2016 has provided us with some interesting developments in the employment law landscape. This article highlights lessons for employers arising from recent decisions dealing with unfair dismissal, stop-bullying orders and enforcement of post-employment restraints.
Dismissal: reinstatement despite valid reason
To successfully defend an unfair dismissal claim, an employer must show that a dismissal was procedurally and substantively fair in that it was not harsh, unjust or unreasonable.
In the recent decision of Mt Arthur Coal v Jodie Goodall, the majority of a Full Bench of the Fair Work Commission upheld an order for reinstatement of a mine operator on the basis that the termination of his employment was harsh. The operator had made homophobic and anti-Muslim remarks over a two-way radio channel with other operators.
The majority came to this decision despite finding that Mr Goodall had engaged in “clearly inappropriate” conduct which was a substantial breach of Mt Arthur’s policies. Mr Goodall had also been afforded procedural fairness prior to dismissal.
Particular weight was given to Mr Goodall’s personal and financial circumstances as well as the duration and “exemplary” quality of his five year employment history.
In a minority decision, Commissioner Leigh Johns disagreed with the majority and stated that the decision to reinstate Mr Goodall was a “manifestly inadequate consequence” given the employee’s “substantial and wilful breach of Mt Arthur’s policies”.
The decision is important for employers because:
- it illustrates that the severity of an employee’s conduct and the fairness of an employer’s process are not the only considerations in determining whether a dismissal is unfair; and
- it shows the divergent views within the Fair Work Commission as to what constitutes “harsh” in an unfair dismissal claim.
Bullying: reasonable management action and repeated conduct
Stop-bullying orders have been the subject of considerable attention since 2014 when they came into effect under the Fair Work Act.
In the recent decision of Luis Perez, a Full Bench of the Fair Work Commission declined to make stop-bullying orders in respect of a cleaner. The cleaner alleged he was bullied when a leading hand co-worker approached him about sleeping on shifts and called him a “pig” in the presence of others, after the cleaner had loudly burped in the cleaners’ room.
The Full Bench found that “many of the incidents and aspects relied on by Mr Perez did not constitute relevant unreasonable conduct”. In forming this view, the Full Bench confirmed that:
- bullying requires repeated unreasonable behaviour, however this persistent behaviour might refer to a range of behaviours over time; and
- reasonable management action will not constitute bullying.
This case is a reminder for employers of the importance of:
- having clear written policies, including for bullying and complaint handling, which clearly identify what constitutes bullying and what conduct falls outside the definition of bullying; and
- following these processes when handling complaints of bullying by employees and other workers.
Restraints: crossing the bounds of reasonableness
Employers often seek to protect the goodwill, client or customer connections and confidential information in their businesses through post-employment restraints of trade. These are usually contained in employment contracts for senior employees or employees with significant access to clients, customers and confidential information.
In the recent high profile decision of Just Group Limited v Nicole Peck, the Supreme Court of Victoria refused to grant an injunction sought by Just Group (whose brands include retailers such as Just Jeans and Jay Jays) to prevent its former Chief Financial Officer from being employed by a competitor, Cotton On.
The CFO, Ms Peck, had only been employed by Just Group for a number of months before resigning with the intent of commencing employment with Cotton On.
Just Group immediately took steps to seek to enforce a non-compete restraint clause in Ms Peck’s employment contract. This clause prevented her from working for a list of approximately 50 brands (including Cotton On). In addition, the clause sought to prevent her from being engaged in any activity for or on behalf of any of the entities operating the listed brands for up to a maximum period of 24 months.
The court held that these restraints were not reasonable and therefore could not be enforced. This was because:
- the restraint provision would have prevented the employee from working for businesses that did not compete with Just Group; and
- the restraint period was too long, particularly in circumstances where the employment could be terminated by either party on short notice (one month) during the probationary period.
We understand Just Group has appealed the decision.
This decision is an important reminder to employers that post-employment restraints in employment contracts must be drafted carefully to:
- give specific consideration to the circumstances of each employee and the employer’s legitimate business interests; and
- be reasonable in their scope and duration. This is particularly the case in states (other than New South Wales) where there is no legislation enabling courts to rewrite contractual provisions that are too broad.