RESTRAINT OF TRADE UPHELD
The High Court has refused an appeal by a former senior executive of a financial services company against a Supreme Court of New South Wales Court of Appeal Decision to uphold a restraint of trade agreement.
In Miles v Genesys Wealth Advisers Limited [2009] NSWCA the Court of Appeal granted an injunction against the executive, Mr Miles, which prevented him from competing against his former employer for a period of thirty months.
Mr Miles had been employed for a period of 20 years in a very senior role with Genesys and was privy to sensitive commercial information including the earnings of those financial advisers who were members of the Genesys network. When he left his employment he agreed to an extended restraint in return for certain financial benefits. After he left he had discussions with a large financial institution with a view to forming a business that would entice financial advisers away from his former employer and to the new business venture.
In deciding to uphold the restraint, the Court had regard to the potential for Mr Miles to damage the business of his former employer and that his former employer had a legitimate business interest to protect in seeking the restraints against competition. Further, the executive had the benefit of independent and experienced legal advice when he signed the restraints and had accepted what might have been valuable consideration.
This case demonstrates that the Courts are increasingly willing to uphold restraints that protect legitimate business interests. However, employers wishing to impose restraints on employees must ensure that they are reasonable in their scope both in terms of time and area of operation. The restraint must also be reasonable in terms of what it prevents an employee from doing. For example, a restraint that completely prevents an employee from working in their trade or profession may be found to be unreasonable even if it is for a short period of time and in a limited area. Accordingly, restraint clauses need to be carefully drafted.
OH&S COMPLIANCE AND ENFORCEMENT POLICY 2009
In June 2009, Workplace Health and Safety Queensland and the Electrical Safety Office released the Queensland Occupational Health and Safety Compliance and Enforcement Policy 2009. The policy is available on the WHSQ website – www.deir.qld.gov.au.
Modelled on the National Occupational Health and Safety Compliance and Enforcement Policy, this policy communicates the factors used for decisions on compliance and enforcement in Queensland.
The criteria that are applied when enforcing OHS legislation include:
- The seriousness of any breach;
- The culpability of the obligation holder,
- Compliance history and attitude of the obligation holder;
- The impact of enforcement on deterrence; and
- Any mitigating or aggravating circumstances, including the extent of effort an obligation holder has expended in controlling risks.
The enforcement options available range from improvement notices to prosecution. When deciding whether to prosecute, WHSQ and the ESO will consider whether it is in the public interest to do so.
OH&S prosecutions can be very difficult to defend. There is, in effect, a reverse onus of proof that requires an obligation holder to show that all codes of practice and regulations were complied with.
Employers who do not take their OH&S obligations seriously and who cannot demonstrate that they at least made an effort to comply with the law are far more likely to be prosecuted. Those employers that make every effort to comply with the law are more likely to get the "benefit of the doubt" when a decision is made as to whether a prosecution should be commenced.
UNFAIR DISMISSAL UNDER THE FAIR WORK ACT 2009
Workchoices substantially amended the Law in Australia in relation to unfair dismissal. The most significant changes were:
- that Federal system employers employing one hundred (100) or fewer employees were not subject to unfair dismissal claims;
- an application could not be made if the employee's employment was terminated for genuine operational reasons; and
- a qualifying period of six (6) months applied.
The Fair Work Act has removed the one hundred (100) employee exemption and the genuine operational reasons exemption.
Under the Fair Work Act a person will be protected form unfair dismissal if the person was an employee who:
- had completed a minimum employment period; and
- either a Modern Award covered the person or an enterprise agreement; or
- the sum of the person's annual rate of earnings and such other amounts worked out in accordance with the regulations is less than the High Income Threshold.
MINIMUM PERIOD OF EMPLOYMENT
The minimum period of employment for a small business employer is one (1) year otherwise it is six (6) months for other employers. In a transfer of business situation, provided that the new employer informed the employee in writing before the new employer started that a period of service would not be recognised, then the period of service with the old employer does not count towards the employee's period of employment with the new employer for the purposes of establishing the minimum period of employment.
HIGH INCOME THRESHOLD
The High Income Threshold is presently $108,300.00. Statutory superannuation does not count toward the threshold and nor do amounts that cannot be determined in advance such as bonuses and commissions.
WHAT IS A SMALL BUSINESS EMPLOYER?
A Small Business Employer for the purposes of the unfair dismissal provisions is one with no more than fifteen (15) full time equivalent positions. The calculation is determined by totalling the number of ordinary weekly hours worked in the business (averaged over the four (4) weeks preceding the dismissal) then dividing that total by 38. This will only apply until 1 January 2011 when the definition will revert to fifteen (15) employees as a simple head count.
WHAT IS UNFAIR DISMISSAL?
Unfair dismissal occurs when Fair Work Australia ("FWA") is satisfied that an employee:
- has been dismissed;
- the dismissal was harsh, unjust or unreasonable;
- the dismissal was not consistent with the Small Business Fair Dismissal Code ("the Code"); and
- the dismissal was not a case of genuine redundancy.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, Fair Work Australia must take into account:
- whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and
- whether the person was notified of that reason; and
- whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
- any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to the dismissal; and
- if the dismissal related to unsatisfactory performance by the person, whether the person had been warned about that unsatisfactory performance before the dismissal; and
- the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effect in the dismissal; and
- the degree to which the absence of dedicated Human Resource Management specialists or expertise in the enterprise would be likely to impact on the procedures followed in respect of the dismissal; and
- any other matters that FWA considers relevant.
The combined effect of the legislation is that harshness cannot be found in relation to a small business employer to whom the Unfair Dismissal Code applies where the employer complied with the Code in relation to the dismissal.
REMEDIES
The remedies of re-instatement and compensation are similar to those that were available under the Workplace Relations Act.
LIMITATION PERIOD
The time limit for lodging an unfair dismissal claim is fourteen (14) days. There is scope for extensions of time.
PROCEDURES
Fair Work Australia must conduct a conference or hold a hearing in relation to a matter to the extent that it involves disputed facts.
There are only limited rights of appeal. Fair Work Australia must not grant permission to appeal the decision made by Fair Work Australia unless Fair Work Australia considers that it is in the public interest to do so.
This means the body who makes the decision is the same body that has the final say as to whether or not an appeal against the decision can be made. Accordingly, it is unlikely that there will be many appeals.
Employers should consider whether their policies and procedures relating to employee discipline, performance management and termination should be amended in light of the changes introduced by the Fair Work Act 2009.
In September 2009, MDRN Solicitors will be conducting a seminar on the introduction of the Fair Work Act. If you would like to attend this seminar, you can make a booking by clicking here.
A SINGLE WORKPLACE RELATIONS AND OHS SYSTEM?
While the Australian Fair Pay Commission has imposed a wages freeze, state industrial tribunals have recently awarded pay increases, causing confusion and concern for small business.
In an interview with ABC radio on 26 August 2009, the Workplace Relations Minister, Julia Gillard said:
"I certainly share the concern of employers that it's stupid to have a system where we have fragmentation of industrial tribunals for the private sector. We said that in 2007. We're one nation and we went to the election saying if we were elected we would strive to achieve a fair workplace relations system for the whole of the private sector. So if you were running a business, you would never have to wonder to yourself am I covered by a state tribunal or a federal tribunal - you would be covered by the one system. And it's part of our Fair Work reforms; we've been working hard with our state and territory colleagues to achieve just that, and I am cautiously optimistic that we will get there".
Under the present system unincorporated entities (e.g. partnerships and sole traders) are covered by State industrial relations systems. Such small businesses will only be covered by the Federal system if the States agree to refer their powers to the Commonwealth.
Despite the Minister Gillard's cautious optimism, the referral of industrial relations powers by all of the States seems to be unlikely in circumstances where not all are governed by Labor.
As for Occupational Health and Safety Laws, each State and Territory presently has its own legislation which increases compliance costs for businesses that operate in more than one State or Territory. However on 18 May 2009 all State and Territory Governments (with the exception of Western Australia) agreed to a national framework for uniform OHS laws. If "model legislation" is adopted in Queensland this will involve some significant changes to the OHS laws that presently cover Queensland Workplaces. The Federal Government aims to implement the new laws by the end of 2011.
Important Disclaimer: The material contained in this publication is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends on the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser.
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