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Employers must take care when Paying Annualised Salaries to Award Covered Employees

In Simone Jade Stewart v Next Residential Pty Ltd [2016] WAIRC 00756, the employer paid an annualised salary of $78,000 to Ms Stewart, whose position was covered by the Clerks-Private Sector Award 2010 (“Award”). This salary was well in excess of the corresponding minimum rate of pay for Ms Stewart’s classification level within the Award. The employer issued a contract to Ms Stewart which relevantly included the following provision:

“Your salary is inclusive of any award provisions/entitlements that may be payable under an award”

Ms Stewart nonetheless commenced legal action against Next Residential Pty Ltd for payment of overtime rates she claims were payable for work performed during the course of her employment.

Next Residential Pty Ltd argued no additional overtime rates were payable to Ms Stewart on account of her above-Award annual salary, and the remuneration terms expressed in her contract.

The Court ultimately found in favour of Ms Stewart, thereby allowing her to pursue an application for recovery of approximately of $29,000 in unpaid overtime. The Court’s decision hinged on the wording of clause 17.1 of the Clerks-Private Sector Award 2010, which reads as follows (emphasis added):

(a) An employer may pay an employee an annual salary in satisfaction of any or all of the following provisions of the award:

(i) clause 16-Minimum weekly wages;
(ii) clause 19-Allowances;
(iii) clauses 27 and 28-Overtime and penalty rates; and
(iv) clause 29.3-Annual leave loading.

b) Where an annual salary is paid the employer must advise the employee in writing of the annual salary that is payable and which of the provisions of this award will be satisfied by payment of the annual salary.

The Court found the wording of Ms Stewart’s contract did not comply with the strict requirements imposed by clause 17.1 of the Award. Specifically, Next Residential’s failure to:

a) specifically identify the applicable Modern Award, and

b) specifically identify which of the Award’s provisions were satisfied by Ms Stewart’s annual salary meant the employer could not establish Ms Stewart had received her monetary Award entitlements, even though Ms Stewart’s overall salary exceeded her minimum Award entitlement.

Ms Stewart’s case highlights the risks an employer can face when offering fixed annual salaries to award covered employees. Employers are encouraged to obtain expert legal advice when offering employment and preparing contracts for employees potentially covered under a Modern Award.

For more information, please contact Harmers Workplace Lawyers our member firm in this country.

Spain: Employees may receive special rights of trade union representatives even if legal requirements are not met

In Spain, pursuant to the Organic Law of Freedom of Association (“LOLS” by its acronym in Spanish), the number of trade union representatives that can be appointed depends on the number of employees in the company or workplace according to the following scale:

  • From 250 to 750 employees: 1 trade union representative (TUR)
  • From 751 to 2.000 employees: 2 TUR
  • From 2.001 to 5.000 employees: 3 TUR
  • From 5.001 onwards: 4 TUR

Of course, such trade union representatives have a special protection against dismissal that ordinary employees do not have. One of these additional rights is, in the event of an unfair dismissal, the capacity of deciding whether the employee prefers the severance pay corresponding to unfair dismissal or to be readmitted to the company with the same working conditions as before the dismissal (the decision corresponds to the company in the case of an ordinary employee).

In these cases, where the company/workplace has less than 250 employees, even if there is no legal requirement to appoint trade unions representatives, it can be done. However, such employees do not have the status of trade union representatives, but trade union spokespersons. The difference between both is that spokespersons have no special rights.

In this new ruling of the Spanish Supreme Court, a company dismissed an employee who was a trade union representative and the employee asked for his right to decide whether he had to receive a severance pay corresponding to unfair dismissal, or if he had to be rehired by the company. However, the company had less than 250 employees and, from a strict point of view, this employee was a trade union spokesperson with no special rights.

In this case, despite the fact that the employee was legally a trade union spokesperson (and not a trade union representative) and the right to decide belonged to the company, the Spanish Supreme Court ruled that the employee had the status of trade union representative, since the employee argued that he was a trade union representative instead of spokesperson, and the company did not oppose such statement. Thus, those facts that deprived the employee of his status of trade union representative were neither alleged nor proven by the company.

For more information, please contact Bufete Suárez de Vivero, S.L. our member firm in this country.

Sweden: A dismissal of an employee was declared invalid due to a close connection with the employee’s upcoming parental leave

The case concerned an employee who was dismissed four days after he had requested parental leave from work. The question in the case was whether the dismissal constituted a violation of the Parental Leave Act or if the dismissal was based on legal grounds.

The Parental Leave Act (Sw. föräldraledighetslag (1995:584)) contains a non-discrimination principle in Sections 16 and 17, according to which an employee is discriminated against if the dismissal is in any aspect related to the parental leave. The Labour Court found that the short time between the application for parental leave and the dismissal indicated that the dismissal had such connection to the parental leave that it was in breach of the previously mentioned principle. Due to a reversed burden of proof concerning discrimination in the Parental Leave Act, the employer had to prove that the dismissal was not related to the parental leave. The employer claimed that the dismissal had been made in order to cut costs. However, the court found that the employer had hired other people to perform the claimant’s work and thus that the employer had failed to prove that the dismissal was not related to the parental leave. The employer was obligated to pay general damages to the employee amounting to SEK 40,000. (Labour Court – AD 2017 no. 7)

For more information, please contact Cederquist our affiliated member firm in this country.

Sweden: Disobedience and general unwillingness to perform work constituted grounds for dismissal

The case concerned an employee, a seller, who was dismissed via email for neglecting his undertakings by not reporting to his supervisor as instructed, failing to report sick leave, not meeting the selling requirements and refusal to work. The questions before the Labour Court were whether the circumstances constituted legal grounds for dismissal and whether the employee was entitled to compensation, since the dismissal lacked some statutory formal requirements. The Labour Court found that the employee, despite warnings from the management, had failed to comply with the instructions regarding reporting to the supervisors. The Labour Court concluded that the disobedience of the duty to report and the general unwillingness to perform in accordance with his job description constituted legal grounds for dismissal. However, it was also found that the company had neglected formal requirements concerning a dismissal that follow from the Employment Protection Act (Sw. lag (1982:80) om anställningsskydd), Sections 8 and 10. The employer was ordered to compensate the employee by paying SEK 15,000 in general damages. (Labour Court – AD 2017 no. 3)

For more information, please contact Cederquist our affiliated member firm in this country.

UK: Disability discrimination – whether a condition is likely to result in a substantial adverse effect on normal day-to-day activities

The EAT considered the employee’s argument that type 2 diabetes should be treated as a progressive condition and therefore deemed to be a disability under the Equality Act 2010.

To assess whether it was a progressive condition, the correct question was whether the condition was likely to result in a substantial adverse effect on normal day-to-day activities. Even if there was a small possibility of the employee’s condition deteriorating in the future, that is sufficient to make it ‘likely’ and may result in the employee having a disability.

It should not be assumed that type 2 diabetes is a progressive condition under the Equality Act; indeed neither type 1 nor type 2 diabetes are given as examples of a progressive condition in the Guidance.

The EAT did not explore the extent to which the individual’s control over their lifestyle should be taken into account when assessing the long term effect of a condition.

For more information, please contact L&E Global.

UK: Gross negligence by a failure to act may justify dismissal without notice

The claimant was a Regional Operations Manager responsible for 20 stores. When an HR Partner sent an email to 5 store managers in his region, which undermined and manipulated the employer’s procedure for measuring staff engagement, the Manager failed to take any action. Following his dismissal without notice for gross negligence tantamount to gross misconduct, he brought a claim for wrongful dismissal.

The Court of Appeal confirmed that gross negligence can amount to gross misconduct, justifying summary dismissal without notice. However, there will only be limited circumstances in which an employee’s failure to act justifies summary dismissal, if they did not intend to act contrary to, or to undermine, the employer’s policies.

This case illustrates that where a manager’s negligence relates to a procedure, which the employer treats as an important part of its culture, and the individual is responsible for the success of that procedure, this can amount to a serious dereliction of duty which may justify dismissal.

That said, there are not likely to be many occasions where dismissing a grossly negligent employee without notice is risk-free, particularly if the negligence is a result of their failure to act, rather than their action.

For more information, please contact L&E Global.

Poland: Shorter notice periods allowed only if employee terminates the employment contract

As per the Supreme Court (case signature II PK 323/14), it is neither illegal nor unacceptable to make an agreement between an employer and employee, according to which, notice periods of contracts of employment can be reduced to periods shorter than prescribed by the Labour Code. This provision may be included in the contract of employment itself, or in a separate agreement. However there are two conditions necessary for such a provision. Firstly, this period is acceptable when it is the employee who terminates the contract. It is not possible to use shortened periods when an employer terminates the contract. The second condition is the necessity of the provision being for the benefit of the employee in the moment when the agreement was concluded. Previously, the Supreme Court’s approach found it acceptable to extend the notice period only (under the same two conditions). It also confirms that article 36 § 1 of the Labour Code is treated as a semi-imperative rule.

For more information, please contact A. Sobczyk & Wspólpracownicy our member firm in this country.

Poland: Claim for discrimination is allowed even if employee failed to appeal the termination before the deadline

Prior to the Supreme Court resolution of 28 September 2016 (III PZP 3/16), there were two discrepant approaches to this matter. There was an approach, according to which, if the termination of contract of employment itself was not successfully appealed, it was not possible to seek a claim for compensation based on a discriminatory reason of termination or a discriminatory choice of dismissal. It was justified that if the termination was not declared illegal it cannot be the justified cause for another claim. As for now, a discriminatory claim is treated completely separate from the appeal against termination, and is no longer treated as the circumvention of law constituting conditions and terms of such an appeal. The illegality behind both claims may be the same, however it is not necessary. After all, an employee may be dismissed for illegal reasons which are not discriminatory and, au contraire, reasons for termination that are not always justified means that the dismissed employee was not discriminated by this act.

For more information, please contact A. Sobczyk & Wspólpracownicy our member firm in this country.

Romania: The isolation of a football player during practice, because he has judicial claims related to his employment, is discrimination and harassment

The National Council for Fighting Discrimination is not a court of law in its own right and such decisions lead to administrative sanctions. However, the individual affected by the discrimination can ask the court to be compensated for the discrimination, based on the CNCD ruling. The CNCD found that in this case, the criteria for the discrimination was the use of a legally recognized right – the right to access the courts of law, in this particular case, for employment related matters. The administrative sanction the football club received is one of the highest ever.

For more information, please contact Magda Volonciu and Associates our member firm in this country.

Russia: A collective agreement establishes only the minimum amount of compensation to employees

A collective agreement establishes only the minimum amount of compensation to employees. The final amount of damages determined by the parties themselves should be sufficient and proportionate. The Presidium of the Russian Supreme Court, in its Resolution as of 26.10.2016 in case No. 6-PV16, determined that an employee may demand a larger sum than that specified in the collective agreement. If there is a reason to pay compensation to employees, the amount of pay from the agreement and the collective agreement is money that an employer must pay on an uncontested basis. The final sum must be negotiated by the employee and the employer. If they fail to agree, the amount of compensation shall be determined by court.

For more information, please contact L&E Global.