There are many reasons for an organisation’s management to be reasonable with their staff, especially if one of the workers is proving difficult and will not do as they are instructed. But the one central reason to be reasonable with them is that it aids in preventing stress claims from being raised to frustrate disciplinary action that could be leading up to termination of that worker.

How does a stress claim frustrate disciplinary action? Throughout Australia, a stress related worker’s compensation claim will be compensable if it arises out of work related circumstances. In most states, that will prevent termination; and anywhere in Australia it will undermine the disciplinary process, because the worker’s ailment was brought about by the discipline.

‘Reasonable management action’

The law in Australia, sadly, has not kept pace with the growth of the many stress claim strategies of workers. Over the last few years, our parliaments have addressed the issue by making stress claims not compensable if the disciplinary process was carried out in a reasonable manner. For the purposes of this article, the term ‘discipline’ may include retrenchment, transfer, demotion, dismissal and performance management. There are a number of different formulations of this defence, but it is commonly referred to as ‘reasonable management action’.

Simply speaking, ‘reasonable management action’ means that a manager performing a ‘performance management’ or similar disciplinary process acts fairly, transparently and justly. At present, the defence of ‘reasonable management action’ is treated in different ways, depending on which state the action is being taken in.

• In Victoria, ‘reasonable management action’ is a defence for all performance management action including discipline;
• In Queensland, it is a defence for discipline and restructuring;
• In New South Wales, it is a defence for all performance management action including discipline;
• In South Australia, it is a defence for all performance management action including discipline;
• In Tasmania, it is a defence for all performance management action including discipline;
• In Western Australia, it is a defence for discipline;
• In Northern Territory, it is a defence for discipline;
• In the ACT, it is a defence for all performance management action including discipline; and
• Under Commonwealth jurisdiction (i.e. under Comcare), it is a defence for all performance management action including discipline (relevant to the Federal Government as a self insurer).

In recent times, there has been a series of legal cases that have analysed what ‘reasonable management action’ actually is. These cases have examined circumstances such as:

• A worker whose performance had deteriorated when performance managed, claiming being ‘decompensated’ into a mental illness as a result of bullying;
• A worker who became aware of a possible restructure, and claimed being treated unfairly leading to an anxiety condition;
• A worker complaining of undue delay in investigating complaints caused a stress disorder; and
• A teacher whose employment was terminated following discussions and/or warnings, suffered anxiety as a result of the termination.

Lessons to be learned

Some of these claims were successful in court, while others were not successful. But here are the lessons to be learnt by business managers from these cases:

1. Be clear about what is acceptable behaviour and what is not acceptable behaviour. This should be recorded in writing in a ‘code of conduct’ document and a ‘workplace behaviour policy’ that includes specific procedures.
2. Ensure that all workers are trained in the written processes and that, as new staff are inducted into the organisation, they too are trained in these written processes;
3. Remember that your worst worker is also your greatest risk – ensure that you are doing everything right with them;
4. Be strategic, not tactical. Make sure that you get everything involved in the matter correct before you act. All too often, an opportunity arises for a manager to deal with a difficult worker and they impulsively seize that opportunity, only to reflect later that their treatment of the worker was, in actual fact, ‘opportunistic’.
5. Always listen carefully to what the worker has to say – it may indeed be the truth. It is possible that the manager who is pushing for the action is simply ‘sick of the worker’.
6. Manage everyone regularly, openly and fairly. As management consultant and social ecologist, Professor Peter Drucker once famously said: “What gets measured, gets managed.”
7. You must lead your staff by example; and that means acting fairly with the workers and being seen as being fair by the workers. In order to achieve this effectively, it takes considerable courage. If you want a strong, courageous and honest work force, you must be a model of such behaviour for them. Napoleon Bonaparte correctly stated: “An army of lions commanded by a deer will never be an army of lions.”
8. When taking action on disciplinary issues, you should endeavour to be scrupulous with the aspect of procedural fairness.
9. Never criticise under performance against an unreasonable direction or instruction. Take the advice of General Douglas Macarthur, who once said: “Never give an order that can’t be obeyed.”

10.  Try being reasonable. Ignore the freedom of being the ‘Clint Eastwood’ style of manager we described in the   introduction of this article, and wear the yoke of management proudly.

If you follow all of the above advice, stress claims during performance management processes will be a thing of the past. You will indeed get leverage, consistency and performance from your work force.

It was also developed to exclude several state Acts that permitted retrospective variations of contracts for IC’s giving rise to unpredictable damages claims. Sadly, as courts seek to balance justice for IC’s with a restrictive ICA, the good intentions of our legislators have been thwarted. The recent case of Keldote v Riteway should cause alarm for all businesses.

The critical facts, findings and effect of the decision were as follows:

1. Several truck driver incorporated IC’s had a contract with Riteway;
2. The contract permitted Riteway to require the IC’s to change their rig at the IC’s cost;
3. Riteway directed the IC’s to change their rigs, the IC’s refused and were terminated;
4. The IC’s commenced action to prevent the termination of their engagement with Riteway and subsequently sought the contracts to be varied to remove the requirement of “change” and to seek damages;
5. The contracts were, in effect, unfair and did disadvantage the IC’s;
6. The Federal Magistrate, FM Cameron, retrospectively varied the contract, removed the change clause and awarded damages.

The decision in the Riteway case appears at odds with the purposes behind the implementation of the ICA. It is unlikely to stand as an authority for long. But while it remains persuasive authority, businesses may consider the following steps prudent.

1. Pre-engagement – create a spreadsheet with each clause in it and ensure that both you and the IC initial that you both have read each clause and understand its effect.
2. At pre-engagement stage, issue the IC with a letter advising them, pursuant to the contract (which should have a clause to this effect), that they should get independent legal and accounting advice.
3. The contract must have a rolled-up rate that explicitly states it is in consideration of all IC responsibilities including, but not limited to, change obligations. It must be clear the rate amortises reasonable upgrade costs and the rate must actually remunerate the IC for this!
4. Undertake your own (defensible) calculations that demonstrate the rate once the cost amortisation and usual business costs have been rolled in, is better than the rate for a comparable employee.

Remember the purpose of IC’s is to have remuneration based on productivity and flexibility not mere hourly attendance. If you lose sight of the purpose – you will lose the benefit.

Melbourne OHS Training Day – 24 September 2010
When: 24 September 2010
Times: 8.30am – 5:30pm
Where: RACV Melbourne, 501 Bourke Street, Melbourne

RSVP by Monday 20^th September

Cost $1,200 plus GST

Early Bird Special only $1,000 plus GST (if book prior to Wednesday 15^th September)

The program for the Training Day is designed to look carefully at white collar safety. That falls into six parts:

(1) “Physical risks and hazards in the office”

Gary Rowe CEO Safety Action

(2) “Gossip, Stress and Bullying”

Anna Palmer, HR Consultant at Provenio Consulting

(3) “The risks of relying upon standards in uncontrolled environments – looking beyond “false comfort” of standards into the implementation of a culturally safe environment.”

Dr. David Borys, Researcher and Lecturer at VIOSH

(4) “Senior Management Governance responsibilities – something that few managers are trained in or understand at a Board/Executive level.” Ian Bird Company Secretary, Murray Goulburn and Ms Diana Taylor – General Manager Legal, Douglas LPT and Director of the Geelong Football Club.

(5) “Factors leading to stress in the office and how to manage it” and on “Poison

People- workplace Munchausen Disorder” Dr Ian Sale, Forensic Psychiatrist, and a leading advisor on compensable stress

(6) “Court Room Drama” – This trial will involve all the experts above, in addition experienced Barrister Catherine Symons and National HSE Manager, Steve Jackson from Mercedes-Benz Australia.  Each expert will be paired with participants to prosecute and defend a serious injury claim based on all the theory of the day.

The Principal of Douglas LPT, Andrew Douglas, will convene and provide commentary and legal analysis around each presentation.

If you have further questions feel free to call Emma Edwardes:
(W) 03 9669 1604
(E) eedwardes@douglaslpttraining.com.au

Melbourne IR Training Day – 29 September 2010
When: 29 September 2010
Times: 8:30am – 5:00pm
Where: RACV Melbourne, 501 Bourke Street, Melbourne

RSVP by Friday 24^th September

Cost $1,200 plus GST

Early Bird Special only $1,000 plus GST (if book prior to Wednesday 22^nd September)

Many legal training courses focus on the sharp end legal tools to fix highly contentious
disputes. However, in reality, the vast majority of HR/IR/ER work and risk arise in the
more pedestrian grievances and industrial disputation that are capable of sensible
resolution. The difficulty in developing sensible and livable results is shifting workers,
union and even operations from narratives that simplify and polarize disagreement.
Inevitably everyone loses.

The purpose of this training day is to introduce you to past and present Commissioners
who will address how to fix problems before the dispute itself becomes the problem.

The day is split into five major parts:

(1) “What are the grievance/dispute tools every employer should have and where do
you find them (Award, Enterprise Agreement, Policies and Procedures).” This will be followed by a Practical Problem – “Managing an employee following misconduct allegations in a unionised workplace”

Andrew Douglas, Principal Douglas LPT

(2) “Industrial disputes – how to prepare, what to do if it ends up in Fair Work Australia
(FWA), what powers does FWA have in conciliation/arbitration and, most
importantly, how to plan to avoid it.” This will be followed by a Practical Problem –

What are the key steps in preparation?

Commissioner Roe, Fair Work Australia

(3) “Legal update for IR disputation – most current law and what it means”

Andrew Douglas, Principal Douglas LPT

(4) The General Protections Provisions – the Dispute process in FWA and, its ultimate
destination, the Federal Court.

Commissioner Blair, Fair Work Australia

(5) “Court Room Drama – The Blue!” This trial will be before Commissioner Foggo from Fair Work Australia.  The trial will have an experienced union industrial officer, Karen Luu from Toll in2store, and key HR specialists to assist you with implementing what you have learnt through the day into practice.

At the end of the day, you will have learnt:

1. What are the tools you, the employer, the employee’s union and FWA have to fix
grievances and disputes;
2. What are the primary areas of risk under the FWA and how to manage them;
3. How to bring management/operation in from the HR/IR wilderness;
4. How to apply the theory you have learned into practice. You will be provided
with the opportunity to practice in an entertaining environment surrounded by
highly skilled experts and members of FWA.

If you have further questions feel free to call Emma Edwardes:
(W) 03 9669 1604
(E) eedwardes@douglaslpttraining.com.au

Your business is small to medium size and need HR support? But you don’t need anyone full time. Also, some of your needs are not “entry-level” HR practitioners. Come and speak to Nikki about what you need. We have a range of specialist HR contractors who can help you out. Each has specialist skills to help you run your business.Get the best practitioner to do your work.

Remember, one size does not fit all. Our HR offering provides you with the right HR practitioner to help you.

 Speak to Nikki on:

 (M) 0437 450 346

 (W) 03) 9669 1609

 Or email her on: ndoneney@douglaslptpeople.cpm.au

At Douglas LPT we offer tailored solutions to recruitment. We can recruit on an hourly basis for those simple to find recruits where you need someone into:

- Prepare an advertisement and advertise

- Sort through potential applicants

- Identify the best for interview

- Conduct the interview with you

- Reference check

- Make an offer

Or, we can use the common retainer process to find the difficult recruit.

Speak to Nikki on:

(M) 0437 450 346

(W) 03) 9669 1609

Or email her on: ndomeney@douglaslptpeople.com.au

Kim Cunningham and husband Leigh, welcome their second child Archer Jack Cunningham.

Kim, presently on maternity leave, has been a long serving senior employee of Douglas LPT and continues to act as secretary to the Douglas LPT Board.

From Andrew, staff and all our clients – Congratulations.

It is common for installers of cabling to take great comfort from the written warranties provided by manufactures of cabling product. Most installers assume that if something goes wrong with the product after it is installed, they can call upon the manufacturer’s warranty to cover the costs and expenses associated with rectification. While that comfort has some justification, it is also important to remember that manufacturer’s warranties do not provide complete protection for installers of other people’s products.

What is a warranty?

A warranty is a guarantee that a product will be free from defects.

Warranties come in two forms:

(1)   Voluntary warranties (otherwise known as express warranties). A voluntary warranty is a written promise by a manufacturer or retailer to fix specified problems with a product if the problems arise during a set period of time. The term of the warranty (i.e. the number of years that it lasts) is stipulated in the warranty.

Manufacturers and traders are not required by the law to provide a voluntary warranty, but if they offer one then they must honour it; and

(2)   Statutory warranties (otherwise known as implied warranties). These are statutory guarantees which are set out in legislation, but which become terms of the contract of sale.

What is the difference between voluntary warranties and statutory warranties?

A party who purchases a product will only be covered by a voluntary warranty if it is written into the contract of sale. The amount of protection provided is determined by the wording of the warranty.

All purchasers of products are covered by ‘statutory warranties’ (otherwise known as ‘implied warranties’).

The statutory warranties allow a purchaser to sue for breach of contract where:

• Goods are not of merchantable quality (which means fit for their ordinary purpose, taking into account the price of the goods and any description that is provided with the goods);
• Goods are not fit for a special purpose which has been made known to the seller;
• Goods do not match any description or sample given to the consumer whether in promotional material, over the phone, in person, on a website or on labelling or packaging; and
• In a contract to provide services, the services were not carried out with due skill and care. A person who provides services must also make sure that any materials provided as part of this service are fit for the purpose.

The effect of the statutory warranties is that if the goods break down or develop a fault within an unreasonable time, the purchaser can demand a refund or replacement/repair of the goods. In some circumstances, a purchaser may be able to sue for associated damages (e.g lost profits). Similarly, if a supplier has not provided a service with due skill and care or if the materials which have been supplied as part of the service are not fit for the purpose, then the consumer may also be entitled to claim compensation for expenses they have incurred as a result, such as lost profit.

The purchaser must be able to demonstrate that they did not cause the fault, and that they used the product as it was intended.

There is no time limit which specifies when the defect must arise. It all depends on how long a product of that sort should operate without defects (bearing in mind the price and ordinary purposes of the product). In some cases, the statutory warranty will be longer than the voluntary warranty. For example, the contractual warranty may be limited to one year, but a court may determine that a product of that type should operate without defects for two years.

The statutory warranties are set out in Victoria in the Goods Act 1958 and the Fair Trading Act.[1] The warranties in the Fair Trading Act 1999 (known as consumer protection warranties) are mandatory and cannot be excluded by a contract of sale.  These warranties only apply when:

• The goods or services are worth less than $40,000 or
• The goods or services are worth more than that, but the goods or services are of a kind ordinarily acquired for personal, domestic or household use.

In addition, the Fair Trading Act warranties only apply where the purchaser is the end user. In other words, they don’t apply where the purchaser is on-supplying the product to someone else in the course of business. This means that where a contractor purchases goods to supply to another business, the warranties in the Fair Trading Act won’t apply. The warranties in the Goods Act apply regardless of the value or ordinary use of the good,[2] and even where the purchaser is planning to supply the goods to another business. However, these warranties can be excluded by the contract of sale.

Purchasers are still entitled to their statutory rights no matter what terms and conditions might be contained in a voluntary warranty. The only exception to this is where the seller is entitled to exclude the statutory terms and has done so through clear language in the contract of sale. If the seller does this, the statutory warranties will not apply, and the purchaser’s remedies will be limited to any voluntary warranty.

It is quite common for manufacturers to exclude any warranties other than voluntary warranties. If the Fair Trading Act warranties do not apply and the Goods Act warranties have been excluded, the voluntary warranty is the only warranty that applies.

Who is the warranty given to?

Voluntary warranties are normally given to purchasers or end users. This means that the end user can enforce the rights in the warranty, even if they have never seen it, or it was handed to the installer.

Is it bullet proof?

It is important to remember that warranties only cover defects in the product supplied. However, the installer’s liability is not confined to the supply of defective goods. Legal liability can arise in a number of ways. These include:

(a) Pre-contractual representations

Parties frequently make representations and promises while they are negotiating a contract or tendering for a job. For example, an installer of a cabling system may represent that the system will perform in a certain way. These ‘pre-contractual representations’ can give rise to legal liability in two main ways. First, the promises may become terms of the contract, and the installer can be sued for breach of contract if the promised performance does not eventuate. Secondly, the installer could be sued for making a ‘false and misleading representation’ in the context of trade or commerce.[3] This applies where a person makes a statement of fact (e.g. this product has certain attributes) which is untrue, or a comment about the future (e.g. this product will behave in a certain way) which they did not have a reasonable basis for making. The manufacturer’s warranty will not provide a defence where the client sues due to representations made by an installer which did not have a proper foundation.

(b) Common law negligence

The law of negligence requires a party to pay compensation where they fail to meet the standard of care owed in the circumstances, and the party to whom the duty was owed suffered loss. A contractor who installs products for a client owes that client a duty of care to ensure that the installation is carried out with a minimum standard of competency.

(c) Occupational Health and Safety

Occupational Health and Safety (OHS) legislation in all states imposes duties on persons who perform work to ensure that other persons (such as employees or members of the public) are not endangered by the work they perform. A contractor who performs work on the site of another business can be prosecuted for a breach of OHS duties if the contractor creates risks or hazards on that site.

What does Court look like?

It is not always easy to predict the legal outcome of a dispute over the quality of an installed product. In most cases, a party who has had a defective product installed will bring an action against the party who installed it. This is because the ultimate purchaser has a contract with the installer, and that contract will contain the statutory warranties described above. The installer can be sued for breach of contract in respect of defective goods supplied by them, even though the manufacturer is really to blame. A person who provides or installs a product is responsible for the quality of that product, and can be sued for breach of statutory warranty if it is defective. While the end-user can sue the manufacturer directly, it is more common for them to sue the person they have a contract with.

If an end-user brings an action against an installer in respect of defective cable, the installer can ‘join’ the manufacturer of the cable to the court proceedings. If the cable is shown to be defective, then the manufacturer will be held liable on their voluntary warranty (or any statutory warranties that have not been excluded). However, this is often not straightforward. In many cases, the manufacturer will argue that the product has not been installed correctly, or that it has been used incorrectly by the end user.

In addition, if the installer made claims about the product which go beyond the promises made by the manufacturer, and the promises have been breached, the installer will be held liable for breach of contract, or for misleading and deceptive conduct. Therefore, it is important that installers do not make claims which go beyond the manufacturer’s warranties, and that all communication about the work to be done is recorded in writing to avoid a dispute over what was said.

The Warranty and beyond

The reality is that warranties are often limited in their scope. Common limits or conditions of voluntary warranties are:

• The product must have been installed by an installer trained by the manufacturer;
• The manufacturer will repair or replace the components but will not provide a refund;
• The warranty is not transferable and applies only to the original end user;
• The party claiming under the warranty must follow a specified procedure (e.g. the installer must attempt to diagnose and rectify the fault first);
• The manufacturer will not be liable for associated or consequential losses (eg. lost profits due to down time).

Limits such as these can drastically curtail the protection afforded by a warranty. If statutory warranties have been excluded (which is commonly the case), then the voluntary warranty may be the sole basis for having recourse against the manufacturer. It is important to remember, though, that the end-user may also have a case against the installer, and the installer’s right to call upon the manufacturer to take responsibility will be limited by the manufacturer’s warranty.

Your contract with the end user: the importance of limiting liability

To ensure that installers are protected, it is important that the contracts they enter into with clients are designed so that the installer’s liability for defective products is limited. It is not possible to limit liability for services where the consumer protection warranties apply (see above), but in other cases it is.  The contract of installation can include an ‘exemption clause’ which limits the liability of the installer in the manner specified. To be valid, an exemption clause must be written into the contract with the client, or otherwise brought to their attention.

It is also important to control your sales pitch – make sure that your representations and promises are defensible, and don’t promise what you can’t deliver. Ensure that your services are delivered in a way that is competent and not open to charges of negligence. A manufacturer’s warranty won’t help you defend a charge of negligence which is aimed at your own performance.

Conclusion

Manufacturer’s warranties are an important source of rights for both end users and installers who may otherwise be held liable for defective products. However, the potential legal liability of installers is not completely covered by manufacturer’s warranties. Installers need to think about protecting themselves by using other mechanisms, such as carefully worded contractual documentation, and prudent negotiating.

[2] The warranties in the Goods Act 1958 apply to goods, but not the provision of services.

[3] In breach of section 52 of the Trade Practices Act 1974

Employers, employees and unions must negotiate an enterprise agreement (EA) in good faith. In past articles, I have suggested that the US position – that any direct communications with your workers when there is a bargaining representative for the workers is unlawful – will not be followed in Australia.

Why?
1. Our legislation is different;
2. Our industrial landscape and history are different;
3. Our tribunal – Fair Work Australia (FWA) – has mature, experienced members who recognise industrial reality in Australia.

On May 5, 2010, the Full Bench of FWA agreed.

In CFMEU v Tahmoor Coal Pty Ltd [2010] FWAFB 3510, the CFMEU, as the bargaining representative of Tahmoor workers, argued it was bad faith for Tahmoor to:
1. speak directly and aggressively to workers about the history of the dispute with the CFMEU and put the company’s case to the workers;
2. write directly to workers at home; and
3. fail to notify the CFMEU of the company’s direct communications.

As a result, the CFMEU alleged that Tahmoor breached section 228(1)(e) of the Fair Work Act 2009 (Cth), which requires bargaining parties to refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining.

The CFMEU sought bargaining orders from FWA preventing Tahmoor’s actions, including an order that Tahmoor must not put up for vote an enterprise agreement directly with the workers.

The Full Bench rejected the CFMEU’s argument, stating:

“Indeed, there is no evidence that any of the material provided to employees was misleading or that employees were threatened in any relevant way. Nor is there any reason to believe that the employee representatives did not themselves have adequate access to the workforce in relation to the bargaining process.”

The CFMEU and Tahmoor had been in dispute for some time. They were at an impasse. Tahmoor’s communications to the workers arose out of a desire to break the impasse.

“In those circumstances the conclusion was open… that it was not capricious or unfair conduct for Tahmoor to seek to explain its negotiation position to the employees directly.”

The communications did not attempt to mislead or misrepresent what had occurred. The proposals put to the employees were the same as those put to the CFMEU.

The Full Bench also took into account the fact that bargaining meetings continued during and after the employee meetings and that Tahmoor made various efforts for the CFMEU to consider its proposals.

The decision highlights the following issues:
1. Employers can communicate directly to their workers even when the union is the workers’ bargaining representative;
2. The communications must be honest. The communications cannot misrepresent or mislead the workers.
3. The robust Australian IR environment means that both employers and unions can strongly advocate their position;
4. It is permissible to put an EA up for a vote with the workers if you are at an impasse with the bargaining representative.

In short – business as usual for employers.

Teletech had arranged meetings with Telstra about possible employment for its workers.  The employees began new jobs with Telstra and Teletech argued they had arranged employment for the employees and were not liable for severance payments.

Justice Marshall held that for Teletech to avoid the payment, the test was the employer must be ‘a strong moving force towards the creation of the available opportunity.’ His Honour found the redundancy provision required the employer to find the employee a position to avoid payment. Teletech did not do so, they merely put the employees in Telstra’s recruitment process.

The workers were subject to the same recruitment process as other applicants and were selected through their own efforts and merit.

What can be drawn from this case is the need for caution in drafting redundancy provisions in employment contracts and industrial instruments.  An appropriately drawn suitable alternative employment clause may have circumvented Justice Marshall’s decision.