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Thinking you've done everything right isn't enough

Saying it like it is with Joe: Case study #1 - Thinking you've done everything right isn't enough.
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Thinking you

Thinking you've done everything right isn't enough

30 June 2016

Hear from Joe Murphy, Managing Director - National Workplace, Australian Business Lawyers & Advisors (ABLA), on how an employer who thought she was doing everything right still got hit by a crippling claim. What could she have done to better protect her business and fairly manage her employees?

Video transcription

Workplace Relations claims

I think I always come back to the point that it doesn't matter what you do, you can still end up in a court or a tribunal, facing a claim. It doesn't matter how good or bad you are, there is still a chance that you'll end up in the tribunal. And of course, there are many employers who don't follow the rules and get away with it for a very long time, but eventually, you get stung by a claim. The best position to be in is, of course, when you're best prepared, you've got the right arrangements in place. But once a claim comes, the difficulty for some businesses is, when they've done all the right things, when they've ticked all the boxes, crossed all the Ts, dotted all the Is, done all the right things, and a claim still arrives at their front door, they feel aggrieved about that, and they have a right to feel aggrieved about it, because, if they've done all the right things, shouldn't that mean that they're not gonna get sued? Well, it doesn't mean that. 

Case study

So, when I think about some case examples, one in particular was an unfair dismissal case that I had a call from a client, it was a director for a business, and that business had gone into liquidation. The director had no control over that, wasn't her fault. It was poorly run before by the previous manager and she'd taken it over when it was on its last legs, and had to put it into liquidation. That meant that a number of the employees walked out without some of their entitlements, and, you know, she had done all the right things. She'd done her best to try to keep the business afloat. One of the employees went off and commenced an unfair dismissal claim, because she had lost her job as a result. That unfair dismissal claim ran on its own and took on a life of its own without anyone opposing the claim, because the company was in liquidation. 

What really should have happened, is someone should have stepped in and informed the commission that the company was in liquidation. They didn't, and a judgement came down against the company. Now, that wasn't a problem, for a company that's already in liquidation, the judgment's questionable in terms of its enforceability. What the employee then attempted to do was, that employee, who was also confused, and didn't understand what she was doing, took the judgement from the Fair Work Commission to the Federal Circuit Court. And at the Federal Circuit Court, put on an application to join the director as a party to the proceedings, and try to make her responsible for the unfair dismissal result, which was a full 26 weeks' pay. Of course, the director hadn't had any deliberate hand in terminating the employment of the employee who was aggrieved, and in fact she'd done the right thing by putting the business into liquidation, so it wasn't trading while it was insolvent. 

That employee, that client of mine then had to go down to the Fair Work Commission and defend that case, and it was at that stage that she needed to have legal representation. I got involved, and of course, we got her out of it, and it was a good result, but do you think she felt good about the result? No, because she was $10,000 behind in legal fees, which was pretty good, for how much work we did on it, but nonetheless, it was cold comfort for her, that she was $10,000 in legal fees, and she'd done all the right things. 

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Now, if she'd had insurance in place at the time and she'd had all the right arrangements in place, she'd had a workplace advice line that guided her through the steps earlier on, there are a range of steps at which she could have saved herself these problems. She had to have a workplace advice line to rely on at the front end. She could have advised the employees better, and avoided a claim. If she hadn't done that, she could've relied on the firm and the insurance policy for the purposes of being defended legally, having the successful legal cases she had, but also having her legal costs paid for.

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