April was a record month for our Consulting area, a popular area is around the Employee Relations and Industrial Relations legislation. We are lucky to have our own legal experts as part of our service offering.

The team at Optimum Legal have compiled the top 5 ER/IR myths:

  1. It is against the law to give a bad reference

It is popular belief that giving a “bad” reference is against the law. However, there is no general obligation at law to give an employee any sort of reference – good or bad.

Where the law might intervene would possibly be if an employer provided a deliberately dishonest or misleading reference which caused some harm to the employee.

To avoid such potential pitfalls many employers adopt the position of just providing a statement of service confirming an employee’s length of service and position, but not commenting further.

  1. I need to give three warnings before I can dismiss them

“Three strikes and you’re out” may have some application to the laws of baseball, but does not generally apply in the field of employment law.

Employees will be protected from unfair dismissal, under the Fair Work Act 2009, if the dismissal was:

  • harsh, unjust or unreasonable; and
  • the dismissal was not consistent with the Small Business Fair Dismissal Code (for an employer with 15 or less employees; and
  • the dismissal was not a case of genuine redundancy.

There is nothing in the FW Act that deals with how many warnings an employee must be given. In cases of serious or gross misconduct, it may be permissible to dismiss an employee without any warning at all.

It may also be the case that an employment contract, workplace policy or enterprise agreement prescribes that a certain number of warnings must be given before an employee that can be dismissed. It is therefore very important to check all such documents before taking any decision to terminate an employees’ employment on the grounds of performance or misconduct.

  1. Extension of an employees’ probationary period

Situations often arise where the employer is still unsure at the end of the probationary period whether to offer the employee ongoing work. In such situations, many employers will simply extend the probationary period for another few months to see if the employee is able to lift their game. So long as the employee is aware that their probationary period is being extended, there’s no risk of a claim if they’re let go before the end of probation, right?

It may come as a surprise that probationary periods are not concepts recognised by the unfair dismissal provisions in the FW Act. Once an employee has completed 6 months service (or 12 months service in the case of a “small business employer”) then they will have an ability to bring a claim for unfair dismissal – regardless of whether they are still within a probationary period or not.

It is usually advisable that probationary periods are not extended beyond the 6 (or 12) month period. In addition, care should be taken to ensure that any “end of probationary meetings” are scheduled well in advance of the 6 (or 12) month cut off, so as to avoid the possibility of the employee accidentally tipping-over into unfair dismissal territory.

So long as one or more of the following applies:

(a) they are covered by a modern award

(b) an enterprise agreement applies to their employment

(c) they earn less than the high income threshold.

  1. Oral contracts are not legally binding

There is no general requirement for employees to be given a written contract. That is not to say it is not strongly advisable to have one in place.

It is important to note that oral contracts – such as a verbal agreement as to how much an employee will be paid, or their duties whilst at work – can be binding at law. Issues frequently arise where an employee is consistently given a benefit over a period of time and then the employer wishes to remove or alter the terms of the benefit at a later date (for example, to a bonus or to a company car). Without a written contract specifying the terms under which the employer is entitled to do so, the potential for a dispute will always be there.

It should also be noted that generally Awards, Enterprise Agreements or other employment contracts require employers to put in writing, particular details about the terms under which employees are engaged, for example, what their Award classification is and in the case of part time employees, the hours they are to be engaged for.

To avoid doubt, this should be recorded in writing and agreed between the employer and the relevant employee.

  1. Courts don’t enforce a restraint of trade

It is a common misconception that courts don’t enforce “restraints of trade” (those clauses in employment contracts preventing former employees from competing with their previous workplace, soliciting their clients and/or poaching staff).

In truth, courts will and frequently do, prevent former employees from acting in breach of their contractual restraints. That is not to say that employers have “carte blanche” in this area: a court will not enforce a restraint if it considers that there is not a legitimate business interest to protect.

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