August 2005 Issue 30
EMPLOYMENT BRIEFLY
Increased Family Provisions for Federal
Award workers……but for how long?
On 8 August 2005, the Australian Industrial Relations Commission
(AIRC) handed down its decision increasing family leave provisions
in federal awards. The decision has attracted extensive media
attention, most notably because of the uncertainty as to whether
the amendments will survive the Howard Government’s proposed
overhaul of the Federal industrial relations system.
In essence the AIRC decided that in respect of employees covered
by Federal awards:
- An employee may request that his/her employer:
• Increase simultaneous unpaid parental leave to eight weeks;
• Extend unpaid parental leave from 52 weeks to 104 weeks; and
• Permit the employee to return from parental leave on a
part-time basis until the child reaches school-age.
- Employers may only refuse an employee’s request if
the employer has “reasonable grounds” for such
refusal – Such grounds include cost, lack of adequate
replacement staff, loss of efficiency and impact on customer
service.
The AIRC also approved the parties’ agreement on a new
Emergency Leave provision and two replacement model clauses relating
to sick leave and bereavement leave. Essentially, employees are
entitled to use up to 10 days personal leave each year to care
for an immediate family or household member who is sick or requires
care as a result of an unexpected emergency. This period may
be extended upon agreement with one’s employer.
Further, the AIRC also adopted measures requiring employers
to consult with employees who are on parental leave in respect
of significant changes to their jobs. By the same token, employees
on parental leave will now be required to inform their employers
of “significant matters”, such as how long they intend
to take parental leave for and whether they will request part
time work upon their return.
Whilst Unions have commended the decision, believing it struck
an adequate balance between the needs of employees and employers,
there was some concern among employer groups as to the practical
implications for small to medium sized businesses. Employers
may now be forced to choose between the competing requests of
employees and the needs of business and customers.
Implications for employers
Currently, the increased provisions relate only to selected
federal awards (in the retail, pharmaceutical, metal, graphic
design, and engineering industries). Unions will now seek to
vary individual federal awards to include the provisions. As
such, employers whose workforce are governed by a federally certified
award must adopt the increased standards, once their respective
individual award is varied. It is also expected that applications
will be made to State commissions to adopt the new Federal Standards
in State awards.
The effect of this decision in light of the proposed Federal
reforms, however, remains unclear. It is not known whether the
increased standards will form part of the proposed Fair Pay and
Conditions Standards against which certified agreements and AWAs
will be measured under the new system.
Release Agreements – will they always protect
you?
In the recent decision of the Australian Industrial Relations
Commission (AIRC) in Gruber v Carton Services Ltd it
was held that a release agreement signed by an employee upon
the termination of his employment did not necessarily act as
a bar to a subsequent claim for unfair dismissal.
Facts
Gruber was terminated by reason of his poor work performance.
In consideration for a sum of money, Gruber signed a Release
Agreement in respect of his termination. Ten days after termination,
Gruber made an application under the Workplace Relations
Act (Cth) 1996 (the ‘WRA’) s170CE, claiming
that his termination was harsh, unjust or unreasonable.
The decision handed down by the AIRC related to a preliminary
application made by Carton, seeking orders that Gruber’s
application be dismissed for want of jurisdiction. That is, the
Release Agreement signed by Gruber upon termination acted as
a bar to any unfair dismissal applications.
Carton’s case
Carton’s motion to dismiss the unfair dismissal application
was made pursuant to Section 170CE of the WRA, which enables
a respondent to move for the dismissal of an unfair dismissal
application “on the ground that the application is
outside the jurisdiction of the Commission”.
In the alternative, if its objection was not jurisdictional
in nature, Carton submitted that the AIRC should strike out the
application in conformity with equity, good conscience and the
substantial merits of the matter as well as in the public interest.
Carton argued that it is in the public interest that Release
Agreements be honoured, unless there is a sound reason (such
as the agreement having been signed under duress) not to observe
their terms.
Gruber’s case
Gruber submitted that the basis on which Carton sought to have
his application dismissed was not “jurisdictional” within
the meaning of Section 170CEA(1) and, further, that the AIRC
was required to determine whether the termination of employment
was harsh, unjust or unreasonable having regard to the “whole
matrix of circumstances” including the events of the day
of termination (when the Release was signed) and the matters
leading to it.
Decision
The AIRC held that it had no power to strike out, summarily
or as preliminary matter, an application in respect of unfair
dismissal of which an applicant has elected under Section 170CFA
of the Act to proceed to arbitration.
The Commission did, however, recognise that it has the power
to dismiss unfair dismissal applications in the following circumstances:
- by determining the matter at arbitration;
- where the applicant fails to attend a proceeding; and
- by certifying, through conciliation, that the applicant
has no reasonable prospects for success.
The AIRC considered that Carton was effectively seeking a binding
declaration of rights as between it and Gruber, and that such
a judicial determination and enforcement of rights was outside
the power or authority of the AIRC. However, the Commissioner
did go on to note that in the course of the hearing of the unfair
dismissal application itself, the AIRC would be at liberty to
form its views and opinions on the effect of the Release Agreement,
should the matter arise there for consideration.
Implications for Employers
Release Agreements offered to and signed by employees upon termination
will not necessarily offer complete protection to employers from
future unfair dismissal applications.
However, the signing of a Release Agreement on termination is
still recommended as a prudent step in protecting the employer’s
position in the event of an unfair dismissal application. The
execution of a Release Agreement by an employee will be a significant
matter to be taken into account at the conciliation stage (where
the Commission may certify that the application has no reasonable
prospect of success) and also at arbitration when considering
the merits of the application as a whole.
Provided an employee does not execute a Release Agreement under
duress, employers can come to a conciliation or arbitration armed
with a Release as support for an argument that the dismissal
was not harsh, unjust or unreasonable. However, in light of Gruber’s
case, employers cannot necessarily expect to defeat an unfair
dismissal application as a preliminary matter simply on the basis
that the employee has executed a Release Agreement.
…And overseas?
In a decision that echoes the AIRC’s findings in Gruber,
the US Court of Appeal recently determined that an employee who
signs a document containing a release and waiver of all future
claims, can still bring a law suit against his former employer
under the Family and Medical Leave Act of 1993. In Taylor
v Progress Energy Inc, the employee was permitted to make
a claim against her former employer, and retain the $12,000 she
received in consideration for having signed the release document.
Though the decision of Taylor is not binding in Australia, it
is noteworthy that US Courts have too recognised the concept
that release documents will not necessarily protect employers
from employee-instigated litigation.
The decisions of Gruber and Taylor illustrate the limitations
associated with using release documents as a means of thwarting
potential claims of ex-employees.
For further information about issues covered
in this article, please contact our Employment Team, Ian Colgrave,
Sathish Dasan, Cecilia White, Michael Foley or Sharon Kelsey
on 8210 1200
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