FREE White Paper on
 Whistleblower Legislation Changes
Buy your copy now

WISE Training:
Government accredited, diplomas, certificates and more

Enrol now

Qualified. Experienced. Professional.

WISE Workplace is a multidisciplinary organisation specialising in the management of workplace behaviour. We investigate matters of corporate and professional misconduct, resolve conflict through mediation and provide consultation services for developing effective people governance. 

Through the delivery of professional development opportunities and self published practitioner guides, we are the centre of excellence for the ongoing professionalisation of workplace investigations across Australia.

The Latest from the Blog

Record damages awarded to NSW employee for wrongful termination: what can we learn?

Eden Elliott - Friday, October 30, 2020

Case study prepared by WISE Workplace State Manager NSW, Tracey Bosnich 

Image: unfair dismissal

Most of us may believe that if a contract is not signed, it is not legally enforceable. On 10 September 2020, the NSW Supreme Court handed down a significant decision, awarding record damages to an employee for termination of employment and amongst other findings, providing grounds upon which an unsigned contract may be held to be legally enforceable and take precedent over a signed contract.

Background

Ms Melinda Roderick (“Roderick”), the Executive Director of Washington H. Soul Pattinson & Company Ltd (“WHSP”) had been employed since 2006,  when Roderick commenced in the role of Chief Financial Director. She was appointed as Finance Director in 2014, till 12 April 2018, when she was terminated without notice. More notably, Roderick was the only female on the Board and was the second most senior employee in the company.

On 10 September 2020, Roderick was awarded record damages in the amount of $1.105 million. The case was litigated on the issues of termination of employment without warning, failure to give reasonable notice of termination, and failure to pay both short term and long-term incentive entitlements.

Original Signed Contract v Unsigned Contract

Roderick's terms and conditions of employment were originally set out in the 2006 contract ("the original contract"). However, following Roderick becoming the Finance Director in 2014, a draft ‘new contract’ was made in 2015, but was never signed. WHSP argued the original contract prevailed. 

Roderick submitted that when she became the Finance Director, the original contract was discharged. The Court noted that there was a significant change in her role tasks, obligations and duties and that the original contract could not have appropriately been applied in the circumstances, especially where the original contract ‘did not contain a clause specifying that it would remain in force, even if the duties are altered’. It was noted that under the new contract Roderick's responsibilities had significantly increased, in that she became the director of 12 companies. 

Despite the new contract being unsigned, the Court found that the implied intention was for her original contract to be discharged and for the parties to be bound by the new contract. Therefore, the terms and conditions of the unsigned new contract were found to apply and took precedent over the signed 2006 contract.

Calculation of termination payment 

WHSP calculated Roderick’s termination payment based on the signed original contract. Accordingly, Roderick was only paid three months’ of her old salary, in lieu of notice, which was expressly stipulated as the notice period in the original contract.

Roderick’s claim for damages was made in accordance with the notice period expressly stipulated in the new unsigned 2015 contract, being 24 months; and for payment of an amount representing her incentive entitlements under both the long-term and short-term incentive plan and scheme, included in the new contract.

Key issues litigated with respect to damages

There were five issues litigated: whether the original 2006 contract containing the express term of three months' notice applied; if the new unsigned contract applied, what was the implied period of notice; the notice period Roderick should have actually been given; determination of whether Roderick was eligible for entitlements pursuant to the short term and long-term incentives; and the reason for her termination.

Implied Notice and Incentive Bonuses

WHSP argued the original contract provided an express term of a three-month notice period.  As they did not give three months' notice, WHSP paid Roderick an amount in lieu of the three months’ notice and therefore argued they were not in breach of contract.  Roderick argued she was entitled to 24 months’ notice in accordance with the unsigned 2015 contract.

Once the Court established that the original contract no longer applied, it had to determine, what the ‘implied reasonable notice term’ should be. The Supreme Court did not uphold the 24 months’ notice period in the new contract, but determined that Roderick was entitled to 12 months' notice.

Roderick argued the new contract entitled her to the incentives. WHSP argued it was not obliged to pay the incentives as payment was discretionary and dependent on performance, and that Roderick was terminated for ‘poor performance’,  had not worked the full year and was no longer employed. WHSP further submitted that Roderick was terminated prior to the assessment of these incentive benefits.

The Court stated any "decision as to payment is only discretionary in the sense of assessing [Roderick's] performance against the KPIs". The Court stipulated that was an implied contractual obligation to "exercise any discretion conformably with the purpose of the scheme and not to choose arbitrarily or capriciously or unreasonably to not pay money, irrespective of whether the agreed parameters had been achieved". The argument to not pay Roderick as the employment ended "only a matter of days before the end of the relevant financial year would be quite unreasonable and arbitrary".

Reason for termination

The termination letter stated that Roderick was "not the right fit". Roderick argued that she was terminated without explanation. WHSP then subsequently submitted during the litigation, that Roderick was actually terminated for “poor performance”.

The Court noted that it was a "curious feature" that there was not a single document noting an issue with Roderick's performance, including the termination letter itself. It did not accept that Roderick had performed poorly,  but more so "that it (WHSP) could do better in terms of value for its money" given that a day after terminating Roderick, WHSP hired a new CFO on a lower salary. Further, the new CFO had no position on the board and reported to the chief executive, which the Court noted "would have saved [WHSP] a considerable sum".

Key lessons

This case illustrates the following important points for employers:

  • employers should be aware of the terms of their employment contracts;
  • employers should ensure the contract is executed by all the parties;
  • where an employee’s role title, duties and obligations are changed, the Court will look into the ‘intention of the parties to be bound by that contract’ as well as any alteration of responsibilities and duties, to determine when there is a signed contract and an unsigned contract, which contract will apply.

The dangers of wrongful termination for employers are significant – in this case, to the tune of over a million dollars. Employers should always be cautious when ending employment contracts, particularly if the termination involves role changes, very senior employees, complaints, disputes, poor performance or particularly wrongdoing, to ensure termination processes are both compliant and procedurally fair. 

WISE Workplace offers consultancy support with HR and dispute resolution matters to assist employers in meeting these obligations.  If you are seeking advice on the proper way to resolve an internal workplace dispute, contact us today.

COVID-19 decision making: Who is essential?

Eden Elliott - Tuesday, September 01, 2020

As employers, it can be difficult to classify any of your employees’ work as non-essential when every member of your team brings valuable individual strengths. These decisions can also pose significant risks where employers and employees want different things, sometimes leading to employees submitting appeals or complaints about their employer’s determination.

Image: balanced decision-making

We have all been surprised by COVID-19, and many employers have found a need to quickly develop  working from home and pandemic policies to support their decision-making around who stays home and who goes to work. What should these policies include?

  • Employers should always base their decision making on government directions at the applicable time, and appoint a designated officer to monitor and record new guidelines as they are issued. You don’t want to get caught having relied on old advice, or missed a crucial development. Any policies should be driven by this process of checking and applying guidelines, and identifying responsible decision-makers.
  • Review your other policies and make sure they capture the right circumstances. Does your definition of misconduct or bullying include online and remote behaviour? How are you upholding your data privacy obligations for staff working from home? Does your sick leave policy accommodate staff getting tested and waiting for results?
  • For larger organisations, it might be appropriate to decide working arrangements based on specific employee roles, which can provide employees with certainty and consistency around their futures. This can also increase practicality by allowing simpler identification of the working from home needs of each role.
  • Consultation is key to avoiding complaints, which means the policy should provide for employees to have the opportunity to request and make their case for how they prefer to work regardless of their role. These submissions should be kept private and confidential, and should invite employees to nominate practical, health & wellbeing, productivity and any other reasons. However, employers must take care to demonstrate that these submissions have been considered in any subsequent decision, and not ignored.
  • Put measures in place to support your staff while working from home and from the office in pandemic circumstances. Check in with them regularly, acknowledge the difficulties they face, and never forget to recognise their successes. Consider Employee Assistance Programs. Many employers have increased accountability measures for staff working at home, and it is  important to minimise feelings of micromanagement by recognising that these can also be a tool for identifying & addressing increased stressors and other difficulties that take up your employees’ time.
  • Put your duty of care first. At the end of the day, the wellbeing and safety of employees must take precedence, regardless of the short term frustration, decreased productivity and cultural changes to which working from home can contribute. The pandemic will not last forever, and an employer’s response to crises can have a significant impact on employee loyalty, retention and recruitment options in the future.
  • Get expert advice. If you find it difficult to build your processes, or if you receive complaints from staff, WISE can assist in reviewing decisions and policies to help meet employer obligations.

Call WISE on 1300 580 685 to help you develop your pandemic policy or respond to staff complaints.

Power and sexual harassment in the workplace

Eden Elliott - Wednesday, July 01, 2020

Despite decades of effort and improvement in Australian workplace legislation and culture, sexual harassment is, unfortunately, still a real and prevalent issue, mostly recently for a former High Court justice. This case highlights the link between power imbalances and harassment behaviour. 

In 2018, the Australian Human Resources Commission published a national survey which found that one in three people experienced sexual harassment in the workplace. The likelihood of victimisation increases for people who are female, aged 18-29, not cisgendered or heterosexual, Aboriginal or Torres Strait Islander, or have a disability. These are all qualities that are recognised by most workplace equal opportunity and anti-discrimination policies, demonstrating the importance of promoting and ensuring workplace equality overall as a means of preventing sexual harassment. Workplaces need to ensure that their policies on equality include these intersectional issues, so that increased likelihood is balanced by comprehensive and specific protections.

The link between inequality and sexual harassment

A recently published study by the Victorian Legal Services Commission indicated that an average of 2 out of 3 female and 1 in 10 male legal practitioners had experienced sexual harassment in their workplaces. The study also found that power imbalances were a key ingredient for instances of sexual harassment for the legal professional, again placing equality at the heart of the issue.

What can your leaders do to prevent sexual harassment?

Industries built around professional services and hierarchical workplace dynamics take note: your people are more likely to experience harassment from senior members of your profession. However, these dynamics can also present opportunities for your senior team members to provide cultural leadership, by representing and committing to a zero tolerance attitude towards sexual harassment. Prevention is better than cure, and it is crucial for workplaces to provide the right support, education and development of team members at all levels so they can manage their own behaviour, understand the realities of sexual harassment, and fulfil their role in creating a culture which leaves no room for predatory behaviour. 

What can everyone do to prevent sexual harassment?

The AHRC’s national survey also identified a decrease in reporting of sexual harassment incidents by witnesses and reporting by less than a quarter of complainants. Here is another opportunity for workplaces to ensure their complaint processes include protections for reporters, in particular by ensuring complete confidentiality. Complaint processes should also recognise and preserve the distinction between taking a complaint seriously and supporting a complainant and failing to afford the accused person with full procedural fairness.

Preventing sexual harassment in the workplace starts with a culture of equality, built on strong policies, processes and leadership. Employees have the power both to report harassment when they see it, and to use their own conduct to demonstrate to offenders what is not acceptable. If your workplace would benefit from better insight into your existing workplace culture, refreshed policies or training for your cultural leaders, WISE Workplace can assist. Contact us on 1300 580 685 to talk about your needs.

Training  

See how our trainers provide expert one on one feedback on investigative interviewing practicals...