Bosses beware. Employee entitlements are not always those written on paper, as a recent case exemplifies. By PETER VITALE.
By Peter Vitale
If you want to change employees working hours or days, watch out. Many employers wanting to change aspects of their operations, such as working hours, are tripped up by long-standing practices than may override any written agreement or award.
Awards and industrial agreements often provide a mechanism for employers to have some flexibility and discretion in directing employees to work a varying pattern of hours. But a recent case of the NSW Industrial Relations Commission highlights that employers need to consider not just the terms of the award or agreement, but also the terms of the employees’ contracts of employment.
In Public Service Association v Zoological Parks Board NSW, the employees at the Tooronga Park Zoo had generally worked a pattern of eight-hour days, with the award-specified 38-hour week being implemented through a paid “flexi-day” off each four weeks.
The zoo gave notice that it intended to change employees’ hours to a pattern of longer and shorter days during a two week cycle, with no flexi-days.
The employees would still be required to work an average of no more than 38 hours per week, but they objected to the removal of the flexi day.
Even though the award applicable to their employment contained a clause, commonly appearing in awards, which allowed the employer to change a pattern of working hours on seven days notice, the NSW Industrial Relations Commission said that changes could not be made without the consent of employees.
It decided that the flexi-day roster system had been such a long standing “custom and practice” of the zoo, that it had become implied as a term of the employees’ contracts of employment.
The NSWIRC decided that the pattern of hours which employees at Tooronga Park Zoo had been working for more than 15 years had become part of the employees’ contracts of employment.
“Custom and practice” is often relied on as a basis for employees or employers asserting a right or an obligation.
The High Court of Australia has previously said that the circumstances in which “custom and practice” becomes binding contract are difficult to establish. The truth is that, at common law, these circumstances will very rarely arise.
Industrial tribunals will often act according to the merits of the case and not necessarily take a strict legal view.
The Tooronga Zoo case illustrates as much, but it does provide a useful warning for employers to make sure they understand what the terms and conditions of their contracts as well as applicable awards and industrial agreements are before trying to introduce a change.
Similar examples of employers effectively contracting away flexibilities available under an award or an agreement, include:
Over award payments – often the employer makes payments of wages and other entitlements based on a particular interpretation of the award or agreement, for example an “all in” payment which includes allowances.
A dispute may arise about the interpretation of the award or agreement and a court or tribunal may decide that the employer should properly be paying the allowances separately.
The employer is then in a dilemma as it has been paying a higher amount as ordinary weekly wages, which will be part of the employees’ contracts of employment.
The court or tribunal decision means it must pay additional allowances. Because the employer is bound by its contract it cannot reduce the employees’ ordinary wages to rectify the incorrect interpretation of the award or agreement.
Part time employees’ days
Part time employees are often employed on the basis of specified days of the week – an employer may not be able to alter the days on which a part time employee works, because the specific days are a binding term of the employment contract.
The lesson for employers
The case illustrates the need to consider all terms and conditions of employment including awards, industrial agreements and contracts of employment before trying to implement unilateral changes to the way employees work.
It also flags to employers the age old warning to ensure that terms and conditions of employment are up to date and properly documented in a letter of appointment or other form of written agreement.
Finally, employers need to be wary about practices in the workplace which are not strictly to the letter of agreements or awards: you may find yourself bound to a long standing practice, even if it’s no longer suitable or appropriate.
Peter Vitale is the principal of CCI Victoria Legal .
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.