Employment class action lawsuits are a common cause of action in North America, and while we have traditionally seen fewer in Australia, there has been a recent uptick in occurrences. What does this mean for Australian employers? Without large numbers of cases and their precedents to study, how you plan for and prevent class actions may be an ‘unknown’ for many employers. Given the unique bet-the-company issues for employers arising from class actions – we have outlined some risks and strategies.

The Australian context

Whilst uncommon in Australia, there are high-profile examples of employment class action lawsuits.

Indeed, proceedings brought during the 1998 Waterfront Dispute were brought on behalf of approximately 1,400 employees under the Federal Court of Australia’s class action regime. Another example dating back to the days of Australian Workplace Agreements involved proceedings brought on behalf of over 700 academic and general employees of a university.

More recently, two employment class actions have been commenced targeting companies who provide marketing services for large and well-known brands, alleging contravention of minimum labour standards.

Why is the class action landscape changing now?

There are many reasons for the uptick in claims, and those relevant to employment include:

  • diminishing union membership across the private sector, but an increase in individual rights and prominence of plaintiff law firms organising class actions
  • an increased public awareness of minimum labour standards and broadly applicable laws, such as the general protections provisions, brought into focus as a result of a number of well documented scandals
  • an increase in the activity of litigation funders willing to venture outside their traditional stomping ground of commercial litigation.

We also predict that there will be many more such actions in the future, particularly given the ramped up penalties for franchisors and holdings companies found to have been complicit in the underpayment of employees or failure to keep proper employment records by their franchisees and subsidiaries.

Learnings from the US

At Seyfarth, our team of workplace law experts analyse and breakdown the mosaic of US class actions each year compiling a report that highlights the trends. In 2017 they recognised:

  1. Settlements skyrocket
    The monetary value of settlements rose dramatically, with the top 10 settlements in employment-related categories totalling a record high of US $2.72 billion — nearly US $1 billion more than 2016. In Australia, settlements are already causing an increase in insurance premiums for directors.
  2. A favourable landscape
    Evolving case law precedents and new defence approaches resulted in better statistical outcomes for employers in opposing class certification requests for the second straight year. In one of the most active categories, wage & hour litigation, employers won 63% of decertification rulings, a success rate up almost 20% from 2016.
  3. More enforcement
    With the federal government in transition, 2017 results were heavily influenced by Obama administration holdover policies and personnel as government enforcement litigation increased. This balloon is expected to burst in 2018 as the Trump administration settles in further, pulling back these policies and positions; yet, at the same time, it is expected that the private plaintiffs’ class action bar will step up their lawsuit filings and “fill the void”.
  4. Pivotal rulings
    Several key decisions in 2017 of the Supreme Court were arguably more pro-business and pro-employer than in the past. In May 2018 the Supreme Court profoundly changed the class action playing field with its highly anticipated ruling on the Epic Systems, Murphy Oil, and Ernst & Young trilogy of cases which found workplace arbitration agreements with class action waivers were lawful and enforceable.

To access the full report, and additional commentary visit www.workplaceclassactionreport.com.


For a discussion on the ‘best of breed’ strategies in class action and litigation globally – contact one of our partners.

Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

More than ever Boards and senior executive teams are held accountable for workplace liability. This combined with the impact of social media, and its capacity to spread tales of woe, makes ‘the workplace’ a key feature of boardroom attention today.

Download the overview of our top 7 for directors and the workplace:

  1. Workplace health and safety: protecting people at work
  2. Culture: the the organisational imperative
  3. Pay: incentivising right
  4. Brand damaging claims: architecture to prevent and manage
  5. Workplace optimisation: balancing strategy with risk
  6. Governance: oversight of executive conduct and supply chains
  7. Diversity: an organisation enhancing asset.

Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

The ways we work, the structure of our businesses and the economy continue to be transformed by emerging technologies and cultural shifts. Seyfarth Shaw’s annual survey of business leaders seeks to understand how they are coping with, and adapting to, the rapidly changing landscape.

From talent readiness to cybersecurity, the 2018 Future Enterprise Survey Results give a flavour for the top-of-mind issues facing our clients. Take a look at the Survey Results here and consider whether they resonate with you and the way your business is responding to current opportunities and challenges.

Our experience is that clients who accept the changing world and take calculated risks through opportunity driven leadership are gaining a competitive advantage – we recently discussed this in our blog Why “Future Proofing” Is A Myth.


Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

At a recent industry conference, a keynote speaker talked about great outcomes a number of our clients achieved in a critical enterprise bargaining round.

One observation was the importance of “patience“ – with which we would wholeheartedly agree.

So it got us thinking about ingredients for success.

Here are some key ones, borrowed from our bespoke workshop process dedicated to this end.

  1. Clarity of need: articulated and connected to the business needs
  2. Gain v Pain: clarity of what’s needed and the pain points along the way
  3. Leadership: the bedrock of any project
  4. Strategy: integrated – articulated – understood
  5. Planning: which falls out of the strategy and in respect of which one can never do enough
  6. Alignment: cemented by sound governance
  7. Resilience: which comes back to leadership

Each can be strengthened for any employer embarking on a bargaining campaign by the taking of tangible steps. You might not be perfect on each but it’s possible to ‘move the dial’.


Would you like to hear more about our workshop process for enterprise bargaining? Contact Chris Gardner.

Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

For years, the emergence of truly global supply chains and the rise of large, increasingly skilled workforces has wrought havoc on labour supply in Western developed countries. It seems that these days nearly every industry, profession or occupation is facing an existential threat due to automation, artificial intelligence or other advances in technology (indeed, lawyers are said to be the next to go!). This is seen as the next frontier.

In this environment, there is a soothsaying comfort in taking measures that might “future proof” your organisation from the potentially terrifying effects of change and disruption.

But is that really possible? More to the point, is this thinking even helpful?

We work with many of the most successful global organisations. We are always curious to learn why some organisations are successful in the long term, on a massive scale, whilst others fall by the wayside or are diminished over time.

One feature stands out. The most successful organisations do not pretend that there is one initiative – that can be implemented now – to forever insulate them from the effects of change. Rather, their leadership (and these organisations have great leaders at all levels) cultivate a mindset of constant, very often brave, change.

They disrupt themselves before any competitor will have the chance. They make bets on the future and are open to doing things differently, seeing failure as an inevitable part of the learning process. These organisations know that in a truly dynamic and global business environment, there is huge risk in just repeating what has worked in the past. These organisations do not fall into the trap of trying to “future proof” their organisation. They intuitively understand there is no such thing, and that bold leadership, and a learning and calculated risk-taking orientation are a better bulwark against disruption than any future proofing initiative will ever be. These organisations know that an opportunity-driven approach is the only way, and that a risk-driven business model “don’t change anything, don’t break anything” is the riskiest business model of all.

In the last six months we at Seyfarth have seen so many great examples of these types of organisations. Here are a few:

  • An Australian big 4 retail bank with extensive overseas operations, introducing new ways of working that are breaking down silos and making collaboration within the bank much easier
  • A global e-commerce and data services client establishing its operations in Australia, in what is sure to be its latest successful international expansion
  • A global manufacturer and seller of solar panels, investing in Australia given the enthusiasm of various State and Territory Governments to promote renewable energy, whilst somewhat dismayed and discouraged by President Donald Trump’s introduction of tariffs on their products imported into the United States
  • An Australian based manufacturer of a unique biodegradable resin moving its manufacturing from China to Europe in order to take advantage of the friendly production environment in some European countries combined with the progressive and environmentally conscious nature of European consumers of its products.

These organisations are strong examples of opportunity driven leadership – willing to make bold decisions to position themselves well, always thinking in global terms, and always willing to incorporate new and better ways of working. That may mean incorporating or even inventing new technologies, or simply making constant incremental operational improvements. They don’t try to future proof, because they accept that tomorrow will bring more change – some of it unforeseen and perhaps unwelcome.

The cycle of change and transformation is constant. The tension between stability and change, between order and chaos, is ever present: but it is accepted and managed, not denied. These organisations accept the uncertainty that must be managed in today’s world. In fact, they embrace it, knowing that this attitude is itself a competitive advantage.

Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

Automation is a game changer that is altering the industrial landscape. A Committee for Economic Development of Australia publication estimates that over the next 10 to 20 years, 40% of jobs in Australia have a high probability of being susceptible to computerisation and automation.

Smart businesses will approach the automation process from the front end and engage with their workforce in a manner that ensures the business is able to harness all of the productivity benefits from automation, without suffering the industrial dissention and dislocation which so often coincides with dramatic workplace change.

Planning and practical implementation is critical

McKinsey recently published “A CEO action plan for workplace automation”, highlighting the benefits of business harnessing automation processes within their workforces. However, it cautions the need for an appropriate plan of action.

From an industrial relations standpoint, preparing for automation sooner rather than later can provide a business with payoffs down the track.

Where the opportunity presents itself for a business to enter into a carefully tailored enterprise (or greenfields) agreement prior to implementing automation measures, such an opportunity should be seriously considered. If timed properly, this will minimise the impact on the business from workplace change, and maximise workplace flexibility to allow the business to easily transition, saving time, cost and mitigating the risk of workplace disputes arising.

Left to the last minute, an enterprise may face pitfalls in implementing technological change. For instance, should a round of enterprise bargaining be imminent, employees and their representatives will push for greater job security during bargaining through superior redundancy and retention type arrangements. These could slow change, and add cost and complexity. Late engagement and consultation may also create resentment and cause further disputes and delays.

Where workforce engagement occurs early, these issues may not be so prevalent, and a business can ensure that it has the appropriate flexibility mechanisms in place to easily transition. As reported in The Australian recently, NAB’s Andrew Thorburn reflects on the importance of planning for NAB to “retrain and redeploy” workers post-automation. Clearly, planning can deliver the best outcomes for all stakeholders.

Enterprise bargaining in the post-automation world

There are implications on an employer bargaining for a new enterprise agreement (or for a greenfields agreement over a new enterprise) that will cover the business post-automation.

For example, the ability to influence new roles that will be required from technological advances comes with the ability for an employer to:

  • effectively bargain for terms and conditions off a fresh slate as post-automation roles may result in coverage of employees with vastly different terms and conditions
  • use a different modern award (if any) as a base for terms and conditions
  • provide an employer with greater leverage in bargaining through dealing with a smaller, more specialised workforce
  • bargain in circumstances where the agreement’s coverage will dictate which union (if any) has a right to represent employees.

Of course, the need to engage workers with a different skill set may also provide a business with an opportunity for workers to grow in their careers, and present an environment in which cultural change might be effectively promoted and achieved. Viewed through this lens, technical change need not be seen as a negative from an employee relations perspective.

Implementation of process

‘Redundancy’ is the word that comes to most employees minds when they catch wind of an employer taking steps to automate elements of their work.

However, despite many claims made to the contrary, major technological change does not necessarily result in a workforce being decimated. Opportunities are inevitably presented from change for employees to upskill in order to fulfil different roles in the business (or elsewhere).

Unfortunately downsizing a workforce is, in a number of cases, a necessary step in achieving the full productivity benefits that are so attractive in implementing technological change. Again, early and effective planning can minimise forced job losses, and maximise opportunities to upskill.

Transparency and appropriate engagement with employees is critical during the process, as is implementing an appropriate consultation plan.

In a world where so many businesses are moving to automation, failure to take these steps may result in your business falling behind its competitors, change (and its benefits) being seriously delayed, or the often significant capital costs required blowing out.


Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

Recently a number of stoushes about the enforcement of post-employment restraints of trade – including one that captivated the legal industry for many months last year – have played out publicly.

Their high profile nature means it is timely for big business to re-evaluate their restraints of trade to make sure they are effective – emphasised by the fact we are seeing movement in many industries (including the legal industry) picking up pace as teams relocate as a result of mergers and the continued impact of globalisation.

Restraint of trade provisions are common in many employment contracts, but whether or not a business takes steps to hold an outgoing employee to account is a different question. This can be for a range of reasons – for example, not wanting to be the “bad guy”, or where the relationship has fractured to a point where culturally, both parties are happy to move on.

But more commonly, it comes down to the fact that when the rubber hits the road, a closer inspection of the applicable restraints shows that the business doesn’t have a good case to enforce the restraints or that – even if they are enforceable – they don’t give the business the protection it really needs.

There are 3 key strategies to increase the chances that your restraints are effective – keeping you out of court and off the front pages:
  1. tailor your restraints to your business and to the employee – the cases highlight that restraints should be designed carefully to reflect what is actually important to the business and the job of the particular employee. While there is a superficial attractiveness to broad restraints, you need to think about what aspects of the employee’s role justify restricting them in some way after they leave – the courts don’t often like boiler-plate or broad-brush provisions to which no thought has been given.
  2. don’t be blinded by love – we all know the feeling of meeting someone new, making a connection, and thinking about how great your lives will be together. We ignore the faults that stare our friends in the face – because we can’t possibly think of how the relationship would ever turn sour. When it comes to recruitment, that applies too. You should very carefully consider any employee’s request to delete or modify key aspects of the restraint provisions (including, for example, reducing restraint periods, or waiving restraints if certain things happen) – because we all know some relationships just don’t last.
  3. re-evaluate contracts during the employment relationship – you would expect productive and valuable employees to progress and succeed in your business. However, promotions – and particularly senior promotions – often mean the employee has increased access to confidential information/business strategies, key clients/customers and talented fellow employees. Consider promotions as a good opportunity to look carefully at whether the existing restraints are sufficient to protect the company’s interests – it might be worth issuing an updated contract with new restraints at that point.

All our tips on restraints can be found here, along with our map of Post-Employment Protections.


Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

It is common for employers to bring on employees for limited term employment, where work may not be ongoing. Traditionally, “outer limit” contracts have allowed for the employment to end on an agreed date without a resignation or dismissal. A recent decision of the Full Bench of the Fair Work Commission may have pushed “outer limit” contracts closer to their own expiry date.

The key takeout is that if the employee does not voluntarily leave employment and the driving force causing the employment to end is a decision or act of the employer, it could be a “dismissal”, even if the employment ends on the agreed expiry date. In addition to unfair dismissal, this change could also have broader impacts, for example:

  • Does an employer have to provide notice or pay in lieu even if the employment ends on the agreed date?
  • If the contract is not renewed because there is no ongoing work, is this a redundancy?
  • If the employee does not wish keep working, is that a resignation?
Termination may now be considered dismissal 

Where employment ends at the agreed expiry in an “outer limit” contract, this has traditionally been regarded as expiry due to the effluxion of time rather than a “dismissal” which could give rise to a claim under the unfair dismissal provisions of the Fair Work Act 2009. In December 2017, by majority, the Full Bench of the Commission overturned the previous authority on this point.

The majority held that expiry of an “outer limit” contract which allows for termination on notice can amount to a “dismissal”. The majority said that not every contract expiry will be a “dismissal”: this depends on a range of factors including the context of the employment. In the case considered by the full bench, the employee had been employed on a series of ‘outer limit’ contracts and was not offered a further contract due to performance concerns. The outcome may have been different if there was a single contract, with a justifiable basis for the nominated end date.

Changes to how you use “outer limit” contracts

Employers may need to consider treating decisions to end outer limit employment on the expiry date as if this was a decision to dismiss. They should also ensure that “outer limit” contracts are only used where there is a legitimate reason to do so – eg expressly linked to short term funding or role requirement and not as a routine way of engaging people, particularly where such contracts are routinely rolled-over.

An employer may also wish to ensure the employee understands the nature of the contract and the reason it is in place for a limited period of time.

Unfortunately, this change is likely to result in increased administration and costs for “outer limit” contracts, which may undermine their utility – and bring them closer to their own expiry.

***

Fixed term versus “outer limit” contracts: Speaking technically, a fixed term contract locks both the employer and employee into working for the full fixed period, without the possibility of earlier termination (other than for serious misconduct or other serious breaches of the contract warranting termination without notice).

It is more common to see “outer limit” contracts, which come to an end on a specified date or event (the “outer limit” of the contract), but allow either party to terminate the contract before that date. This provides both parties with more flexibility.


Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

Within eight days of each other Bill Shorten and ACTU head, Sally McManus, have called for changes to the enterprise bargaining regime which is a central feature of Labor’s own Fair Work Act. Whilst we will no doubt hear more on this these statements would be chilling to many an employer who regards the current system as stacked against them.

To be fair, finding the right balance in a system which directly effects wage outcomes is difficult. But Labor’s legislation cemented collective bargaining as a central platform for agreement making and did away with a statutory regime to make individual agreements. In doing so unions were given the best legislative platform to date to compel employers to bargain – even with a union that has a minority membership interest in the business.

Mr Shorten cites low wage growth to make the case for change amidst greater productivity. The wages-work bargain is unfair it seems. Conversely employers will tell you that the “productivity lemon” has been well and truly squeezed from enterprise bargaining with little or no incentive for unions to countenance genuine trade-offs. In its inception back in the 1990s, enterprise bargaining presented an opportunity – to move away from inflexible centrally set terms and conditions to outcomes which better reflect the needs of the enterprise. It paved the potential for “win-win” outcomes. But no more. If macro data points to increased labour productivity, the nexus between this and collective bargaining will be very tenuous.

To this extent there is universal acceptance of a system unable to meet the needs of the workplace today and certainly not the future. If no agreement is reached, the status quo typically remains. In negotiations, speak the “Best Alternative to a Negotiated Outcome” for a union and employees is the status quo being the existing enterprise agreement. Very often, the genesis of these agreements were struck when the business was in a very different place – many years ago and when current competitive conditions were beyond contemplation.

Enterprise bargaining, once an opportunity is now an exercise in managing risk. This involves stemming the tide of increasing labour costs and avoiding claims which, for instance, prevent outsourcing or mandate third party involvement in legitimate business decisions. But there’s more. The system relies on a game of leverage. Unions can organise industrial action to effectively coerce employers to agree. Employers can lock employees out in response. Neither are very constructive in the long run. Ms McManus is calling for greater ease to take industrial action and tighter controls on employer lock outs. Mr Shorten wants to shut down the Fair Work Commission’s (limited) ability to terminate old enterprise agreements – which provides employers with a precious opportunity to remove outdated and restrictive clauses albeit not without a contested hearing process usually over some months.

So, inherent in the thinking of both Labor and the ACTU is a re-setting of the legislative levers of leverage which drive bargaining outcomes. For employers more of the same but worse. Employers will make agreements palatable in the short term only because the short term cost of the bargaining process (industrial action) is too high. Rational economic outcomes are thus easily distorted. Of course in the medium-long term the cost of making an agreement becomes intolerable. Restructuring, outsourcing, and offshoring become part of an inevitable ‘solution’ for employers.

Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.

In the last working week of 2017, the Victorian Government quietly released the Independent Review of Occupational Health and Safety Compliance and Enforcement in Victoria. As we settle into the new working year, we consider whether the Review is likely to change the compliance and enforcement landscape in Victoria – whether more ‘carrots’ will be proffered, or whether duty holders will suffer more ‘stick’.

Is the Review likely to result in a seismic shift of compliance and enforcement activities for occupational health and safety offences in Victoria? Probably not. However, this is no bad thing – it symbolises an old adage that “if it ain’t broke, don’t fix it” – we have previously commented that this adage is a sound approach to regulatory and policy reform.

Rather than fundamental change, the report indicates incremental changes to the way WorkSafe Victoria is likely to:

Plan and target compliance and enforcement activities

Publishing its annual compliance and enforcement priorities.

Adopting a risk based approach to compliance and enforcement activities.

Establishing performance based measures which reflect health and safety outcomes.

Responding to the changing workplace context (ie the “gig economy”).

Communicate and implement its compliance and enforcement framework

Identifying and documenting its compliance and enforcement framework with a guide developed by mid-2018.

Communicating the circumstances in which each compliance and enforcement tool may be used.

Developing a process to regularly review documents in the compliance and enforcement framework.

Updating the visual representation of its regulatory approach.

 Provide information and support to duty holders

Engaging more with stakeholders in shaping its strategies.

Being increasingly proactive in risk scanning and monitoring.

Publishing its research agenda.

Increasing the amount of published guidance and resources including some inspector checklists.

Implementing targeted media campaigns.

Increasing the publication of enforcement outcomes.

Collaborate and engage with other regulators and duty holders.

Introducing infringement notices for some offences.

Continuing to use enforceable undertakings (EUs) with an updated policy on when an EU may be accepted and what an EU may contain.

Undertaking “blitzes” of particular industries/high risk activities.

Increasing strategic prosecutions of offences in priority areas and for exposure to risk (as opposed to reactive prosecutions of injuries and fatalities).

The proposed reforms therefore seem to offer a balance of carrot – by way of greater transparency on WorkSafe’s compliance and enforcement activities and some stick – in the form of the suggested infringement notices and increased prosecutions in strategic areas and for exposure of persons to risk.
As the year progresses, it will become clear which of the recommendations assume priority and whether our prediction of only incremental change is correct.

Subscribe to receive the next Workplace Law & Strategy blog direct to your inbox.