Topic 2: The legal environment for managing people
Employment and workplace law revisited
Organisations and legal frameworks
The European Union
The United States
Legislation in the Asia Pacific region
What managers of people must do
The employment contract as a legally enforceable document, and if it is breached, the injured party can sue for damages. The employment contract includes express terms (set out in the contract), implied terms and terms imposed by statutory regulations. Some of the implied duties of employers are to provide work and not to damage the relationship of trust; while implied duties of employees include confidentiality and handing over inventions made during the course of employment.
Decisions and actions concerning people management within organisations must always take into account the legal framework that applies in the country in which the decision or action takes place. This may seem an obvious point, but it is commonly ignored in management education. . Ignorance of the law is no excuse for managers failing to meet responsibilities to employees.
In most Organisation for Economic Cooperation and Development (OECD) countries governments make laws which set minimum conditions of employment. In Australia, however, the Constitution provides the Commonwealth with quite limited powers in this regard. Instead of direct legislation, the Australian Government has relied on the establishment of a system of tribunals that have intervened in industrial disputes and, in the process, codified terms and conditions of employment in awards.
Stone (2008: 113) identifies five sources of legal obligation concerning employment in Australia. Contracts can be written or oral. As well as terms such as remuneration and hours of work, contracts can cover termination, confidentiality, intellectual property and probationary periods. Statutes are pieces of legislation that specify minimum conditions of employment which override conditions in contracts. An example is the requirement that employers do not discriminate on the basis of such matters as race, colour, sex, sexual preference or age. Statutory agreements were introduced in 1996 for negotiations within specific organisations. These included Australian Workplace Agreements (between an employer and an individual) and Certified Agreements (between an employer and a group of employees). These have since been superseded by the National Employment Standards (NES), which were introduced with the Fair Work Act 2009. Awards usually specify minimum pay and conditions for employees in particular industries and occupations and are administered by Fair Work Australia. It is important that you understand that awards are a feature of Australian employment law and, unlike the other sources discussed here, are not found in other countries. Common law is 'case law', developed within the court system.
There is a sixth source of law—not considered by Stone—which can create obligations: 'custom and practice' (Wallace-Bruce, 1994; Creighton & Stewart, 2000). 'Custom and practice' refers to practices which develop informally over time—for example, the provision of housing by mining companies for employees in remote areas—and which come to be accepted as normal in a particular industry or organisation
There are six general obligations of employers which apply regardless of the specific legislation in place at a given time, and which courts are likely to take as given when hearing disputes about employment. These are: Wages: a basic obligation of an employer is to pay wages in return for work. Minimum rates of pay for different occupations, industries and jurisdictions are usually specified in awards and agreements. Expenses: employers are obliged to reimburse employees for costs directly attributable to the business. Providing work: while an employer is not obliged to provide work, he or she is generally obliged to pay an employee if the employee is ready, willing and available to work as instructed. Providing a safe and healthy workplace. Protecting staff from discrimination and harassment. Protecting the privacy of staff.
The major piece of legislation concerning employment in Australia is the Fair Work Act 2009 (Cwlth). This Act governs the operation of Australia's industrial relations system and sets the framework of rules for industrial relations. This Act started the process of phasing out the previous government's industrial relations laws by introducing amendments to the Workplace Relations Act, including measure to: Prevent the making of new AWAs allow employers. Currently using AWAs to offer Individual Transitional Employment Agreements (ITEAs) for the transition period. Introduce a new No Disadvantage Test for collective agreements and ITEAs. Enable the Australian Industrial Relations Commission to undertake the process of award modernisation.
Labor's reforms involved the creation of a 'new independent umpire' to oversee the workplace relations system. Fair Work Australia assumes the responsibility of the Australian Industrial Relations Commission, Australian Fair Pay Commission, Workplace Authority, Workplace Ombudsman and the Office of the Australian Building and Construction Commissioner. The Fair Work Act 2009 establishes Fair Work Australia as a one-stop shop for information, advice, dispute settlement and compliance on workplace issues.
Commonly referred to as the safety net, the National Employment Standards (NES) underpins employment and collective bargaining under the Fair Work Act 2009. It includes ten legislated minimum national employment standards that apply to all employees and cannot be removed or modified in the workplace.
The minimum standards making up the NES include:
* Maximum weekly hours of work is set at 38 hours. Employees may refuse unreasonable overtime.
* Parents have a right to request flexible work arrangements until their child reaches school age. An employer may refuse a request on 'reasonable business grounds'.
* Both parents have a right to a separate period of up to 12 months unpaid parental leave.
* Annual leave is at least four weeks per year for full-time employees and is accrued on the basis of an employee's ordinary hours of work.
* Personal/carer's leave is no longer capped at ten days per year and may be cashed out as long as the employee remains entitled to 15 days annually.
* Community service leave is provided for eligible community service activities, such as jury duty and voluntary emergency services.
* Long service leave draws on state and territory legislative arrangements.
* An employer may request an employee work on a public holiday but an employee may refuse on reasonable grounds.
* Notice of termination and redundancy must be in writing
* A Fair Work Information Statement must be provided to all new employees from 1 January 2010.
Employees earning more than $100,000 per year are able to negotiate their own pay and conditions without reference to awards. However, these employees are covered by the NES.
Collective bargaining under the Fair Work Act 2009 is central to Labor's system of employment relations. No distinction is made between union and non-union agreements, and the terms of collective bargaining allow for individual flexibility arrangements. Unions do not have a guaranteed role in collective bargaining. As under WorkChoices, statutory rights of entry are only available to union official bearing a permit.
The Fair Work Act introduces a number changes to the previous WorkChoices legislation in
regards to unfair dismissal:
* 'Operational reasons' is no longer an acceptable reason for dismissal, but dismissal for reasons of genuine redundancy cannot be deemed unfair.
* The 100-employee exemption has been removed, but employees are required to serve a minimum qualifying period before they can bring an unfair dismissal claim.
* Employees of a small business of fewer than 15 employees are not eligible to claim unfair dismissal until they have been employed for a minimum of 12 months.
* Employees of businesses of more than 15 employees must meet a qualifying period of six months.
Six Commonwealth Acts prohibit discrimination. They are the:
* Racial Discrimination Act 1975
* Sex Discrimination Act 1984
* Human Rights and Equal Opportunity Commission Act 1986
* Disability Discrimination Act 1992
* Equal Opportunity for Women in the Workplace Act 1999
* Age Discrimination Act 2004.
Each state has also enacted anti-discrimination legislation.
The Superannuation Guarantee (Administration) Act 1992 (Cwlth) requires that an employer must pay superannuation contributions for all employees. The contribution in 2004 is 9 % of earnings, subject to a maximum amount, but there are long-term plans to increase this.
Unlike the other areas of law discussed above, there is not a Commonwealth Act governing occupational health and safety (OHS). Each state and territory has its own legislation, There is a high degree of uniformity among the state and territory Acts and they focus on the minimisation and prevention of occupational health risks
Many countries have subscribed to the International Labour Organisation's Declaration on Fundamental Principles and Rights at Work. These rights include:
a) freedom of association and the effective recognition of the right to collective bargaining
b) the elimination of all forms of forced or compulsory labour
c) the effective abolition of child labour
d) the elimination of discrimination in respect of employment and occupation.
However, not all countries have effective ways of implementing these rights. Until recently, China was dominated by state-run enterprises. The conditions of work were set by central authorities and ensured lifetime employment and welfare (known as the 'iron rice-bowl' policy). Now there are three main types of employment—by 2000 39% of employees were in state-owned enterprises (SOEs); 3% in foreign-owned firms (though their effect on the economy is disproportionately large), and the remainder worked in township and village enterprises. Unemployment has become a major problem in China as state-run organisations are streamlined or transferred to private hands.
There are special regulations governing international joint ventures (IJVs). These aim to protect workers from exploitation while providing incentives for foreign investment. The government requires IJVs to set wages at 120–150% of those of SOEs in similar industries and locations. The Labor Law of 1995 also guarantees continuous employment for any worker who has been with an organisation for more than ten years—and this includes service with an SOE taken over by an IJV. Dismissal can only be for gross misconduct.
The regulations cover three types of employment—fixed period, permanent and informal employment in the traditional sector. For permanent employment, termination is almost impossible after a three-month probationary period. The laws require employers to provide annual leave, incremental overtime rates, sick leave and accident compensation, but there is only weak enforcement of these requirements. There is no minimum age for children who work, but below a certain age they are not allowed to work at night or in mines.
Discrimination is largely permitted in Indonesia—advertisements in newspapers often refer to age, gender and the need to provide a photograph
Managers must take preventive measures to ensure that employees conform to the law, and they must take appropriate action when there is a claim that the law has been breached. The first requirement is that the employer must ensure that all employees are familiar with the relevant legal requirements. This is normally done by drafting procedures and policies which incorporate the legal rules. The next step is to provide training for employees so that they know the significance of the rules and how to do their job within the legal framework. Then the employer should establish a monitoring system which examines the compliance of the workplace. This is particularly important with such legislation as occupational health and safety (OHS), where the law usually requires a committee or representative to be appointed and for regular meetings to be held to review the OHS. A further requirement is for the employer to set up a system to deal with breaches and complaints.