Unilateral change by an employer to term of employment?

13 September 2013
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Legal remedies for breach of contract are often overlooked by unions when employers unilaterally change an established condition which is not part of an enterprise agreement but has been part of the landscape of conditions in the workplace.

Understandably, unions are much more disposed to look to a collective resolution via enterprise agreements or dispute resolution procedures in Fair Work Commission (FWC) or state industrial tribunals.

But sometimes, those traditional dispute resolution techniques via industrial tribunals don't work because an employer is intransigent and/or the tribunal is unable or reluctant to resolve a dispute which falls outside the terms of the enterprise agreement.

In these situations, one option is to examine whether your members can enforce their right to the condition or recover damages for breach of the condition via a breach of contract claim.  While these cases have to be run in the name of an individual member, they can be used as a test case to provide a precedent for the rights of other employees.

Tools of the trade

In 2011, Maurice Blackburn successfully ran a case like this. In Aiezza v Victorian WorkCover Authority, Ms Aiezza had an agreement with her employer to provide a vehicle for the purpose of work. The vehicle was also available for personal use on the payment of a weekly stipend. The vehicle was considered a tool of the trade when used in her role as an Occupational Hygienist, but she had never satisfied the requirement to use the vehicle for at least 65 per cent of her work per annum. The employer widely ignored that requirement. Ms Aiezza saved significant amounts of her own money by being able to access the vehicle for personal use, and gave up promotions so that she could keep her car.

In April 2010, the employer reviewed the private use of tool of the trade vehicles and determined that Ms Aiezza was no longer eligible for the vehicle because of the 65 per cent rule and she was required to purchase her own vehicle.

One of the issues for determination was whether there was an enforceable contract between the employee and the employer for the car.

Magistrate Lauritsen determined that the initial application in the year 2000 by Ms Aiezza for a tool of the trade vehicle was an offer accepted by the employer. The offer included a term that the agreement would only cease when Ms Aiezza resigned, she changed employment within the employer or by mutual agreement. Valuable consideration passed between the partie regarding the payment of the stipend and the provision of the vehicle. Accordingly a contract had formed. 

Approximately each three years after that time, Ms Aiezza completed an order form for a new vehicle. The most recent order was in August 2008.  The new order form was regarded by the Magistrate as creating a new contract in the same terms as the original contract.

He then determined that due to the employer unilaterally ending the agreement, it was in breach of the clear terms of the contract to end the agreement.

Having established there was a contract and a breach of a contract, the next part of the decision for the Magistrate was to determine any loss and damage. In this case, it was the value of the vehicle for the remainder of the agreement.

In the case of Ms Aiezza, the Magistrate determined that the Victorian Workcover Authority was prevented from departing from a common understanding regarding the provision of the car because Ms Aiezza had not applied for promotions as her existing position carried the benefit of the car and the higher positions did not.

The Magistrate determined Ms Aiezza would have been entitled to the benefit of the contract until August 2011, when the three years of her most recent vehicle lease finished. However, because of the employer's practices, the Magistrate awarded her damages until August 2017.

Breaches of contract

There are so many variables to contracts that it is impossible to reflect on them all, and the types of breaches. The remedies will also differ in each individual case. However, a breach of contract claim may be a legal option to consider, especially when statutory regimes are unhelpful (eg in this case, where the vehicle use and application was contained in a policy). A contract claim could be particularly beneficial when there is a unilateral change to the employment terms.

It's also helpful that most courts offer alternative dispute resolution as a way to bring a contract claim to an end, which can offer a quick way of resolving a contract dispute (especially if you can access state industrial commissioners as mediators).

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