Sham contracting

High Court fines Quest Hotel for sham contracting contravention.

2015 saw sham contracting under the microscope in the High Court decision of Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45. The court found in favour of the Fair Work Ombudsman and held that Quest South Perth Holdings Pty Ltd had contravened the Fair Work Act after falsely representing to two of its employees that they were being converted to independent contractors and would be engaged by a contracting third party.

In short, this decision is authority for the position that an employer cannot engage a third party contractor (who in turn purports to engage employees as independent contractors) in order to shield itself from the obligations owed to employees under the Fair Work Act.

So what does this mean for businesses thinking of outsourcing or using contracted services?

When making decisions on contracting or outsourcing you need to be aware of the legal implications of the arrangement. Having contracts that say a worker is an independent contractor does not mean that they are an independent contractor at law.

The test for establishing whether a worker is an employee or a contractor is complex and will depend on a broad range of factors that will be given varying weight depending on the unique circumstances. Navigating the legal test is tricky so, if after careful examination of the the truth of the relationship with the worker whom you are engaging, you are still unsure about whether they are an employee or a contractor, seek some guidance from a professional. Getting it right upfront can save costly mistakes.

The best advice we can give you is to get advice.

Contractor checklist

Do you engage contractors?
Have you considered if the “contractors” are actually employees at law?
Do you have written contractor agreements?
How long is it since you reviewed these arrangements?

Social media

Social media is replacing traditional methods of communication. But what are the upsides and risks for your business.

Social media and the workplace remains a hot topic, particularly after the widely reported Facebook ‘unfriending’ case in September last year. In that case, an employee made a successful application to the Fair Work Commission for stop bullying orders citing an example of unreasonable behaviour where a co-worker (the bully) 'unfriended' her on Facebook.

The Commission did not make its decision based solely on this one ‘unfriending’ incident, but it was a contributing factor in the Commission’s approval of the stop-bullying orders and its finding that workplace bullying had taken place.

Social media is becoming more and more entrenched in our workplaces and it’s not just bullying that employers need to be aware of. Social media can be a huge time-waster at work and employers should not under estimate impact on business and reputation if disgruntled employees vent their spleen on social media, identify themselves as employees and abuse others on social media, or interact with clients or potential clients on social media without the consent of their employer.

On the other hand, social media can be a great communication tool for business. Using social media in a communications strategy can be an effective way to get your message out and your employees can bring new business through their own use of social media.

So how do you strike a balance? It is essential for employers to have a solid social media policy that covers use, expectations and responsibilities. However, writing a policy is not enough - training and monitoring are just as important. Employees should understand their obligations and responsibilities in relation to all policies, and adherence to policies should be an entrenched part of workplace culture (you might also consider making adherence and enforcement a KPI for managers).

Development, implementation, training and enforcement of workplace policies is the best way to protect your business and maintain a fair and happy workplace.

Social media checklist

Do you have a current social media policy?
When did you last train staff on the policy?

Performance reviews

How great managers will use informal performance reviews to drive staff performance and business success.

2015 saw the decline of formal performance reviews for a number of large companies like Deloitte, GE and Accenture.

The rationale behind the trend is multifaceted - companies and their employees have described formal performance review as too time consuming, ineffective, unfair and stressful, and a lot of effort for little result.

Are you thinking of ditching formal performance review in your business? If so, here are some things to think about:

Performance still needs to be measured, just differently. Measuring performance helps employers understand their business, helps to highlight inefficiencies and is important for identifying employees who are suitable for promotion or those who may need their performance managed.

Removing formal performance review will mean continuous, timely feedback, contemporaneous with the task, project or assignment. It is likely this will be less informal, maybe over a coffee, take less time but be more frequent and get more to the point. It will identify strengths and accomplishments. It will be specific and motivational. Any negative feedback will be evidence based such as providing recent specific examples and explain how performance fell short of expectations. Tips and encouragement for improvement will follow.

Changing your performance review model may mean changing a number of other things within your business, like the structure of bonuses and how eligibility is assessed. It may have ramifications for the way performance issues are documented, specifically in circumstances where underperformers are disciplined. Before making any changes, have a clear plan for how these will be managed under a new system.

There are also some legal risks for you to consider in the way performance reviews are conducted. Employers will need to ensure that any review is objective, conducted in accordance with any existing policies and that any review and/or management of employees is consistent across the board. Without taking these measures, performance review may open the employer to claims of unfair dismissal, adverse action or discrimination.

For example, the risk of unfair dismissal may arise where an employee is terminated for legitimate performance issues, but they were not aware of any performance issue because it was not brought to their attention. Unfair dismissal may also arise if the review is so persistent and overly critical that the employee resigns because they feel they have no other choice, resulting in a constructive dismissal claim.

A claim of adverse action may also be a risk where a poor review or disciplinary action is taken after an employee exercises a workplace right. For example, an employer might wish to discuss with an employee the pattern of their sick leave. The entitlement to sick leave is a workplace right and action cannot be taken against an employee for legitimately accessing that entitlement. If a poor review follows, the employee may link this to the sick leave discussion.

Furthermore, if employees are treated differently to each other under informal performance reviews, it could open the business up to allegations of adverse action and discrimination, so consistency across the board is crucial.

Making any change to your performance review strategy will require planning, training and good communication with employees.

Flexible work practices

Providing flexible work options can lift your business bottom line and help retain the best employees.

Flexible work is becoming the norm, and businesses are embracing the changes that technology has brought to our traditional concept of the ‘workplace.’ As the trend for flexible work continues to gain momentum, it’s vital that employers turn their minds to the practicalities of flexible work and how to get the most out of it.

Under the current legislative regime, legal rights to request flexible working arrangements are limited to particular circumstances such as when the employee is a parent of a child under school age, a carer or aged over 55.

However, employers are free to agree upon flexible work arrangements with any employee, not just those with rights to request flexible work under the legislation. As a result, we have noticed that working from home is becoming a regular feature of many businesses.

Developments in portable technology and improvements in home-based internet connection have made working from home a breeze but it’s not always a perfect solution. Employers should be aware of their obligations to employees and the potential risks that arise when employees work from home.

Here are some things to think about:

Workplace health and safety – if an employee is working from home, they are still at work. Therefore, an employer’s WHS obligations extend to the home working environment. Is it free from hazards that could result in the employee getting injured? Working from home a lot can also be isolating for employees so, what are the psychological and social impacts of an employee working from home on a regular basis?
Security – employers usually treat the security of their property and data in the workplace seriously and provide their employees with secure internet access to complete their work. Control over security measures becomes more difficult when employees work from home and employers need to consider what type of work the employee will take home with them. Will they be taking documents, their computer, other devices? Is the internet connection they use at home secure? Will documents containing confidential information be secure at their home?
Productivity – employees may be equally or more productive when they work from home, but there can be distractions at home that they might not have in the office. We recommend that employers have a communication strategy for when employees work from home so that everyone can stay on track. Consider implementing a trial period to see if working from home suits and monitor productivity during this trial to get an idea of how productive an employee is when they work from home.
Legal obligations – do you know your legal obligations in responding to requests for flexible work? Do you have a flexible workplace policy? Is someone trained in managing any requests?

We suggest that employers develop a flexible work policy and working from home policy. To assess safety at home, a working from home checklist that an employee can complete to indicate if they have a safe working environment, is a good idea.

Our experienced team at T H E W O R K P L A C E can assist you with these and any other employment issues that impact on your business. Please contact us if you are in need of any assistance. We hope you are as excited as we are about 2016 and we wish you every success for the year ahead.

T H E W O R K P L A C E