The best time to negotiate a good contract of employment is before you start the job. Of course, sometimes contracts are provided on a “take it or leave it” basis, or the response to proposed changes is “HR won’t let us do that”. If this occurs, you should consider whether it is really a business you want to work for. You should also keep in mind that whilst employment contracts are subject to overriding provisions of the National Employment Standards, applicable industrial awards and enterprise agreements, employment contracts are binding legal documents with legal force. Be wary of that friendly BBQ comment “Oh, the courts will never enforce that” because it is often wrong.
So let’s say you are an existing employee and your employer has given you a new contract. Do you have to sign it? No you don’t. Contracts are bilateral agreements with, at least in theory, the parties having equal bargaining power. The first thing you should do is ask your employer to explain why you have been given a new contract and what the changes are. Then check yourself. You should not accept the say so of HR. Ask for the changes to be provided in “track change” format for ease of reference. The employer may say the changes reflect changes in the National Employment Standards. For instance, the forthcoming NES right to disconnect. Don’t just take their word for it. And don’t take their word that “oh, its just paperwork”. Talk is cheap. The way in which employment contracts interact with industrial awards and enterprise agreements is becoming increasingly complex and there may be good reason for the changes but don’t just assume that is the case.
Common changes that need to be considered include:
a. A different employing entity – has there been a restructure involving a transfer of employment by stealth;
b. Is the nature of the engagement changing from employment to contracting;
c. Is permanent employment changing to a fixed term or outer limit basis;
d. Is the employment changing from full time to part time or casual;
e. Is there a shift from pay based on hours of work to a salary incorporating all award entitlements and “reasonable additional hours” of work;
f. Is there a reduction in base salary and increase in commission based remuneration;
g. Are other benefits such as leave entitlements, RDOs (rostered days off) or TOIL (time off in lieu of overtime) being reduced or replaced;
h. Is the employer implementing workplace surveillance provisions;
i. Is the employer trying to introduce a unilateral contractual right to require employees to attend “independent” medical examinations;
j. Is the nature of the job being changed or is the employer changing the contract to give them the contractual ability to shift you to another job;
k. Are there changes to bonus and incentive schemes, for instance to make them discretionary;
l. Importantly, are changes being made to post employment restraints to make them more restrictive;
m. Is there a reduction or increase in notice on termination of employment or redundancy entitlements.
What happens if you tell an employer that you are not accepting the changes? The first thing is to ensure that your refusal is based on reasonable grounds and an understanding of the changes actually being proposed. Hopefully the employer will be in a position to negotiate with you to reach agreement. Some employers will say that they are not open to negotiation and the changes will occur whether you like it or not. You can accept this and get used to it, or you can confirm in writing to the employer that you do not accept the changes. You should always obtain advice before refusing to carry out employer instructions. Once you accept changes, it is very difficult to change your mind.
You may have the choice of resigning to find other work (which may amount to constructive dismissal depending on the circumstances), raising a dispute in the Fair Work Commission if that avenue is open to you, taking civil proceedings for your loss whilst remaining in employment or taking other action based on evidence of the employer’s unlawful motive in making the changes. In extreme circumstances, you may be able to bring an unfair dismissal claim whilst remaining in employment. It is also possible that the employer may move to make your job redundant or terminate your employment for failure to follow a lawful and reasonable direction – this may be unfair, see Sheldrick v Hazeldene’s Chicken Farm Pty Ltd [ 2014] FWC 5820. It is also important to consider the “bigger picture”. It may be that detrimental changes are acceptable if a higher salary is being paid and it is still a good job. The grass is not always greener.
The lesson for employers is not to expect there will be no resistance to contract changes. Employees are becoming ever more aware of their workplace rights and explanation and consultation in relation to contractual changes is always worthwhile.
Please contact us if you would like any further information or help. Rob Stevenson will be away overseas on leave from Friday 16 August to Wednesday 11 September and the office of Australian Workplace Lawyers will be closed over this period. Please phone or email for details of referral arrangements over this period.