Chapter 4

Human resource
management and the law
 Learning objectives

4.1 Understand the importance of the law as it relates to

HRM and distinguish between an employee and an
independent contractor
4.2 Identify the sources of legal obligations in employment
law, understand the importance of the contract of
employment and its essential terms, and recognise the
amendments to the federal legislation by the Fair Work
Act 2009 (Cwlth) (Fair Work Act)
4.3 Identify the legal requirements at various stages of
employee recruitment and selection
 Learning objectives

4.4 Understand the legal issues for HR professionals

during employment
4.5 Discuss the procedures for terminating employees
and understand an employee’s rights of review upon
dismissal
 4.1 HRM and the law

• HR managers need to be aware of legal issues that

govern the employee/employer relationship.
– Labour law, which incorporates:
• law of employment (the individual contract
that all employees have with their employer)
• industrial law (regulates the manner in which
employees collectively relate with employers or
groups of employers)
• This slide set provides an overview only of new
legislation and some important legal issues.
 Employee or contractor

• A person is likely to be considered a contractor if the

service provider:
– is not an employee of the principal
– is providing skilled labour which may require
special qualifications
– has control over the manner in which work is
performed
– provides their own tools and equipment
– is not presented to the public as an emanation of
the principal.
 4.2 Sources of legal obligations

• Employment contract:
– A written document signed by both parties, or
– A wholly or partly oral agreement.
• HR managers must ensure that all relevant
terminology is included in the contract itself for
clarity.
• Types of contracts:
– Indefinite duration or fixed term
• A written contract provides important advantages to
both parties.
Essential terms of employment contracts
 Workplace policy

• Workplace policy
– A document of general application, prepared by
the employer, and designed to govern (either with
or without contractual force) any and all aspects
of the conduct, rights and obligations of the
parties to a contract of employment.
• A workplace policy can regulate virtually all aspects
of employment, including recruitment, termination,
disciplinary procedures, confidentiality and more.
 Considerations

• Restraint of trade
– Limits an employee’s ability to engage in similar
employment for a specified period.
• Confidentiality agreements
– During and after the course of employment.
• Whistleblowers
– Legislation provides protection for individuals who
seek to properly disclose dishonest, corrupt or
unethical dealings, for the public interest.
 Considerations

• Workplace intellectual property

– An invention created during the course of
employment will usually belong to the employer,
not the employee.
• Moral rights
– However, the employee may still have rights with
respect to the inventions created during the
course of employment.
 Statutes

• In the context of employment, statues legislate the

minimum conditions of employment and behavioural
obligations that must apply in any employer–
employee relationship or workplace.
• The Fair Work Act aims for a unified system of
industrial law across Australia.
• All employees from national system employers are
bound by the Fair Work Act.
 Statutes

• The ultimate ambition of the Fair Work Act is that the

states will voluntarily transfer workplace relations
powers to Canberra. However, many non-industrial
state and territory laws still apply, for instance:
– Equal employment opportunity
– Superannuation
– Workers compensation
– Occupational health and safety.
 The National Employment Standards
(NES)
• Minimum standards apply to all national system
employees:
– Maximum weekly hours
– A right to request flexible working arrangements
– Unpaid parental leave, annual leave,
personal/carer’s leave, community service leave,
long service leave
– Public holidays
– Notice of termination and redundancy pay
– Fair Work Information Statement
 Statutory agreements

• The Fair Work Act radically remodelled the statutory

agreement. The capacity to enter into an Australian
Workplace Agreement (AWA) is gone.
• The agreement-making regime emphasises:
– Collective bargaining leading to collective
agreements
– The entitlement to appoint a bargaining
representative
• Enterprise agreements take effect when approved by
Fair Work Australia (replaces the AIRC).
• The ‘better off overall’ test applies.
 Modern awards

Award: A piece of delegated legislation determined by

an industrial tribunal.
• Previously, awards were the primary source of
employment obligations for most Australian
employees and employers.
• Awards, if in place, will now be modernised and
ultimately reduced from thousands to less than 122
operating by industry, trade or occupation.
• Still necessary for HR managers to understand
awards.
 Common law

• Common law
– Case law developed in the court system as
opposed to statute law. Includes laws and
principles that have been established by courts
over the years.
• It may be codified into a statute or overruled by a
statute passed by the government.
• General duties prescribed:
– Employer’s duties
– Employees’ duties
What could these general duties include?
 4.3 Employee recruitment and selection

• A myriad of laws govern arrangements for selecting

and engaging employees.
• The following areas require particular consideration
in the pre-employment phase:
– the job advertisement
– the job description
– the application form
– the interview
 Unfair discrimination

• Discrimination
– Any practice that makes distinctions between
different groups based on characteristics such as
sex, race, age, religion and so on, which results in
particular individuals or groups being advantaged
and others disadvantaged in an unreasonable or
unjust manner
• Pervades all stages of the pre-employment process.
Direct versus indirect discrimination
 The job advertisement and legal
requirements
• It is essential that the advertisement does not
indicate, or could not reasonably be understood to
indicate, an intention to act in a manner which is
discriminatory:
– ‘Cleaning lady wanted’, ‘waiter’, ‘cameraman’
• The job description must include:
– Job title, qualifications, experience required, level
of responsibility held, details of the person the
occupant reports to.
 Issues to consider

• Application forms
• Freedom of (and from) association
• Age
• Sex
• Physical and mental capacity
• Criminal convictions
• References and previous employment
• Testing employees
• The interview
 4.4 Legal issues for HR professionals
during employment
• Occupational health and safety requirements
• Discriminatory treatment of employees
• Workplace bullying
• Statutory benefits:
– Payment of wages
– Provision of leave
• Termination
 4.5 Terminating employees

• Summary dismissal
– Effectively dismissal without notice
• Notice of termination or payment in lieu of notice
(refer to next slide)
• Redundancy
– Often based on commercial or economic decisions
• Constructive dismissal
– When an employer acts contrary to terms and
conditions of employment
NES period of notice required
 Procedures for dismissal

• The Fair Work Act requires:

– A valid reason for dismissal, to demonstrate
substantive fairness
– All actions be taken to prevent a dismissal which is
‘harsh, unfair or unreasonable’
– The employer’s basic right to ‘hire and fire’ must
be maintained.
NES scale of redundancy payments
 Termination – employee entitlements

Employees must:
• Be furnished with reasons for the impending
dismissal (ref. Section 387a of Fair Work Act).
• Have a fair hearing so that the employee is afforded
a right to response to those reasons
• Have an unbiased decision-making process that takes
the employee’s response into account before any
final decision is made.
 The rights of the employee

• The Fair Work Act allows an employee to challenge

their dismissal in an industrial tribunal, with some
exceptions.
• Eligible employees can seek redress from Fair Work
Australia, including reinstatement or compensation.
• There is an important distinction between unfair
termination and wrongful dismissal.
Wrongful dismissal and unfair dismissal
 Summary

• The relationship between the employer and the

employee is governed by law:
– Employment contracts, legislation, statutory
agreements, awards and the common law.
• HR managers need to be aware of requirements to
minimise an organisation’s exposure to dispute and
litigation.
• Having a balanced approach and seeking expert legal
advice as necessary is the key.