant burden on employers to justify the refusal of flexible working arrangements which see employees working almost exclusively from home. This decision, together with the push of employers to bring employees back to the office, is likely to encourage a surge in such requests, challenging employers to provide robust evidence of any likely detriment to the business, and also highlights the ongoing struggle between the desire of many employees to work remotely and the efforts of employers to bring employees back to the office.

While each request needs be assessed on its face, fortunately, the science of neuroscience supports the notion that in-person interaction is crucial for building psychosocial capital and offers important evidence that can be leveraged to demonstrate that while remote work offers certain benefits, the human element of face-to-face collaboration is essential for a resilient and adaptable workforce.

[1] Ridings v Fedex Express Australia Pty Ltd [2024] FWC 1845

[2]  [2024] FWC 717

On 20 August 2024, the Sydney office of Kingston Reid is proud to be hosting our Wise and Shine Breakfast Seminar, where we bring together a dynamic, multi-disciplinary panel to discuss the benefits of neuroscience in fostering stronger and more resilient employees, and how organisations might harness the science as part of their approach to managing psychosocial risks in the workplace more broadly.

Places are limited, please email [email protected] if you would like to attend this in person breakfast event.

Across the world, a number of jurisdictions have outlawed the use of certain types of restraint clauses (such as the US Federal Trade Commission banning the use of all encompassing “non-compete” clauses nationwide). We’re starting to see a similar sentiment take hold in Australia – restraints are becoming much more heavily scrutinised by both the courts and the government, reflecting that the tide may be changing (you can hear more about that in our Podcast episode (available here).

So, when and why should your business be using restraint clauses?

We take a look at some recent Australian decisions that illustrate the evolving legal landscape and its implications for your contract practices.

A quick refresher…

Employment contracts often include clauses that restrict an employee’s actions even after their employment has ended. As a quick refresher, the “family” of restraint clauses include:

• Non-compete restraints which bar the employee from working with or being involved in a competing business.
• Confidentiality restraints that prohibit disclosing employer’s secrets.
• Non-solicitation restraints that prevent soliciting employer’s clients.
• Non-dealing restraints that forbid providing services to those clients.
• Non-recruitment restraints that stop the employee from encouraging colleagues to leave the company.

The Debate

In Australia, we’re seeing restraint clauses face increasing scrutiny for their negative impact on both individual employees and the broader economy. See for example, a recent FWC decision, Andrew Goddard v Richtek Melbourne Pty Ltd [1] where the Fair Work Commission criticised the non-compete clause as overly restrictive when considering whether a dismissed employee had done all they could to mitigate their loss in assessing compensation for an unfair dismissal.

Deputy President Colman mused that it was unclear why restraints are common in the contracts of ‘ordinary workers’ and that the presence of such a clause (despite its likely unenforceability) explained why the employee, a grouting and grouting services salesperson, hadn’t tried to find another job in his sector in the 12 months after his dismissal.

Lochdyl Pty Ltd v Lind [2] strikes a similar chord, with the Magistrates Court of South Australia declaring a non-solicitation restraint clause void, due to its excessive restrictiveness. The employee in question was a hairdresser and the restraint in her contract tried to impose a two-year restriction on the employee diverting or attempting to divert from any business she had enjoyed, solicited or attempted to solicit from customers prior to the termination of her employment. Magistrate Vozzo determined that the restraint’s duration and scope were significantly more than what was reasonably necessary, as the nature of the hairdressing business allowed for the quick establishment of new customer relationships. This implied that any reasonable restraint would need to involve a shorter time period during which a hairdresser should be restrained from soliciting or attempting to solicit business. Consequently, the two-year restraint was deemed excessive and unenforceable. Additionally, Magistrate Vozzo found that the clause in question was ambiguously worded, lacking clarity in key terms, further contributing to its unenforceability​.

Finally, Justice Parker in Scyne Advisory Business Services Pty Ltd v Heaney [3] refused to grant an interlocutory injunction based on procedural grounds. Justice Parker found that, despite considering there was a serious question to be determined about the enforceability of the restraint, which would support granting a temporary non-compete restraint, Scyne’s significant delays in its attempt to enforcement the restraint meant that it would be unreasonable to restraint the ex-employee and prevent them from working while the case was heard. The decision signals to employers the critical need for timely action when seeking to enforce restraint clauses.

This isn’t to say that post-employment restraints are never being enforced – Samsung Electronics Australia Pty Ltd v Grenville[4] is a recent example of a court temporarily enforcing a non-compete and a non-solicit restraint while the case was being heard by the Court. The Court found that it was arguable that the restraint was necessary to protect Samsung’s confidential information and customer connections and ordered the temporary restrictions last for at least three months while the case was heard. In this case, Samsung also gave an undertaking that during this time the ex-employee’s old base salary would continue to be paid to him to mitigate his loss.

Key observations

Restraint clauses are important for ‘worst case’ scenarios – you know, like where an employee sends 10,000 work emails to their personal Hotmail account on their last day, or where a key senior executive immediately starts at your no. 1 competitor. However, while restraint clauses can serve as a tool for employers, they must be carefully crafted to ensure they are reasonable in scope and duration.

Pursuing excessive restraints that will likely be deemed unenforceable is not a good use of anyone’s time or resources. Excessive restraints are bad for employees, bad for the economy and thus bad for employers.

As employers, you should always consider whether the inclusion of a restraint clause is truly necessary. Thoughtfully crafted restraint clauses not only enhance their legal enforceability but also promote a fairer and more dynamic labour market, benefiting both businesses and employees.

Takeaways

1. Courts are adopting a stricter stance: Excessive or unwarranted restraint clauses are increasingly likely to be deemed unenforceable. Ensure your restraints are reasonable and justifiable.
2. Tailor restraint clauses to individual circumstances: Avoid using a one-size-fits-all approach. Consider the specific role, industry, and potential impact on the employee’s reasonable ability to practice their profession when drafting a restraint.
3. Focus on legitimate business interests: Restraint clauses should be proportionate and necessary, aimed solely at protecting genuine business interests such as your confidential information and customer relationships.
4. Review restraint clauses upon dismissal: Evaluate whether enforcing a restraint clause is appropriate when an employee leaves. In some cases, negotiating the application of the restraint, or parts of it, might be the better course of action.

[1] [2024] FWC 979

[2] [2024] SAMC 43

[3] [2024] NSWSC 275

[4] [2024] NSWSC 608

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.