In our last blog post in this series, we outlined a model for developing strategy in two different processes: developing an ideal state and grappling with a key decision. Both invariably require an evaluation of options and an assessment of the balance of consequences as between the various options. Often, there are “downsides” or risks with these options.

Perhaps now more than ever, employers need to engage with “risk” as it relates to the workplace. In making a connection between the workplace and risk, we speak broadly. For instance, there are:

  • health and safety risks
  • other compliance based risks, whether under the Corporations Act 2001 (Cth), the Fair Work Act 2009 (Cth), the Competition and Consumer Act 2010 (Cth), and the myriad of other laws that impact a business, and
  • the risks associated with poor service, such as loss of customers, reputational risk, and market risk.

It’s people that make a business and, on one view, all risk is about people.

More broadly, the types of risk that an organisation may face fall into one of three categories:

  1. preventable risks (internal controllable risks)
  2. strategy risks (here some risk is tolerated in pursuit of business objectives), and
  3. external risks (arising from events outside the control of a business).[1]

According to one study, if you ask ten different people what they imply by the meaning of risk you will likely get ten different answers.[2]

Whatever label is applied, risks need to be identified and identified as an outcome. The identification of cause is a separate, albeit obviously necessary, exercise.

Risks are typically examined and understood in the following ways:

  • Risk as exposure: that is, what will or may happen
  • Risk as impact: that is, what is the harm that will follow, and
  • Risk as a probability: that is, how likely it is that this will occur.

Many readers will be familiar with a risk matrix that plots the likelihood of an event against the degree of severity.

What can be done about “risk” is another exercise again. As General Stanley McChrystal observes in his book Risk – A User’s Guide, “to study risk is to reconsider what we know about being prepared.”

When we work with employers on their enterprise bargaining strategy, the bargaining risks are often central to any planning. Those risks can range from industrial action to an increase in sick leave, lower productivity, and certain pressure being placed on customers.

As noted above, the evaluation here calls for a degree of judgment and hence perception about the nature, degree, likelihood and impact of the various risks, together with an assessment of what can be done to mitigate them. Interestingly, employers who are most confident about their capacity to deal with bargaining risks are the ones often prone to capitulation in the bargaining when they arise. The risks were effectively ignored. A lack of planning followed, and with it something more fundamental: the lack of mental and emotional preparation that seemingly makes matters worse. As the great Stoic philosopher Seneca observed, “What is quite unlooked for is more crushing in its effect, and unexpectedness adds to the weight of a disaster”. In effect, the organisation has been taken by surprise. Flight or fight kicks in amongst the leadership. Panic and anger. What was organisational becomes personal. “Now my job is on the line” becomes just one interpretation of these events.

Hardly the best time to close out an enterprise agreement.

Conversely, there are those so concerned about the risks they are all too willing to make an agreement, putting their business at risk in the medium to long term. There is an overestimation of risk and a degree of catastrophising that masks clarity and true perspective. The opposite can also occur. An employer is so obsessed with bargaining risk that upon facing and dealing with its manifestation, they become emboldened and their bargaining position strengthened. Their attitude to perceived risk changes having better understood the reality of it.

In advising many employers over many years who are about to embark on a challenging change or enterprise bargaining project, the following has been instructive: the more they countenance risk, and the more preparation they put into leveraging what’s in their control, the better is their experience with the project and outcomes.

[1] Johansen, I.L and Rausand, M, ‘Foundations and choice of risk metrics’ (2014), Safety Science pp. 386–399.

[2] Kaplan RS and Mikes A, ‘Managing Risks: A New Framework’, Harvard Business Review, (June 2014).

Employee burnout is high, with one recent survey reporting that one in three participants say they experienced this in the last 12 months. This can lead to disengagement, high staff turnover and claims connected with mental illness or injuries.

To mark the fact that today is World Day for Health and Safety at Work, we will look at how leading employers can help their workforces to be mentally well and avoid feelings of burning out.

One issue to consider is the role that subjective employee perceptions about work can have in affecting their mental wellbeing. Known psychosocial risk factors include the following perceptions:

  • Under-utilisation: they are not using their skills or training
  • Unpredictable or unrealistic: work hours are unpredictable or deadlines are unrealistic
  • Not meaningful: tasks are not regarded as meaningful or are monotonous
  • Lack of engagement: not being able to address issues constructively with supervisors or peers
  • Role confusion: a lack of clarity about objectives or accountabilities
  • Underappreciation: lack of recognition for the work they do
  • Poor change management: anxiety or ambiguity regarding the impact of changes, and
  • Unfairness: a failure to treat people fairly, with dignity and respect.

These risk factors are consistent with the findings of a joint research project between Harvard and MIT, which highlighted that some of the best ways to support wellbeing for workers is to provide them with more control, reduce excess work demands and improve social relationships at work.

One option is to adopt a psychosocial approach to reducing the above risks and create an environment that best supports wellbeing and avoids burnout. Practical strategies include:

  • Resilience programs. Numerous studies show the mental wellbeing benefits associated with offering workers training in how to be more resilient.
  • Consider disconnection strategies. We have previously written about union claims and global legal reforms regarding a ‘right to disconnect’. This is increasingly adopted as good business practice, with many companies encouraging employees to set boundaries on out of hours contact and communicate this clearly (e.g. via a message in email signatures).
  • Look at ways to give people autonomy, control and recognition. Think creatively about how to embed a sense of ownership and independence in everyday tasks and show appreciation (which does not necessarily depend on pay).
  • Monitor work hours and resourcing. Check to see how much people are working and, where there are excess overtime hours, try and understand why. This will also assist with Fair Work Act 2009 (Cth) record keeping and award compliance requirements. If there is a resourcing crunch, how can this be addressed in both the short and long term?
  • Explain and clarify, as often as needed. Ensure people understand what they are supposed to be doing, what they are accountable for, and what their objectives are.
  • Create good working relationships. Look for opportunities to support positive team interactions at all levels – and embrace small wins. Do people feel comfortable asking each other for help and grabbing lunch or coffee together? Where people are working remotely this may require more effort but such efforts can provide huge returns for productivity and culture.
  • Set a safety based culture from the top down. Letting the workforce know that wellbeing and safety are priorities, and consulting with employees about safety measures will assist to demonstrate the genuine commitment to finding sustainable solutions as well as discharge work health and safety obligations.
  • Continue to support responsive measures. Programs such as EAP and mental health first aid are important to help employees respond to stressors as and when they arise.

There is no one size fits all approach when it comes to preventing employee burnout. Instead, employers have lots of opportunity to create an engaged and productive work culture while also reducing the risk of burnout.

Have a happy, healthy and safe World Day for Health and Safety at Work!

There’s been a lot of debate in mainstream and social media in the past week about major Australian corporates removing pay secrecy clauses from their employment contracts. The Financial Services Union is keeping sustained pressure on employers in that industry to remove the clauses from their employment contracts. The Labor Party has made it known that, if elected, it intends to amend the Fair Work Act to prohibit these kinds of clauses, as part of their commitment to achieving gender pay equity.

The Australian position on pay secrecy clauses is different to that of other leading economies. Pay secrecy clauses have been made legally unenforceable in the United States of America and the United Kingdom, with the worthy aim of decreasing discrimination and disempowerment of employees. In 2021, the European Union also announced a proposal to make pay transparency a binding measure for its member states.

But there are sound reasons for employers to include pay secrecy clauses in employment contracts. As with all complex issues, there are trade-offs that must be considered in arriving at a balanced final position. Requiring employees to keep their pay levels confidential can assist with preventing workplace tension and conflict, particularly in sectors where a significant proportion of pay is discretionary. Pay secrecy clauses can also provide an easy ‘out’ for employees who aren’t comfortable divulging their remuneration to others.

Before making any decisions about removing pay secrecy clauses from your employment contracts, there are some important practical considerations to work through:

  1. What exactly are you prepared to allow? Whilst an employer may be open to removing pay secrecy clauses, there may still be good reasons to moderate employees’ public statements that could potentially damage the employer’s brand or reputation. If appropriate, set clear boundaries around when and with whom employees are permitted to discuss their pay.
  2. Protect employees who don’t want to disclose. How will you ensure that workers who don’t wish to share their private pay information don’t feel pressured to do so? Consider developing a communication policy to guide behaviours and expectations around disclosures.
  3. Quarantine employees’ choices about disclosing their pay from other decision-making processes. Employees must not be dismissed or subject to other adverse action because they have made complaints or enquiries about their pay, or (if pay secrecy prohibitions are introduced) because they have exercised, or propose to exercise, any right to disclose or withhold their pay details. Be clear on the proper process and channels for raising genuine complaints. Consider training your leaders on effectively separating an employee’s disclosure (or not) from other decisions about their access to promotions or other opportunities, disciplinary action or termination, and handling sensitive pay discussions, queries, and complaints appropriately.
  4. Be prepared to answer tough questions about pay gaps. There are good reasons to remove pay secrecy clauses if that is the only way to ensure transparency about pay. Employers can also consider alternative approaches such as providing detailed information about pay that does not identify individual employees. Whichever policy position is taken – arm yourself with knowledge – do pay differentials exist in your workforce? Are there sound merit-based reasons for the gaps, or is gender (or another protected characteristic) the underlying reason, and if so, what is being done to address this? Understanding the reason for gaps in pay, whether based on gender or any other attribute, requires a detailed analysis of data and a regression analysis which can help to flush out causal relationships between gender or other attributes and variable matters such as percentage pay rises or discretionary pay.
  5. Be mindful of privacy obligations. Disclosing details about an individual’s pay data for purposes other than those directly related to the employment relationship with that individual (for example, as part of broader pay equality initiatives) without their informed consent may expose the employer to a privacy complaint. If you need to share pay data, can this be done at an aggregated, anonymised level?

It’s unlikely that removing pay secrecy clauses will resolve gender pay gaps in and of itself – the question is whether it is a necessary step along the way in light of alternative measures that may not have the same unintended consequences. And when well-executed, pay transparency might also be leveraged as a powerful motivational and cultural factor.

In our first blog of this series, we highlighted that strategic thinking is a skill and one that can be improved and developed.

So, what is strategy? What does it mean?

The word “strategy” comes from the ancient Greek word strategos meaning “general or leader of the army”, being a union of the words stratos “army” and agein “to lead”.

From the Oxford Dictionary, a modern definition is “a plan designed to achieve a long-term aim.” Synonyms of strategy include “plan; grand design; game plan; policy; scheme.”

Learnings on strategy, strategic thinking, and strategic decision making are ubiquitous. A plethora of academics and theorists have conjured their own meanings and applications of the term, making the search for a universally accepted definition illusory.

The military context provides many perspectives perhaps best described in Robert Greene’s classic book, The 33 Strategies of War, distilling learnings from Sun Tzu (孫子) and Niccolò Machiavelli to modern-day references.

In business schools, you’ll likely learn about: Michael Porter and his “5 forces framework”; Henry Mintzberg and his “5Ps of strategy” – plan, ploy, pattern, position and perspective; Benjamin Tregoe and John Zimmerman and their view that strategy is “the framework which guides those choices that determine the nature and direction of an organization”; Michael Treacy and Fred Wiersema and their “three value disciplines”; Igor Ansoff’s “Ansoff Matrix” – a two-by-two depiction of how a business can grow; and Kenneth Andrew’s view of corporate strategy as “the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities.”

Then there’s Frank Rothaermel, who, according to one study, is amongst the world’s top 2% most cited researchers, formulating “good strategy” for a company as involving a:

  1. diagnosis of the competitive challenge – accomplished through analysis of external/internal firm environment;
  2. guiding policy to address the competitive challenge – accomplished through strategy formulation; and
  3. set of coherent actions to implement the firm’s guiding policy – accomplished through strategy implementation.

Clearly, there is no one meaning or application of the word. That said, there are some core elements that can provide a useful framework.

In the workplace context, we consider there to be two common strategic processes.

The first is around developing an ideal future state. What resourcing is needed to deliver on our five year plan? How should our HR function be structured? What should our next enterprise agreement look like, and do we need one? These issues, we would argue, are genuinely strategic.

The second is grappling with key decisions of a more narrow compass. Perhaps not strategic as such, but their importance calls for strategic thinking. Do we terminate the employment? Do we engage contract labour here? Do we now allow working from home, and if so, how regularly?

Both processes rely on getting the correct information to the table and, often, difficult choices to be made, which call for an assessment of the balance of consequences which might follow.

For either process, a similar strategy framework can be readily applied. It is summarised in our Seyfarth Strategy Framework (below) based on the “rational decision making” model.

Seyfarth Strategy Framework
Click to enlarge

The framework:

  1. is not intended to be applied rigidly. Rather, it serves as a guide; and
  2. prompts a first layer of analysis only. For instance, a risk matrix might be needed to identify and better examine the risks. A RACI matrix might be developed as part of the “implementation”. A nine-box SWOT (as opposed to a simple four box) might be developed to populate the “plan”.

As mentioned in Part 1 of our series, “inquiry” is key to sound strategic thinking. The Seyfarth Strategy Framework poses high-level questions. Asking the right sub-questions having regard to specific context ought to precede the irresistible urge to proffer a solution.

Cell four of the framework, the “inputs”, is the key fact-finding part. Here, it is necessary to identify the information needed. Let’s use the example of deciding whether we should allow work from home. Anecdotal feedback from one manager about their views on what the team are thinking, or feeling, might be useful, but is it reliable enough to make the decision you are about to make? What more might be needed here before steps are taken?

Finally, decisions cannot be sensibly made in a vacuum. Hence the need for criteria or guiding principles. A debate about a course of action can often be resolved by asking, “what are our priorities here?” To take our work from home scenario again, are we aiming to justify our lease expense? Do we care to balance the interests of those who want flexibility with those who don’t?

In Part 3, we will turn our attention to “risk”. More than ever, risk is a feature of workplace thinking and hence a key variable impacting strategy.

We talk a lot about “strategy” in our day jobs. There’s certainly plenty of talk about it in the workplace. There’s a workplace strategy, a human capital strategy, an employee relations strategy, a strategy for rolling out an initiative, a change strategy, even perhaps a strategy to end someone’s employment, a negotiation strategy, and an enterprise bargaining strategy…the list goes on.

So, what is “strategy” as it relates to the workplace? Despite the constant references to “strategy”, there’s little by way of commentary on how it can be effectively applied in the workplace. In this series, we are going to do just that.

What is strategy?

Strategy is about making decisions that matter. This is true of the workplace as it is in any domain.

It might be about which roles are the best organisational fit. It might be about how best to service the HR needs of a business. It might be about how to define and improve culture. With a more narrow lens, it might be about how to manage a particular issue such as: workplace bullying; the future of an employee; or an enterprise bargaining campaign.

Classic notions of strategy come from business and the military. Business strategy typically concerns itself with answering questions of significance to the overall business. Are we in the right market? Do we need to pivot our service offering, and if so, how? There is a general acceptance that strategy is distinct from tactics and, in the view of some, a plan is not a strategy but rather a function of the strategy.

It’s easy to get distracted by definitional debate, and if we indulge in this too much, we will lose the opportunity to create the sort of practical insight that we aspire to provide here.

We cannot explore strategy without dealing with risk. More and more, those responsible for the workplace are concerned with risk due to increased regulatory demands and the perceived damage to one’s brand – both personal and business. The call for organisational moral perfection that social media now demands makes this all the more acute.

What is strategic thinking?

Strategic thinking is about problem solving in a particular domain of importance. It’s about defining the problem as a first step. The problem then needs to be analysed from different perspectives and sometimes needs to be broken down. Options are then generated and tested applying one or more frameworks or models to help generate the answer. The result is often a plan, or a series of objectives that then enable a plan to be made. It demands an eye on the “big picture” without missing key details.

How can we improve our strategic thinking?

Like most things, the more focus you give to your strategic thought process, the better your output. So the idea here is to treat strategic thought like a skill or a muscle to flex. The more attention you bring to it, the better you will be.

In this series, we will explore these themes further with insights aimed at helping you become more “strategic”.

As always, we welcome your comments which you can leave below to share your thoughts with us.

The World Economic Forum’s Global Gender Gap Report 2021 estimates that at the current rate of progress it will take more than two and a half centuries to close the worldwide gender gap in economic participation and opportunity, with Australia ranked 70 out of 156 countries. Although the proportion of skilled women in the workforce continues to increase, in 2020 the Australian Government’s Workplace Gender Equality Agency reported that women occupy only 32.5% of key management positions in Australian workplaces.

Based on these statistics alone, it would be easy to view the task of edging our way toward gender parity as practically unattainable, especially as the COVID-19 pandemic largely hobbled global progress. However, there is real hope. According to Saadia Zahidi, Managing Director and Head of the Centre for the New Economy and Society, employers now have a unique and unprecedented opportunity to contribute to gender parity by “investing in inclusive workplaces…advancing women’s rise to leadership positions, applying a gender lens to reskilling and redeployment and embedding gender parity into the future of work.” There is plenty of work to do, and with genuine, coordinated effort by employers, both the gap and the time it takes to achieve parity can be shortened significantly.

To celebrate International Women’s Day 2022 (IWD) we asked Seyfarth Australia’s female leaders to offer their insights on what we can do to #BreakTheBias in order to achieve equality and inclusivity.

How employers can play a role in forging gender parity

Erin Hawthorne, employment law partner in Seyfarth’s Melbourne office, says it’s important that employers take a hands-on approach to parity. “Leading employers who have moved past male/female same-work-same-pay concerns have the opportunity to commit to what ‘gender parity’ looks like in their organisation and set concrete steps to implement it.” This will look different to different organisations, for example, Erin notes that “for some organisations, it might be reflected in short term quotas at senior levels. Other organisations might look to change behaviour so that factors that can drive longer-term unequal outcomes (such as work specialisation, career breaks, part-time work or flexibility) have a much more even distribution among workers of all genders.” Erin acknowledges that “these issues are complex, but regardless of whether the ‘parity’ objective is based on equal treatment or equity of outcome, leading employers can take a stand to create momentum for real change.”

Sarah Goodhew, workplace health and safety partner in Seyfarth’s Sydney office, recognises that “gender parity isn’t a female-only issue. Gender parity and flexibility in the workplace is often needed for reasons beyond parenthood, by all genders.” This goes to IWD’s focus on ensuring all genders are involved and engaged, too. “Once leading employers recognise and support this, and have systems in place to entrench gender parity in their working arrangements, such as rewards systems and processes generally, then all genders will be able to achieve their personal and professional goals.”

Rachel Bernasconi, employment law partner in Seyfarth’s Sydney office, says “we at Seyfarth pride ourselves on asking ‘is there a better or different way to do something?’ not just approaching problems with a mindset of ‘this is how it has always been done’. We call this No Sheep, which is shorthand for not following the flock. Ask the equivalent of ‘the Seyfarth question’ in your organisations to help tackle these issues.” Taking an out-of-the-box approach is the mark of true leadership and courage – as Rachel points out “when you apply this thinking within your organisation to these issues, as we do often at Seyfarth, real and lasting change can come about.”

Advice for females aspiring to leadership in the workplace

Our partners have some very sage advice for women looking to become our future leaders.

Penny Stevens, workplace health and safety partner in Seyfarth’s Melbourne office, says to focus on your strengths and learn from those who inspire you. “Learn from other leaders you admire. Be confident in your own ability and tell yourself every day you are great at what you do. If you focus on what you do best you will succeed.”

Erin’s advice is to have a bold goal – it’s vital to “start small and dream big.” Erin suggests that being clear on your goals is also key and that by “thinking about the kind of leader you would like to be will give you the vision to pursue goals by utilising strategic stepping stones whilst staying true to yourself.” Erin also suggests that unnecessary self-doubt can inhibit progress. “Do not assume you are ‘doing it wrong’ unless you have data to back that up and, if you do, course-correct with those goals in mind.”

Sarah believes that it’s important to know the journey won’t always be smooth and advises future leaders to “be prepared for inevitable setbacks, but don’t let that mean you take ‘no’ as the answer.” A network of genuine supporters is also important. “Surround yourself with supporters who align with your values, your goals, and who also understand your context.” Sarah also warns that “the best advice that doesn’t work for you, won’t work for you. Be comfortable with the fact you might be doing something differently to the way ‘it’s always been done’ by others in your network – changes will happen, even if incrementally.”

Rachel advocates for courage and resourcefulness. She says, “If you’re given an opportunity grab onto it with both hands rather than questioning whether you are good enough or ready enough.”

IWD’s theme for this year is #BreakTheBias. For more IWD information and resources, please visit www.internationalwomensday.com.

Most recent commentary on the recent High Court decisions in Jamsek and Personnel Contracting suggests that the Court has confirmed the primacy to be given to the terms of the written contract when determining the nature of the relationship between the parties. Whilst that is a fair observation, there is much more to the story. Key to understanding the real commercial impact of the two High Court cases for business is an appreciation of two matters.

First, neither of the losing parties – the two truck drivers held to be contractors in Jamsek; and the labour hire company held to be an employer in Personnel Contracting – argued at any stage of the proceedings that the contracts in place:

  • were not genuine or were somehow a “sham”; or
  • should be set aside or held invalid for any one of the many reasons the law recognises that can occur such as unconscionable conduct, undue influence or misleading conduct of the other party.

Second, in both cases, everyone involved (the litigants themselves and their very capable legal teams) agreed that the contracts in evidence recorded the full and complete terms of the contracts and therefore contained all of the relevant terms and conditions between them. No party argued, for example, that the contracts had been superseded by fresh unwritten contracts or that they had been varied in some way, whether in writing or, as can happen, orally or by conduct.

Let us explain why these two points matter so much.

Much of the media, academic and legal coverage of what happened in these cases, and the result, positions the outcomes as extreme or somehow, not what should be the expected result. Critics of the outcome in Jamsek, for example, put forward the view that two hard working truck drivers working for the benefit of the same company for decades, in a way that looks like employment should be recognised as employees and receive all of the benefits – annual leave, long service leave, minimum hourly rates, etc., that truck driving employees are entitled to. So, the argument goes, a conservative and “black-letter” High Court has given the contract terms primacy over the “reality” of how things actually operated, to the detriment of real working people who, so the thinly veiled criticism goes, have little bargaining power when they enter into contracts and have been outsmarted by companies and clever lawyers.

Critics of the outcome in Personnel Contracting argue that the tri-partite Odco style arrangements that took off particularly in the early 1990’s are now dead. They say that this is because the finding that the individual concerned was an employee of the labour hire company (rather than an independent contractor as labelled in the contracts), means that settled industrial arrangements that have been in place for 30 years have now been undermined, probably fatally. In fact, the one Judge who dissented in the outcome of the case, formerly an elite tax specialist barrister no doubt experienced in seeing tax rulings chopped and changed after clients had made business decisions relying on them – described the damage that the decision of the majority Judges would do, not only to Personnel’s business but to the businesses of many others, as “undesirable”. There is more than a little bit of wisdom in these observations. The CFMMEU has, if recent newspaper reports are accurate, launched a $60m backpay case as a result of the Personnel Contracting decision.

In our view, these decisions have been subjected to more than their fair share of misguided criticism and the commercial implications are both modest and manageable. Here’s why:

The Court in both cases re-iterated a number of principles that are not new – that Judges should not go on wide-ranging inquiries after a contract is made to help interpret the contract (but making these inquiries for other reasons – such as deciding on an argument about whether the contract has been varied – is perfectly permissible); and that amorphous arguments about concepts like “unequal bargaining power” shouldn’t be countenanced unless the argument is that an established legal remedy is being sought. On the latter point, it did not go without comment in Jamsek that by entering into independent contracting relationships, the two truck drivers were able, through partnership agreements, to split 50% of their income with their wives, who played no active role in the business, and on top of that, paid tax on income at much lower rates (the corporate rate rather than employee marginal rates). The decision does not indicate the tax savings over the decades and whether they were more or less than the employment benefits (leave, etc.) that the truck drivers would have been awarded had they won the case. But one can see how the argument that the drivers were exploited or treated unfairly can wear thin when the full circumstances are considered – they enjoyed material financial advantage by virtue of these arrangements which they presumably did not intend to pay back if they won their claim for employment benefits foregone.

The idea that Courts must strictly apply contracts ignorant of the way things work in practice doesn’t square with either decision or the way the parties litigated their cases. There are a myriad of reasons a Court can look beyond the written contracts which have been signed – for example, on the basis that the contracts have been superseded, varied or terminated, or should not be enforced because of the way they were negotiated or made. In other cases, the terms of the contracts are so ambiguous or amorphous that it is necessary to look at how the contracts were performed to try to understand what the contracts’ terms meant in the first place. All parties in these cases were represented by experienced legal teams who did not go near any of those arguments – we assume for good reason. To take this point a step further, the criticism of Jamsek to the effect that the Court is too “black-letter” in its interpretation overlooks the decision in Personnel Contracting, where the Court held that the individual concerned was an employee of a labour hire agency rather than, as described in the contract, an independent contractor. The Court said, essentially, that the contract terms will be rigorously scrutinised, but the parties characterisation of or label given to the legal relationship – employee or independent contractor – is not determinative and is something for the Court to ultimately decide. A true and strict “black-letter” approach would have honoured the contract as drafted and held that the individual was a contractor because that was the way the parties had described the relationship.

With all that said, what are the commercial implications?

  1. Right it is, that robust, well-written contracts which accurately capture the arrangements between the parties are more likely to be upheld and will be the focal point of the analysis – the idea that a Court could apply a “multi-factor” test to assess whether a contractor was really an employee, with the contract playing a relatively minor role in the analysis, is out of favour. But the central question – who controls the work and how it is performed, and is the individual running a business on their own account, remain central. It will be critical to ensure that the terms of the contract reflect the parties’ intentions about those matters.
  2. For organisations engaging people to provide services or perform work, there is great value in taking steps to ensure that the contracts in place do reflect the totality of the arrangements, and say so. There are different drafting techniques that can be utilised to achieve that objective. Great care will be needed because the terms may be subject to significant scrutiny – as was the situation in Personnel Contracting, the contract terms themselves may show that one party has such a high degree of control over the individual on the other side of the contract, and that the individual could not be said to be running their own business, such that the individual is an employee not a contractor.
  3. With the above in mind, at a practical level, when entering into agreements for individuals to perform work or supply services, organisations will need to think carefully about the degree to which they actually want or need to control the manner in which the relevant work is performed – and the consequences of that decision for the nature of the relationship between the parties. Contracts which give the “principal” a high degree of control over the manner in which work is performed by the individual are likely to carry a higher risk that the individual is doing such work as an employee, and that employment obligations are owed to them.
  4. The part of the labour market most sharply and negatively affected by these cases is likely to be labour hire companies engaging individuals as contractors, and then on-hiring them to other organisations. We don’t think it’s right to say that Odco style arrangements are dead, but they are certainly more vulnerable to legal attack. One issue that the Court did not consider was whether the outcome in Personnel Contracting would have been different if the individual didn’t contract directly with the labour hire agency, but did so through a company – a very common arrangement in our experience. Following the logic set out, the labour hire agency could not control the individual’s work – it would engage a company that would in turn do so. Absent an argument that the intermediary company involved a “sham” or some other invalidating aspect, such an arrangement may have made a difference to the outcome.
  5. Having said all of this, the terms of the contract will not (despite what some commentators have suggested) be the start and end of the analysis. These cases say nothing about the situation where the arrangements in place are not fully captured by the written contracts in evidence or there is an effort to invalidate or set aside the contracts. What has occurred during contract negotiations or after the contracts were signed can become highly relevant to the litigation outcome for many reasons, as described above. We think future litigation in this area will focus on these aspects.

Whether there will be a “Great Resignation” in Australia has been fiercely debated for weeks. But whatever the different viewpoints, stabilisation, recovery, and growth in 2022 will be critical for most businesses. Timing is everything – the need for growth coincides with widespread fatigue and burnout among the workforce, ongoing uncertainty associated with the new Omicron COVID-19 variant, and anticipated high levels of job transitioning and career downsizing. Add to the mix that remote and hybrid working is here to stay in 2022 and beyond.

Will this combination of factors brew into the perfect storm or little more than a storm in a teacup? One thing is certain, though – most employers can’t afford to find out the hard way.

To best prepare, employers should now focus on supporting top talent to revive and thrive in order to minimise attrition. Revitalising culture will be important. Extended COVID-19 lockdowns have seen most businesses improve the accessibility and seamlessness of their apps and platforms for facilitating remote work. The downside is that workers report their workdays have extended, and colleagues are less cohesive and connected. Finding sustainable ways to address these concerns will go a long way to minimising burnout and attrition.

But if your best efforts aren’t enough, what then? Sophisticated employers are starting to think about some of the things that will be relevant to employee departures, including:

  1. Future-proofing employment contracts. Are there appropriate contractual notice periods and post-employment restraints in place? For those employers looking to implement remuneration reviews in the new year, this presents a timely opportunity to bolster these protections. Moving forward, it will be particularly important to carefully define the parameters of post-employment restraints, including who your competitors are, given that top talent are now uniquely positioned to access remote work opportunities with competitors far and wide.
  1. Re-writing the playbook for remote exits. Employers will need to think about the systems they have in place for managing employee exits in remote working environments, including:

(a) how they will ensure employees return confidential and sensitive information to the employer

(b) retrieving work devices from remote workers, and

(c) establishing a clear line of sight over departing employees’ actions during their notice and gardening leave periods (any delays in acting upon suspected misuse of confidential information or intellectual property, or breaches of restraints, can seriously impede the ability to enforce those obligations).

  1. Enforcing post-employment restraints. The consequence of a “Great Resignation” may be that employees resign in order to work for direct competitors. 2022 may well be the year for a resurgence in litigation about the reasonableness of restrictions on working for competitors or soliciting customers from former employers. Employers ought to think carefully about how they approach this – and any pre-planning that might need to be done so that they are best positioned to succeed in any dispute.

The pandemic has prompted many organisations to adopt ‘hybrid’ work models. Seyfarth’s global Future of Work pulse survey in 2021 found that navigating remote and hybrid work was the number one concern that in-house legal and business leaders had coming out of the pandemic. There are a number of key reasons why ‘hybrid’ work is predicted to continue, including:

  • health and safety: with new COVID variants an ongoing risk, home working will likely remain a key safety measure for businesses.
  • employee engagement: surveys show that employees increasingly value and expect home working.
  • productivity: recent studies indicate many employees work very productively at home.

Given these pressures on businesses, now is a great time to take stock, strategise and prepare for the future. So, what are some of the key issues that future focused businesses and HR leaders should think about when looking at longer term hybrid working options in 2022 and beyond?

How do you support health and safety best practice when you don’t control the workplace?

Employers and their officers have a range of work health and safety legal obligations that cannot be contracted out of, and still need to be discharged regardless of whether employees are working at the desk next to their manager or from their living room. Employers often have much lower visibility and practical control of remote working hazards such as un-ergonomic work station arrangements, cables, tripping hazards, electrical or equipment safety, excess work hours, stress, anxiety, isolation or loneliness. Risks to physical and mental health and safety need to be considered and addressed (noting there has been an increasing focus on mental health risks as a direct result of the pandemic).

How do you build an inclusive culture and effectively mentor staff when people rarely meet in person?

There can be unintended cultural downsides of having a team who rarely interact in person. Many businesses will be looking for initiatives that enable all team members to feel included and valued, have opportunities to share ideas and progress, and access support and mentoring. Two-way communication has never been so important in a world where, without the right measures in place, employees can go a long time without meeting each other or their managers.

Technology can certainly go a long way to keeping people connected and engaged, but it is not the be all and end all. In fact, there is always a danger of issues like bullying and harassment flourishing when workers think no one is watching that need to be carefully managed.

As more and more businesses embrace flexibility, we are seeing reports of creative solutions to boost personal engagement and foster collaboration and team-building, such as ‘keeping in touch’ days (where all staff or certain teams meet in the office on agreed days), making smaller satellite offices available in the suburbs, and more in-person training and celebrations.

How do you account for industrial instrument restrictions on flexible work?

Many industrial instruments restrict when and where work can be performed, when breaks must be taken and what amounts have to be paid to employees for work at different times. This adds a layer of complexity for hybrid working policies, which might inadvertently breach a legal standard or fundamentally change the remuneration required to be paid. Any hybrid working arrangements need to be assessed against legal requirements to ensure there are no unintended consequences of permitting worker choice.

How does cross-border hybrid work affect employer compliance, insurance and risk?

Employees working across jurisdictions create a number of challenges for global employers that need to be carefully considered. In Australia, employers need to consider impacts of any cross-border work on state-based compliance requirements, including, for example, any changes regarding the applicable choice of law, jurisdictional coverage under discrimination and work health and safety laws, local workplace surveillance requirements and confirming the correct payroll tax and workers compensation arrangements are in place. Some states have also introduced criminal sanctions for breaches of labour hire licensing laws, industrial manslaughter and wage theft, which would need to be complied with if workers commence working in those jurisdictions.

How do you ensure that remote working arrangements are not inadvertently discriminatory?

While flexible working has long been considered a tool to remove barriers to diversity and inclusion, this also requires navigation of a range of possible diversity and discrimination risks that can arise from remote working.

What legal changes and claims may be on the horizon for hybrid work?

The law is playing catch up to fast-moving cultural and technological change. Globally, we have seen hybrid work driving a range of industrial pressures and legal reforms. For example, Portugal has recently followed countries such as France, Spain, Belgium, Italy, the Philippines, Argentina and India by introducing a legal right to disconnect. The UK government is also considering a proposal to make flexible working the default. Locally, the ACTU has also developed a series of claims for working from home.

In short, employers can and should expect to face additional claims and/or legal challenges as more workplaces move to implement hybrid working models. Employers that invest in comprehensive planning and risk management at the outset will be best placed to meet these challenges.

Our project was finished. With grins on our faces, my colleague and I walked towards each other, hands sailing through the air in synchronised arcs. Onlookers shouted, “No, don’t! It’s not COVID-safe….” Our grins faded, but it was too late. We high fived. Cringed. And hand sanitised.

There’s going to be an awkward adjustment period while we all figure out how to interact with people at work again. Unfortunately, the timing overlaps with both the predicted ‘summer of love’ and the new Roadmap for Respect changes to Australian sexual harassment and discrimination laws, which commenced operation on 1 September 2021.

The Roadmap for Respect didn’t account for the fact that people who have been in extended lockdowns may be out of practice at reading the room or have different thresholds for what is acceptable, normal, welcome, offensive, humiliating or intimidating conduct. It’s easy to see how water-cooler conversation may run dry. Pauses could be filled with overly personal stories or awkward banter. Physical proximity could be much more confronting now than it has been in the past.

This creates a ‘perfect storm’ of risk, noting that:

  • There is now a broader range of conduct that will amount to unlawful ‘sexual harassment’ under the Sex Discrimination Act 1984 as well as a new type of unlawful conduct (‘harassment on the grounds of sex’).
  • A larger population of people are now covered by these laws. Claimants also have a longer period of time in which to bring claims to the Australian Human Rights Commission.
  • All “persons conducting businesses or undertakings” (or PCBUs) are covered and can also be liable as an accessory if they cause, instruct, induce, aid or permit sexual harassment and sex-based harassment.
  • The Fair Work Commission can also now hear applications for orders to ‘stop sexual harassment’ (which is similar to the existing ‘stop bullying’ framework).

To navigate these risks, leaders may need to recalibrate. Key points to check off the list are:

  • Policies and procedures should be dusted off to ensure that the standards are clear and companies have the tools needed to respond to any claims of inappropriate conduct. Consider reminders and training, particularly as we head into the festive season.
  • If office attendance is down, how do you ensure leaders oversee interactions, spot any red flags and respond swiftly to prevent sexual harassment and discrimination, if needed?
  • Invest in support for anyone who is struggling, including drawing on some of the great tools we have all been using while working from home.
  • Have genuinely open dialogues (and sometimes hard conversations) about the line between acceptable and unacceptable behaviour, focusing on the practicalities of interpersonal interactions and the nuanced ways workplace sexual harassment and discrimination can arise depending on the dynamics and power imbalances between those involved.
  • Ensure people know they can and should ask questions or raise issues – and that the employer values and supports input on how it can continue to create a productive, respectful and inclusive workplace where people can thrive.