WARNING TO EMPLOYERS
SEEK LEGAL ADVICE
WHEN DRAFTING EMPLOYMENT AGREEMENTS
8 October 2009
Employers need to ensure they seek proper legal advice from a workplace lawyer when drafting their employment agreements. They need to seek legal advice at the beginning of an employment arrangement or any time it changes to ensure they get the contract right.
Many employers are now considering Enterprise Agreements under the Fair Work Act to avoid the implications of the Modern Awards. The recent case of Fair Work Ombudsman v The Palcon Group Pty Ltd [2009] is a sobering reminder of the unnecessary risks that an employer takes when failing to obtain proper legal advice.
The employer (Palcon Group Pty Ltd) was ordered to pay $60,000 after an error in the drafting of its AWAs enabled two employees to succeed in payment claims despite the fact that the Federal Magistrate said the employees claims were "opportunistic".
The directors of Palcon Group Pty Ltd, asked a friend who was an IR consultant to draft the AWAs.
Federal Magistrate Robert Cameron found that the poorly drafted AWAs (created without a lawyer), required the employer to pay both the minimum and bonus payments which was not the director’s intent.
The Federal Magistrate found that the employer’s main error had been in failing to engage a lawyer to draft the "important contractual documents".
"While the engagement of an industrial relations consultant to undertake certain tasks was understandable and probably appropriate, the [employer’s] apparent failure to obtain legal advice on the drafting of the AWAs is less easy to understand," he said.
He found that the employer had underpaid the two workers and breached the Workplace Relations Act. The employer was ordered to pay the employees and in addition pay a penalty for its failure to obtain legal advice.
Employers need to be mindful of the risks they run if they do not consult a workplace lawyer.
As always, prevention is better than a cure. The cure is to document and seek proper legal advice. Employees are often a business’s greatest asset however, if not properly managed, can easily become liabilities.
If you are unsure if your documentation is adequate, please contact Tiana Daly on 9545 7255.
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