Australia: Workplace Relations Update

Last Updated: 29 August 2007


  • Beware of enforceable employment policies
  • Child Employment Principles Case 2007 in New South Wales
  • New pay scale for Real Estate Agents

Beware of enforceable employment policies

In 2006, Justice Wilcox in the Federal Court of Australia held that an employer’s redundancy policy was a term of a senior employee’s contract of employment, even though the policy was never meant to apply to non-award employees.

The employer appealed this decision and on 7 August 2007 the Full Bench of the Federal Court of Australia handed down its decision on the appeal which again considered the question of whether a policy is a term of an employee’s contract (Goldman Sachs JB Were Services Pty Limited v Nikolich [2007).

In this case, a policy contained in the employer’s handbook on workplace safety stated that the employer committed to take "every practical step to provide and maintain a safe and healthy work environment". The employer appealed Justice Wilcox's decision to award the employee $435,000 for loss of income and $80,000 for pain and suffering from psychological injury suffered from breaching the policy because of alleged intimidation and harassment by his manager.

When Mr Nikolich was employed his letter of appointment included the following clause under the heading "General Instructions":

"From time to time the Company has issued and will in the future issue office memoranda and instruments with which it will expect you to comply as applicable. If you have any queries at any time about which memoranda and instructions apply to you, you should raise that question with me or with Colin."

At the time he was given the letter of appointment he was also given an employee handbook which comprised 10 chapters and was entitled "Working With Us". It contained various policies, procedures and rules that employees were expected to follow while employed by the employer.

The majority of the Court considered that policies and procedures could take a number of forms. The policy could be:

  1. informative – for example, such as telling employees what they needed to do if they lost their mobile phones. Such policies or procedures would not be incorporated as a term of the employee’s contract.
  2. aspirational – for example, such as outlining the cultural and family values of the employer. Similarly, these policies would not be incorporated as terms of the employee’s contract.
  3. contractual or promissory – for example, where the employer promises to do something, as in the case of the commitment made to provide a safe and healthy workplace.

The Court said that the language used in the safety policy, taken in its context, pointed to the statement embodying a contractual obligation and therefore was a term of the employee’s contract. The Court also considered the company’s harassment and grievance procedure policies but held that they were not contractual because of the language used in them.

Lessons for employers

  • review all written contracts of employment and employment policies and procedures including employment manuals and employee handbooks
  • review the terms of policies and procedures to ensure that those intended to be merely informative or aspirational in nature are appropriately worded to reflect this purpose
  • ensure that all employee complaints are promptly dealt with in accordance with company policies and procedures and comply with policies that are contractual in nature.
    by Steven Troeth and Gisella D’Costa
Child Employment Principles Case 2007 in New South Wales

The Industrial Relations (Child Employment) Act 2006 (NSW) (Act) was introduced on 27 November 2006 and has caused significant uncertainty amongst employers in New South Wales as to the appropriate terms and conditions of employment for child employees.

In NSW, employers covered by WorkChoices have an ongoing obligation under the Act to ensure that the conditions of employment which are being provided to employees aged under 18 (child employees) do not, on balance, result in a 'net detriment' to the child employee when compared to the minimum conditions of employment under the comparable state award and industrial relations legislation in certain circumstances (No Net Detriment Test).

On 22 May 2007, the Industrial Relations Commission of New South Wales (NSWIRC) set down principles designed to provide guidance to employers and an industrial court in assessing whether a child employee's agreement or arrangement meets the No Net Detriment Test in the Child Employment Principles Case 2007 (No Net Detriment Principles).

The principles provide some guidance to assist employers in determining whether they have met their obligations under the Act.

An outline of the requirements under the Act and the application of the No Net Detriment Principles is set out below.

When does the Act apply?

The Act applies:

  1. if a child employee is employed by an employer covered by WorkChoices (an affected employer) under an agreement or other arrangement entered into on or after 27 March 2006 (for example, under a contract of employment or a workplace agreement); and
  2. a NSW award is in place which covers employees performing similar work to that performed by the child which does not bind the affected employer (comparable NSW Award).

What does the Act require an affected employer to do?

If the Act applies, then an affected employer must ensure that:

  1. the child employee is provided with the same conditions of employment as the minimum conditions of employment for a child; or
  2. if the conditions of employment provided to the child employee are different to the minimum conditions of employment for the child – the conditions of employment provided to the child employee do not, on balance, result in a net detriment to the child employee when compared to the minimum conditions of employment, that is it meets the No Detriment Test.

What are the minimum conditions of employment for a child employee?

The minimum conditions of employment for the child employee are:

  1. the conditions of employment for employees performing similar work to that performed by the child employee for which provision is made in the comparable NSW Award (minimum conditions under the comparable NSW Award); and
  2. other conditions for which industrial relations legislation makes provision (for example, the Annual Holidays Act 1944), as if the affected employer were bound by the comparable NSW award (minimum conditions under industrial relations legislation).

How is the No Detriment Test applied under the No Net Detriment Principles?

Under the No Net Detriment Principles set by the NSWIRC:

(a) the No Net Detriment Test will not be met where an affected employer fails to provide a child employee with certain minimum conditions which apply under the comparable NSW Award or industrial relations legislation such as:

  1. payment for all work performed;
  2. payment in full in money and without deductions;
  3. payment at the base rate of pay and payment of wage related allowances; and
  4. provisions relating to special requirements for the employment of children, including but not limited to supervisory arrangements, limitations on work at certain times, reasonable notice of rosters and changes of shift/working hours, supervisory arrangements, entitlements to annual leave and other forms of leave and occupational health and safety; and

(b) there may be a net detriment to a child employee under the No Detriment Test where:

  1. the amount payable to the child employee is less than the total amount payable to the child employee under the comparable NSW award or industrial relations legislation; or
  2. the child employee’s conditions of employment otherwise differ from the provisions of the comparable NSW Award or industrial relations legislation and as a consequence the child employee's conditions of employment, on balance, results in a net detriment for the child employee.

(c) the NSWIRC sets down a number of factors for an industrial court to consider in determining whether or not there has been a net detriment to the child including the totality of conditions provided to the child employee, circumstances specific to the child employee i.e. their age, the work to be performed and the circumstances surrounding the agreement, whether the conditions reflect the terms of an industrial instrument made or approved by the NSWIRC or the Australian Industrial Relations Commission before 26 March 2006, and other matters.

What are the implications of the Act for an employer's business?

Employers in NSW should review the conditions of employment which are currently being provided to any child employees against the comparable NSW Award and industrial relations legislation to ensure that they are not breaching their obligations under the Act.

An employer who fails to comply with its obligations under the Act can be subject to compliance notices and civil penalties. The maximum penalty for not complying with the Act is $10,000 per breach. The maximum penalty for refusing or failing to comply with a requirement under a compliance notice, without reasonable excuse is $11,000.

Further information

Contact a member of gadens lawyers workplace relations team to obtain more information about how the Act may impact on your organisation.
by Kristen Barratt

New pay scale for Real Estate Agents

On 3 August 2007 the Australian Fair Pay Commission determined a new Australian Pay and Classification Scale for the real estate sector being the Real Estate Agents’ (Commission Only) Australian Pay and Classification Scale (the new Pay Scale).

The new Pay Scale comes into operation on 1 October 2007 and allows certain employees engaged as real estate agents/ salespersons to agree to be paid by commission only arrangements instead of being paid by hourly rates of pay. It may be beneficial for some real estate agents to have their agents covered by the new Pay Scale rather than an existing Pay Scale.

Where employees do not agree in writing to be covered by the new Pay Scale, they will retain all relevant employment entitlements and will be unaffected by the new Pay Scale.
by Gisella D'Costa


Kathryn Dent

t (02) 9931 4715


Mark Sant

t (02) 9931 4744



Ian Dixon

t (03) 9252 2553


Dan Feldman

t (03) 9252 2510


Steven Troeth

t (03) 9612 8421



John-Anthony Hodgens

t (07) 3231 1568



Nicholas Linke

t (08) 8233 0628



Tim Masson

t (08) 9223 9223



Stephen Devenish

t (07) 4031 1622


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