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  • Costs, compromise, Calderbanks

    Costs, compromise, and Calderbanks: Recent developments

    “The issue of costs is central to essentially all forms of legal practice.” — GE Dal Pont.

    It is a common (though perhaps dangerous) assumption that a successful party to litigation will obtain an order that the unsuccessful party pay their costs on a party/party basis.

    This is traditionally known as ‘costs following the event’, with the ‘party/ party’ component of a costs order usually amounting to about 70 per cent of the cost a party has actually incurred.

    However, the ACT Court of Appeal’s recent decision in Cooper v Singh provides a useful reminder that the awarding of costs is an entirely discretionary power that courts may exercise as they see fit.

    It follows that the expectations of a party (and their counsel) as cost may not align with the court’s view as to how its discretion should be exercised.

    Singh also highlights the complex relationship between Calderbank offers and Offers of Compromise, the latter a device created by the Court Procedure Rules 2006 (ACT) (“the Court Rules”).

    Singh

    In Singh, the plaintiff was injured in a motor vehicle accident leading to myriad personal injuries. Prior to the matter being heard, the defendants made an offer to settle the case for $540,000 plus costs. The offer was stated to be pursuant to the principle in Calderbank v Calderbank. The effect of the Calderbank nature of the offer was that, should it not be accepted and the plaintiff fail to obtain an outcome better than $540,000, the defendants could seek an order that the plaintiff pay their costs on an indemnity basis from the date of the offer.

    Through this regime, while a plaintiff may enjoy some success in obtaining a judgment, if a defendant can demonstrate that costs were unreasonably incurred because of a plaintiff’s rejection of an offer which would have seen him or her better off overall, a Calderbank may provide costs protection for the defendant. At first instance in Singh, the plaintiff succeeded at hearing but only for $311,603 — a sum considerably less than the defendants’ Calderbank offer.

    With the offer having been made shortly before the commencement of the hearing, the defendants sought an order that their costs, essentially those of the hearing days, be paid by the plaintiff on a full indemnity basis.

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    First published in Ethos.

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  • False Positive Employment Reference

    A false positive: employment reference checking

    The humble employment reference is an indispensable part of recruitment, but HR managers should be aware of risks.

    While the vast majority of employers take the provision of references seriously and provide fair and beneficial documents, a misleading or erroneous reference can be costly. A candidate may require
    more training than their reference suggests, or may be entirely unsuited for the position. A derogatory reference, meanwhile, can considerably harm an individual’s job prospects.
    Given the vulnerability of workers and prospective employers to inaccurate references, it is perhaps surprising that employers have few legal obligations to provide honest references.

    Duty to give a reference?

    If an employer is reluctant to provide a positive reference, they may be tempted to not provide one at all. Sometimes this will be the best option: the employer does not openly criticise a former employee, the worker is not burdened by a poor report and prospective employers are free to draw their own inferences.

    However, there are limited instances where employers may be obliged to provide a reference. In Australia, there is some judicial support for the implication of a contractual term compelling employers to provide references. If it is usual practice in an industry to provide them, and the worker is unlikely to find work without one, the courts might imply such a term. This will, however, be highly context-specific and there is certainly no blanket legal duty on employers to give references.

    Defamation and negligence

    Once a reference is given, employers may be liable under defamation law if it is inaccurate and damaging. An aggrieved worker might seek damages, or injunct the employer from making further defamatory statements. Employers can avoid liability by being honest and fair in their assessment of the worker, and only making negative statements supported by objective evidence. Provided the negative reference was not given for reasons of malice, the doctrine of qualified privilege will provide a strong defence to defamation lawsuits.

    While a prospective employer has no protection under defamation law for damagecaused to them by a false-positive reference, they may be able to sue for negligence. Employers might owe a duty of care to anyone who is likely to suffer damage as a consequence of (both negative and positive) misstatements in an employment reference, which would encompass the worker and possible future employers. This is certainly the legal position in Britain where one case saw an ex-employee successfully sue a company for negligence following the provision of a damagingly inaccurate reference.
    The legal position is unsettled in Australia – although some courts have endorsed the British approach, differences in underlying law means the question remains open. Until then, employers would be well-advised to ensure they are fair, honest and take reasonable care when providing employment references.

    Disagreeable agreement

    It is not uncommon for an employer and employee to agree upon a reference if the employment relationship breaks down and the employee exits by way of a settlement deed. These references are typically positive or neutral, and might not reflect the employer’s true sentiment. If Australian courts do establish a duty to provide accurate references, employers could be in breach of that duty by giving a false-positive, albeit agreed, reference.

    It is difficult to reconcile these competing concerns, and while the law remains unsettled, employers are in an uncomfortable position. As it is far harder to attach liability for omissions than positive statements, where possible, employers should only include objectively verifiable statements in an agreed reference.

    While several legal risks arise when organisations give employment references, they can be mostly mitigated through common sense. Provide accurate information, do not defame former employees and keep any negative comments to oral communication. If these precautions are followed, references need not be a risky business.

    John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. 

    First published in HR Monthly.

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  • Dirty washing on the line: Nasty employment disputes can generate bad publicity. How can HR help protect the organisation?

    Dirty washing on the line: Nasty employment disputes

    Nasty employment disputes can generate bad publicity. How can HR help protect the organisation?

    Newspaper readers love scandal, and employment disputes can be particularly scandalous. As the widely-publicised litigation between Channel Seven and Amber Harrison demonstrates, the airing of workplace grievances in open court can be damaging to all. Unfortunately for media-shy employers, the principle of open justice – that litigation must be open to the public – is an essential feature of the Australian judicial system.

    Gagging orders

    There are exceptions to the open justice principle. Most courts and tribunals have power to issue suppression, anonymity and pseudonym orders. For example, the Fair Work Commission can ‘de-identify’ (or hide the identity of) parties, order closed hearings, restrict attendance and prohibit the publication of evidence. These orders can be granted where the Commission is “satisfied that it is desirable to do so because of the confidential nature of any evidence” or “for any other reason”. The Federal Court and state courts have similar powers.

    Yet despite the scope of its powers, the Commission (and various courts) have been particularly hesitant to abrogate the open justice principle in the employment setting. The 2014 case of Corfield is illustrative. After an employee had sought an anti-bullying order, the employer applied to the Commission to conceal the identity of the parties. The employer submitted that “the publication of the name of the applicant and respondents in what is essentially a private and confidential matter will not be conducive to good governance of the respondent employer”.

    Given the employment relationship was ongoing, the respondent argued that a de-identification order was appropriate. Commissioner Michelle Bissett didn’t agree. The submissions of the employer were insufficient to overcome the “presumption… that a hearing will be conducted in public”. She concluded: “Mere embarrassment, distress or damage by publicity is not a sufficient basis to grant such an application.” While this is not an insurmountable hurdle, it does require the employer to demonstrate compelling grounds.

    Behind closed doors

    There are other ways to minimise the likelihood of employment disputes descending into trial by media. If an employee is exiting in a situation which may turn acrimonious, ask them to execute a Deed of Release in return for a small ex-gratia payment in addition to their termination entitlements. Not only does this prevent the employee from commencing litigation (at least in theory – some disgruntled ex-employees have been known to try suing regardless), but the Deed can also include a confidentiality provision. This restrains either party from disclosing the terms of the Deed or related circumstances, and a breach entitles the affected party to sue for damages.

    Such Deeds can include non-disparagement obligations. These often require that “the parties must not disparage each other”, with disparage defined as “any negative statement, whether written or oral, about either party”. Non-disparagement provisions are common in settlement agreements between commercial disputants, but can also be used in the employment context.
    Such clauses are no panacea. Particularly aggrieved employees may not agree to a Deed of Release, preferring to chance their arm before the Fair Work Commission or a court. And if the employee breached the confidentiality or non-disparagement provisions, (public) litigation would be required to seek damages – defeating the very point of the clause. However, in our experience once a Deed is signed and the employee has left the organisation, such steps rarely become necessary.

    Judicial luminary Michael Kirby once wrote: “An unfortunate incident of the open administration of justice, is that embarrassing, damaging and even dangerous facts occasionally come to light.”
    This sentiment may be cold comfort for human resource professionals trying to protect their organisation’s reputation. It only underscores, though, the importance of effectively managing the termination process to ensure that an employer’s dirty laundry is not aired on the front page.

    John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. He thanks Kieran Pender for his help in preparing this article. 

    First published in HR Monthly.

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  • High heels and head scarves: dress codes discrimination in the workplace

    High heels and head scarves: dress codes & discrimination in the workplace

    “Discriminatory dress codes remain widespread… the existing law is not yet fully effective in protecting employees from discrimination at work.” — Report of a British House of Commons Joint Committee.

    In 1977, the British Employment Appeal Tribunal heard an unusual complaint from an aggrieved bookseller. Austicks Bookshops in Leeds had a policy that prohibited female workers from wearing trousers. One employee, Ms Schmidt, refused to comply. She was dismissed, and subsequently brought proceedings on the basis that the employer’s policy constituted sex discrimination.

    In rejecting Ms Schmidt’s claim, Justice Nicholas Phillips recognised the expansive powers of an employer to determine appropriate dress code in the workplace. “As a general proposition,” he opined, “an employer is entitled to a large measure of discretion in controlling the image of his establishment, including the appearance of staff, and especially so when, as a result of their duties, they come into contact with the public.”

    Read in 2017, the judgment in Schmidt seems rather antiquated. Certainly, the law has taken considerable steps over the intervening four decades to address such discrimination. Yet the dilemma faced by Ms Schmidt — comply with a sex-specific dress code or be dismissed — lingers to this day. Indeed, just last year professional services firm PwC found itself at the centre of a media storm after an outsourced receptionist in London was sent home for refusing to wear high heels. The furore led to a joint committee inquiry by the House of Commons, which found that clothing related
    discrimination remained widespread in Britain and had not been adequately addressed by legislation.

    There is no evidence to suggest that the situation is any better in Australia. This is not solely a matter of sex discrimination either. An employer’s ability to regulate employee dress standards, regardless of gender, remains unsettled. Questions of religious discrimination also intrude.

    In March 2017, the European Court of Justice found that it was not discriminatory to fire a Muslim employee who insisted on wearing a head scarf contrary to a workplace policy prohibiting visible signs of religious belief. These issues are interrelated. This article will begin by discussing an employer’s power to prescribe and enforce dress codes in the workplace. It will then consider possible legal remedies available to aggrieved employees, located in discrimination legislation and the Fair Work Act 2009 (Cth). Given the paucity of Australian case law in this area, reference to foreign  jurisprudence will be made where appropriate.

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    John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. He thanks Kieran Pender for his help in preparing this article. 

    First published in Ethos.

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  • We need the voices of public servants in the political debate. Their free speech is in peril

    Free speech is in peril: We need the voices of public servants in the political debate.

    Praising your agency is welcome, but not criticising it – new social media guidelines continue a troubling trend of silencing public servants’ free speech.

    Another day, another attack on the ability of public servants to participate in Australian democracy.

    On Monday the Australian Public Service Commission (APSC) released revised guidance on how federal government employees should use social media. It advised that expressing disagreement with government policy, criticising the prime minister or even liking a negative social media post could land public servants in hot water. This, the APSC contended, was the case whether or not comments were made anonymously, on a private account or after hours.

    The new guidelines, which public service commissioner John Lloyd insists are “not more restrictive than previous guidance”, represent the latest frontier in a sustained campaign of government encroachment on the free speech of public servants. In 2013, an immigration officer was fired for criticising department policy on Twitter using a pseudonym. Last year, Centrelink was forced to reinstate an employee who had been terminated for speaking out online. In the Australian Capital Territory meanwhile, the local Labor government recently attempted to restrict criticism from public servants and force them to “dob in” colleagues who disobeyed. For every case that makes the headlines, there are also many more where public servants are sanctioned behind closed doors.

    Nor is the issue straightforward. The government undoubtedly has a legitimate interest in maintaining a neutral and effective bureaucracy. The overt politicisation of the public service would have hugely deleterious consequences, from wholesale turnover following change of government to diminished societal trust in public administration.

    But that does not mean public servants should be silenced. Doing so not only disenfranchises them from proper participation in the system of Australian democracy; Australia’s limited free speech protections, it should be remembered, are predicated on the nexus between political communication and representative government. But it also deprives the broader community of important voices in political debate – public servants are often some of the most qualified contributors to policy discussion.

    The APSC’s guidance is blind to such countervailing considerations. It offers:“Criticising the work, or the administration, of your agency is almost always going to be seen as a breach of the [code of conduct].” Praise is welcome, though. “This doesn’t stop you making a positive comment on social media about your agency,” the guidelines continue, making a mockery of the stated desire for impartiality. Neutrality, it seems, does not swing both ways.

    The latest diktats from commissioner Lloyd’s office also raise intriguing legal questions. In 2013, amendments to the public service act sought to extend the code of conduct’s reach – certain obligations were professed to apply “at all times.” Monday’s guidance argued: “[A public servant’s] capacity to affect the reputation of [their] agency and the APS does not stop when [they] leave the office … APS employees are required by law to uphold the APS Values at all times.”

    Except, “at all times” may not really mean “at all times”. In 2016, Fair Work Commission vice-president Adam Hatcher dismissed arguments to that effect from Centrelink. “I reject completely,” he wrote, the proposition that the law requires public servants “to be ‘respectful’ at all times outside of working hours, including in the expression of their attitude to the government of the day.” Such a “gross intrusion into the non-working lives and rights of public servants”, Hatcher suggested, “would require express and absolutely unambiguous language.”

    Except, this is a half-truth at best. In 2003, customs officer Peter Bennett was directed not to make media comment in his capacity as a union representative where doing so would disclose information gained via his official position. Bennett refused to comply and was charged with breaching a secrecy regulation made under the public service act’s predecessor. Justice Paul Finn of the federal court invalidated the regulation on free speech grounds.

    It is a great shame the APSC overlooked this case while preparing new social media guidance for the public service. If its drafters had read the judgment carefully, they might have reflected on one particular line. “Public servants cannot be,” Finn quoted, “‘silent members of society’”.

    John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. 

    First published in The Guardian.

    Disclosure: John Wilson acted for Peter Bennett in the federal court proceedings.

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