Australia: Workplace Relations Update: Paid Parental Leave, Equal Opportunity and Termination of Seniors

Contents

• The Paid Parental Leave Scheme – coming soon to a workplace near you
• New Equal Opportunity Act for Victoria
• Termination of senior executives – a risky business for the unwary

The Paid Parental Leave Scheme – coming soon to a workplace near you

Legislation introducing Australia's first paid parental leave scheme (Scheme) was passed by Parliament on 17 June 2010 and received Royal Assent on 14 July 2010. The Paid Parental Leave Act 2010 (Cth) (Act) will enable eligible primary carers to receive up to 18 weeks of parental leave pay at the national minimum wage. The fully government funded Scheme commences on 1 January 2011.

As previously outlined here, primary carers who have or adopt a child on or from 1 January 2011 and who meet the work, income and residency tests, may be eligible to receive parental leave pay. Up to 18 weeks of parental leave pay may be taken before the child's first birthday or 12 months from the date of placement in the case of adoption. The parental leave pay can be received in one continuous period, although parents are able to nominate the period over which they wish to receive it.

From 1 January 2011, employers can opt to administer parental leave payments to eligible employees, however, from 1 July 2011 this will become mandatory. Employers' obligations have been phased in to ensure that new processes do not need to be implemented halfway through the financial year. Whilst the Scheme is fully funded by the government, it will be administered by employers through their own payroll systems.

The Family Assistance Office will receive claims for parental leave pay directly from employees and will assess whether a primary carer is an eligible recipient. If a primary carer is eligible, has completed at least 12 months of continuous service with their employer and is taking at least eight weeks of parental leave, their employer will be required to administer the payments. Other primary carers who are eligible will receive their parental leave pay directly from the Family Assistance Office.

If an employer is required to administer the payments, they will receive the parental leave payment from the Family Assistance Office, usually in advance. Employers can elect to receive payments fortnightly or in three six-weekly instalments. The payment is then made to employees in their usual pay cycle, subject to normal PAYG withholding arrangements.

The Scheme is designed to complement parents' entitlement to unpaid leave under the National Employment Standards. The government parental leave payments can be received before, after or at the same time as other paid employer provided leave, such as annual leave or maternity leave.

The Scheme however is not intended to replace existing entitlements and cannot be used to offset existing paid parental leave obligations. For example, entitlements to parental leave available through employer funded schemes in an industrial instrument cannot be withdrawn for the life of the agreement. Despite this, the Scheme does not prevent discretionary non-binding company policies from being varied.

Implications for employers

Employers will need to decide whether to commence voluntarily administering parental leave payments from 1 January 2011 or wait until this becomes mandatory on 1 July 2011 and ensure they have adequate payroll systems and processes in place to do so.

Employers should also review or prepare their own parental leave policies in light of the Act.

Meryl Remedios

New Equal Opportunity Act for Victoria

The new Equal Opportunity Act 2010 (VIC) (new Act) was enacted by the Victorian Parliament on 15 April 2010 and will operate from 1 August 2011.

The new Act will replace the current Equal Opportunity Act 1995 (VIC) (old Act) and is the Government's response to the recommendations of the former Public Advocate, Julian Gardner, following his commissioned review of the old Act in June 2008.

The new Act places a positive duty on organisations to eliminate discrimination as far as possible to assist address systemic discrimination. The duty on organisations will be to take reasonable and proportionate measures to eliminate discrimination, sexual harassment and victimisation as far as possible and to take a proactive role in their compliance obligations. It may involve organisations undertaking such things as:

• identifying potential areas of non-compliance
• developing strategies to meet and maintain compliance (such as providing training and implementing policies)
• reviewing and improving compliance.

The duty placed on organisations is in addition to the existing obligation not to engage in discrimination, sexual harassment or victimisation as far as possible. The requirement 'as far as possible', when combined with the assessment of whether measures are reasonable and proportionate, will ensure that compliance with the duty is appropriate and proportionate to the size and operations of the organisation.

The specific considerations that are relevant in assessing whether a measure is reasonable and proportionate are set out in the new Act and include:

• the size of the business or operation
• the nature and circumstances of the business or operation
• the resources available to the business
• the person's business and operational priorities
• the practicality and costs of the measures.

Discrimination generally

The attributes in respect of which a person can be discriminated reflect those in the old Act and include:

• age
• gender identity
• impairment
• lawful sexual activity
• race
• physical features
• religious belief or activity
• sex
• sexual orientation.

However, there are simpler definitions in the new Act as to what constitutes discrimination.

Direct discrimination will occur if a person treats, or proposes to treat, a person with an attribute unfavourably because of the attribute. Indirect discrimination will occur if a person imposes, or proposes to impose, a requirement, condition or practice that has, or is likely to have, the effect of disadvantaging persons with an attribute and that is not reasonable. These new definitions are designed to overcome the unnecessary technicalities in the old Act.

In relation to indirect discrimination, the person alleging discrimination will be required to show that the requirement, condition or practice causes, or is likely to cause, him or her disadvantage. The onus will then be on the organisation against whom the allegation is made to show that the requirement, condition or practice is reasonable in all the circumstances. In doing so, the organisation may rely on such factors as:

• the nature and extent of the disadvantage
• whether the disadvantage is proportionate to the result sought by imposing the requirement
• the cost of any alternative requirement
• the financial circumstances of the organisation
• whether reasonable adjustments or accommodation could be made to reduce the disadvantage caused.

Compliance

The focus of the new Act is clearly on compliance by placing the obligation on organisations to undertake a review of their policies and to ensure that staff are trained to implement and enforce the policies. A review of policies and practices should also be undertaken to ensure that systemic discrimination is eliminated.

Implications for employers

Employers in Victoria will need to ensure that they are familiar with the provisions of the new Act, and should take steps to review their policies, procedures and practices in light of the new statutory regime.

Steven Troeth

Termination of senior executives – a risky business for the unwary

Senior management and executive employees are generally excluded from unfair dismissal remedies under the Fair Work Act 2009 (Cth), however, increasingly a number of senior employees are turning to contractual remedies to recover damages for unfair or unlawful terminations. A recent example of this is the decision of the Supreme Court of Victoria in Carter v The Dennis Family Corporation (Carter).

In Carter, the Managing Director made a complaint against the Chairman and patriarch of the Dennis Family Corporation alleging that he had been bullied. In response to this claim, the Chairman, with support of the other family members who sat on the Board, devised a plan to summarily dismiss the Managing Director.

The Board issued a letter to the Managing Director alleging 28 instances of serious misconduct. On receipt of the Managing Director's response to the letter, the Board determined that the Managing Director failed to provide adequate responses and terminated the Managing Director's employment without notice.

The former Managing Director commenced proceedings in the Supreme Court of Victoria alleging that the Dennis Family Corporation had breached his contract of employment. The Court considered the process that the Dennis Family Corporation had followed in terminating the Managing Director's employment, and found that this process was a 'charade' designed to justify terminating the Managing Director's employment. The Court also found and that the 28 instances of alleged misconduct were either without substance or insufficient to establish serious misconduct.

Accordingly, the Court found that the Dennis Family Corporation had breached the Managing Director's contract of employment and awarded damages of approximately $920,000. In addition, the Court ordered that the Dennis Family Corporation pay the Managing Director's legal costs.

Implications for employers

Employers should:

• ensure that a senior manager or executive employee's contract of employment is properly drafted to provide the company with options to terminate with and without cause
• ensure that senior managers and executive employees are treated fairly and in accordance with their contractual rights
• consider negotiating a commercial 'exit strategy' if things could get ugly (but don't forget about the Corporations Act limits on executive termination payments)
• take advice about whether or not serious misconduct can be demonstrated before terminating the employment of a senior manager or executive employee.

John-Anthony Hodgens and Alanna Fitzpatrick

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.