Book Review

Employee Protection at Common Law

Review by Craig Cameron*

Joellen Riley (2005), Employee Protection at Common Law, The Federation Press, 280pp pb. , rrp $59.95 

A timely book in the post-WorkChoices environment.

The arrival of Joellen Riley’s book “Employee Protection at Common Law” is timely in the post-WorkChoices environment. Riley identifies, examines and applies legal tools presently available in Australia to demonstrate their potential in “ensuring fair dealing in work relationships” within a new private law of work in Australia. Fair dealing is defined as the “fair treatment in the economic exchange of work for remuneration and other economic benefits” (p 2).

Why are work relationships compatible with equitable obligations of good faith and fair dealing (i.e. the legal tools)? According to Riley, work relationships are relational contracts. Applying classical contract law principles to interpret work rights and obligations is inappropriate because the work relationship is defined by an inequality of power. Workers do not freely accept the bargain if the worker has no choice in available work, where contracts terms are imposed, not negotiated and changing circumstances during a contract render the bargain unfair (pp 37-38). As “good faith” is a feature of relational commercial contracts, importing the same obligation into work relationships is not a radical step. Riley justifies this step on the grounds of reciprocity in employer and employee duties, economic efficiency and that other western democracies, in particular the UK, have recognised a good faith standard of “mutual trust and confidence” in work relationships.

Chapter 3 examines UK and Australian developments concerning the good faith standard in work contracts. Whilst Australian courts recognise the duty of “mutual trust and confidence” in wrongful dismissal cases, their UK counterparts have extended the duty to include fair dealing, which upon breach enables the worker to claim damages independent of compensation purely for termination (p 66). Riley urges that good faith be applied as a principle of construction in work contracts, particularly with respect to terms which employers enjoy discretion, such as the payment of performance bonuses.

Chapter 4 features estoppel, a complementary legal tool to the obligation of fair dealing in the construction of contracts because it addresses non-contractual promises, assumptions and expectations. Following a discussion of estoppel in pais and equitable estoppel, Riley offers a fascinating examination of Bredel v Moore Business Systems (1) to identify the potential for and obstacles to employing estoppel in workplace scenarios. The first obstacle - the predominance of the written contract in determining work disputes – can be countered by a steadfast application of estoppel. Quantifying detriment, an essential element of estoppel, in monetary terms may also defeat genuine claims. A worker who surrenders service in reliance on unfulfilled assumptions or expectations, albeit that a reward is obtained for work, should constitute a detriment for the purposes of equitable estoppel (p 127). The appropriate remedy, and third obstacle according to Riley, is overcome by relying on the equitable rationale of reversing the worker’s detriment. The expected or assumed value of the work is relevant in calculating that detriment. The chapter concludes with an application of equitable estoppel to cases concerning incentive-based remuneration schemes and redundancy following employer promises of long term job security.

Economic duress and unconscionable dealing are the legal tools advocated in Chapter 5 which permit workers to vitiate harsh bargains. Two workplace scenarios are examined: a variation in working terms and conditions (e.g. a requirement to sign an AWA for existing employees or a change in employment status from employee to independent contractor) and deeds signed by a departing worker releasing the employer from future liability.           

In Chapter 6, Riley warns that an “unprincipled development” of post-employment restraints and fiduciary duties which extend beyond the employee’s contractual obligations jeopardises fair dealing in work relationships. Riley is particularly concerned “if an automatic assumption that the employee owes fiduciary duties to the employer is used to prejudge the allocation of newly created property rights, when those newly created property rights were not a result of performance of the employment duties” (p 173). Riley’s critique of staff and client non-solicitation clauses in employment contracts, which arguably confers an unjustified benefit to the employer and stymies a competitive labour market, had this reviewer questioning his own position on post-employment restraints. Riley calls on the judiciary to ensure a careful and proper application of equitable and common law principles.   

Part IVA (unconscionable conduct) and Section 52 (misleading or deceptive conduct) of the Trade Practices Act 1974 (Cth) (“TPA”) are statutory controls on unfair commercial practices identified by Riley in Chapter 7 which support fair dealing in a new private law of work. The statutory controls are:

  • Evidence of a community expectation of fair dealing in commercial contracts characterised by market power and vulnerability. Riley points out that if a person who works within his or her own small business is protected from the oppressive conduct of a larger, more powerful business, then comparable protection for an employee of that larger business is warranted (p 199);
  • A direct source of standards and remedies which are “better tailored to provide individualised justice” in workplace scenarios. Whilst equity permits rescission of a contract, the TPA remedies enable the contract to be effectively re-written through the variation and severance of unfair terms (p 202); and
  • A rich source of jurisprudence to assist judges with applying fair dealing standards at common law to resolve work relationship disputes in the event that the TPA cannot offer the worker a direct cause of action.

Joellen Riley has made a valuable contribution to the labour law landscape. The judiciary is equipped with the tools necessary to develop a new private law of work in the wake of WorkChoices. Nevertheless, Riley acknowledges that access to justice may be problematic in forums other than the Industrial Relations Commissions,  which are “more forbidding”, “reputedly more expensive” and “time-consuming” (p 31). One potential solution raised by Riley is for State and Territory governments to empower their Industrial Commissions with jurisdiction to resolve work contract disputes according to common law and equitable principles (p 32). Accordingly, this book would make compelling reading for State and Territory politicians contemplating a practical response to recent workplace reforms and IR Commissioners facing diminished workloads and, for some, an uncertain future.  

(1) [2002] NSWSC 185 (Bergin J); [2003] NSWCA 117 (Meagher, Handley and Santow JJA).

* Craig Cameron is an  Associate Lecturer and Member of Socio-Legal Research Centre, Griffith University

Posted 14 December 2006

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