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Working 9 to 5, redefined
Substantive Law| What area(s) of law does this episode consider? | Employment law, specifically (1) the legal difference between an employee and contractor, and (2) considerations for employers when implementing flexible working arrangements such as working from home practices. |
| Why is this topic relevant? | The main source of income for most Australians is their employment. But the nature of work is changing – and the growth of the gig economy is an example of this trend. So too is the growing practice of working from home, which has been adopted by (or been forced upon) more and more businesses, in Australia and around the world in light of the COVID-19 pandemic. |
| What legislation is considered in this episode?
| Both Commonwealth and State legislation governs employment law, including:
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| What cases are considered in this episode? | Hollis v Vabu (2001) HCA 44: this case focused on the nature of the employment relationship. Vabu traded under the business name of ‘Crisis Couriers’, which had 20-30 bicycle and motorcycle couriers. In December 1994, Mr Hollis was leaving a building where he had picked up a parcel. He was knocked over by a cyclist, wearing a Crisis Couriers jacket, after stepping onto the footpath and suffered injuries as a result. While previously control was the sole criterion in determining the true nature of a relationship of employment, the High Court held instead that the totality of the relationship between the parties must be considered, including factors such as remuneration (including whether there are invoices, whether the contractor is registered for GST, whether tax is being withheld), who determines the hours the contractor will work, who provides the equipment etc. As Nicola explains, the determination is a balancing exercise between these indicia. Ultimately the High Court held that the bicycle courier was an employee of Vabu thus finding Vabu vicariously liable for the act of the courier who knocked down Mr Hollis. Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd [2019] FWC 5008: Mrs Gupta was an Uber Eats driver. In early 2019, her account was deactivated by Uber. Mrs Gupta argued that the decision by Uber to suspend, then permanently block her access to the app constituted unfair dismissal. In April 2020, the full bench of the Fair Work Commission decided that Mrs Gupta, and Uber drivers in general, were not employees as they lacked some of the “essential hallmarks of an employment relationship”. While some indicia pointed to an employment relationship, Uber did not have significant control over the drivers, who could choose if and when to pick up jobs. |
| What are the main points? |
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| What are the practical takeaways? |
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| Show notes | Safe Work NSW – Working from home workplace health and safety checklist |
| David Turner:
1:00 | Hello and welcome to Hearsay, a podcast about Australian laws and lawyers for the Australian legal profession, my name is David Turner. As always, this podcast is proudly supported by Assured Legal Solutions, a boutique commercial law firm: making complex simple. The nature of work is always changing. The so-called marketplaces in the gig economy – Uber, Deliveroo, AirTasker and others have sought to characterised themselves not as employers but as intermediaries between independent contractors and their principals and with platforms like Lexo and Verio bringing the gig economy to legal practice it seems that few industries are immune to gigification. Meanwhile, more and more businesses and professionals are exploring working from home as a regular part of their working arrangements. Working from home can improve productivity, accommodate more flexible working hours, save commute time and improve the mental health of some employees, but what pitfalls do employers need to look out for? Joining me to talk about the employment law ramifications of the gig economy and working from home is Nicola Martin, Employment Practice Group Leader at McCabe Curwood. Nicola, thanks for joining me today on Hearsay. |
| Nicola Martin: | Thanks David, it’s lovely to be here. |
| DT: | Let’s start with the gig economy. What’s the difference between an employee and a gig worker from a legal perspective? |
| NM:
2:00 | Look there’s quite significant differences. As you probably know, the gig economy is a labour market characterised by short term contracts by freelancers, so they typically are independent contractors. They are provided with a fee or some type of remuneration in return for the provision of those particular services rather than being guaranteed any type of salary or wages as an employee would. So that’s the main difference really; the method of work, the autonomy that a contractor will have as opposed to an employee and the way in which they are both remunerated. |
| DT:
3:00 | It sounds like in that sense, a lot of the distinction is still going back to some of those older authorities; Hollis v Vabu[1] is the one that I remember from when I studied this way back when. Is that still really the test? TIP: Casting our minds back to 2001, Hollis v Vabu [2001] HCA 44 a 2001 decision of the High Court of Australia, concerned the nature of a working relationship between a delivery company and its bicycle couriers. A Vabu courier had knocked down and injured a man who raised a claim of vicarious liability against Vabu for his injuries. The key focus of the case was whether or not the workers engaged by Vabu were employees – in which case Vabu would have been vicariously liable – or independent contractors, in which case no vicarious liability would arise. The High Court ultimately held that the courier was an employee, based on several considerations: the couriers exercised minimal control over how they worked – they were assigned working days in a roster and were allocated deliveries, and could not refuse work either. They were presented to the public as a courier service of Vabu and wore uniforms. To paraphrase from Return of Jedi, it’s an older case, but it checks out. |
| NM:
4:00
5:00 | Look it is. It’s changed over the years and there’s been a different focus at various points in terms of what the Court will consider, but ultimately it still comes down to the level of control, the level of autonomy and the Courts preference at the moment is to really look at can you fairly be said to be running your own enterprise as a worker and it’s been called the Entrepreneurial Test sometimes. Are you performing work for your own business or are you just really an integral part of the principals’ business, such that you don’t have any real risk and reward in terms of your own activities? So quite often, the issue that comes up is contractors hold themselves out to be independent contractors, there might be an independent contractor agreement regulating the terms of the relationship but for all other intents and purposes on the ground, they look and smell like an employee. So the court will still look at a variety of indicia to come to the decision as to what the true nature of the relationship is but control is still a very important part of this. Other things they’ll look at are the way in which the remuneration was paid. Are there invoices? Was the contractor registered for GST? That type of thing. Was there withholding tax being withheld? That’s obviously indicative of an employment relationship if there was. They’ll also consider indicia such as who’s providing the equipment, who determines what hours the worker will work, all those things all go into the mix and it’s still a balancing exercise but the most influential in weighing up those indicia is still this idea of who’s got the control and how independent is that worker, in reality. |
| DT:
6:00 | I suppose that could really vary between some of these gig platforms. If you look at a platform like AirTasker for example, where taskers are offering services in a particular field that they have complete autonomy over, how much they offer and which jobs they choose to take, it seems that that’s squarely in the realm of independent contracting but I suppose there would be other services like food delivery apps for example where there’s significantly less autonomy on the part of the gig worker and they’re really accepting a given rate of pay for very particular services. |
| NM:
7:00
| I think that’s right David and I think that’s why there’s such a media coverage when you look at issues with Uber and whether those workers are employees or independent contractors because there seems to be a level of control being exercised by Uber that doesn’t sit particularly, consistently or particularly well with the notion of the workers being true independent contractors. AirTasker, as you say, it is quite different. The control lies with the contractor to pick up the job if they want to pick up the job. The Uber platform and platforms like that are very interesting because we see a distinction in the way in which those workers are treated from jurisdiction to jurisdiction. For example, in Australia we have had a number of decisions now where the courts are making it quite clear that the Uber workers are independent contractors despite, I think it’s fair to say, a number of those traditional indicia probably pointing more towards an employment relationship. It’s similar in the US, the Labour Board has confirmed on a number of occasions that Uber workers are independent contractors but we have a different position in the UK because in the UK there is a recognition of a third type of relationship. So you’ve got the independent contractor, you’ve got the employee and you’ve got the third class being a worker and a worker is given not as many rights as an employee would have but they are given a safety net of protection, for example that they don’t have minimum rates of fee or pay or whatever you want to call them that fall below a certain point, so they’ve got more protection then they would here but we’re certainly not in the position where, even in the UK they’re classed as employees. |
| DT: 8:00 | That’s interesting that in the UK there is this third type of labour relationship independent to the employment or independent contractor relationship, is that something that’s evolved out of the changing nature of work or is that a concept that has been around for a while? |
| NM:
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11:00 | I think it’s evolved. I think it was a decision to introduce that category to respond to some of the issues that we’ve seen in the last few years with these types of platforms and engagements becoming more common. I think there’s a lot of positives to it. The critics of that system say it doesn’t go far enough that these people are vulnerable, they are vulnerable to being taken advantage of by these platforms and that they should have minimum, basic, entitlements that mirror those that employees have, so it’s not necessarily the ideal but I think it’s some way to addressing the problems that exist in the US and in Australia at the moment for these workers. As recently as April 2020, the full bench of the Fair Work Commission handed down a decision in another Uber matter finding that one of the workers, Mrs Gupta didn’t have access to the Unfair Dismissal Regime and that’s where you see a lot of the claims coming through. The workers will make applications saying their ‘employment’ has been unfairly terminated and the Fair Work Commission’s job then is to say do they actually have access to the unfair dismissal jurisdiction which is a jurisdiction that’s only open to employees, not independent contractors. So a lot of the cases we see regarding platforms like Uber come through as these jurisdictional arguments around whether the person was an employee or not for the purposes of the Unfair Dismissal Jurisdiction. That case went up to the full bench and the full bench handed down its decision to say that although there were some indicia to point towards the employment relationship, ultimately Uber didn’t exercise control over when Mrs Gupta performed the work. Drivers were allowed to accept other forms of delivery work other than just with Uber and the drivers weren’t required to wear uniforms or bear company logos or anything of that nature and it found that those were important factors and ultimately led them to the conclusion that Mrs Gupta, in this particular case, wasn’t an employee. TIP: The full citation for the Gupta case is Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a UberEats [2020] FWCFB 1698 a 2020 decision of the Fair Work Commission full bench 1698, the full bench of the Fair Work Commission weighed a range of factors in reaching their decision that Mrs Gupta was not an employee. Importantly, as Nicola alludes to, they found that the financial entity involved in transferring funds between restaurants and workers had no control over when or for how long Ms Gupta worked, which was entirely within her control both legally and practically: ‘Once logged on, there was no obligation upon Ms Gupta to accept any particular delivery request.’ [69]. Even when logged onto UberEats, she could accept work through other food delivery apps or perform similar work – as long as her ability to make timely deliveries for Uber Eats was not compromised: She did not wear a uniform and her car did not have any Uber logos. She was not required to represent a connection to Uber Eats either ‘beyond what was necessary to collect the particular meal from the restaurant and deliver to the customer.’ As you can see, the Uber platform operates very differently to the Vabu bicycle courier service the High Court considered almost twenty years ago. |
| DT:
12:00 | It’s interesting that so many of these cases come to the Fair Work Commission through the lens of unfair dismissal. On what basis do gig economy workers allege that they have been unfairly dismissed because I suppose that’s a matter of characterising losing access to a platform, for example as unfair dismissal. Is that the way it usually comes to the court? |
| NM:
13:00 | Yeah look that’s how Uber approaches it. As you are probably aware, it approaches it from ‘all we do is provide a platform’ but when you get into the mechanics of how that platform operates, you’ll find a worker saying ‘we don’t really have the degree of control that Uber suggests that we have. We are locked in at particular rates’, which as I’m sure you’ve seen in the media, are apparently fairly low rates. They feel like they have no choice but to accept them. They don’t have any bargaining power to negotiate on those rates, albeit they may not be told when they have to work, there is a lot of control they will say exercised by Uber, about the manner in which they work and the way they have to abide by the rules and regulations that Uber set for them. In the Mrs Gupta case for example, she was saying that her, that it was her employment that was terminated rather than the independent contractor relationship being terminated. The factual scenario was that she was late in delivering Uber eats deliveries and the contract was terminated on that basis. Now she maintained that that was her employment relationship that had been terminated hence she wanted to bring her unfair dismissal claim. |
| DT: | I suppose some of the immediate consequences of the distinction between an independent contractor and an employee for the worker are access to leave entitlements, particular rates of pay, things like that. Are there any other consequences for employees particularly around, for example, health and safety at work? |
| NM: 14:00 | Not so much health and safety, I mean a principal, whether they are a principal or whether they are an employer, they are a person conducting a business or undertaking, a PCBU or a Peekaboo as they get colloquially referred to as. TIP: A ‘person conducting a business or undertaking’ or PCBU is a broad term used throughout work health and safety legislation to describe all forms of modern working arrangements. A person who performs work for a PCBU is considered a worker under the legislation. A PCBU must meet their obligations, as far as is reasonably practicable, to ensure the health and safety not only of workers but of other people at the workplace like visitors and volunteers. PCBUs must also have meaningful and open consultation about work health and safety with workers, usually through health and safety representatives, and health and safety committees. |
| NM 15:00
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| Those health and safety obligations on the PCBU apply regardless. The Work Health and Safety Legislation talks about those obligations applying to workers, so it does cast within its net the contractors and employees. The same applies for the discrimination legislation for example, the bullying jurisdiction and some others but it’s relatively limited. Ultimately contractors lose out on paid leave. They lose out on any sort of minimum wage increases or even a minimum wage full stop. They often lose out on superannuation and this is an issue that I see quite a lot in my practice. There’s an assumption by principals that independent contractors are not entitled to have superannuation contributions made on their behalf by the principal, and that’s usually the incorrect assumption. There’s a fairly low bar in terms of the threshold for having to make superannuation contributions. As long as the contractor is earning $450 a month from the principal and they are providing their personal services, then that’s more or less enough to get them over the threshold and that will require the principal to make superannuation contributions on their behalf. TIP: The provision that Nicola is referring to here is the Superannuation Guarantee (Administration) Act 1992 (Cth) section 12. Under that provision an employee is defined as a common law employee and a worker that falls within the expanded definition of an employee, which includes merely a person that works under a contract that is wholly or principally for their labour (s 12(3) of the SGAA). A lot of employers assume that that’s just not the case, so often when I’m asked to look at a relationship where there is perhaps a dispute about the true nature of the arrangement, one of the first questions I ask is around the treatment of superannuation and nine times out of 10 superannuation is not being paid, so the principals are immediately exposed because if the dispute doesn’t end up resolving and then that’s a complaint that the contractor can make to the ATO. It’s different if the contractor is providing their services through their own incorporated entity because then clearly, you’ve got the corporate veil, you’ve got the interposing entity as the employer of the contractor who’s actually providing the services and there clearly the superannuation obligation lies with the employing incorporated entity and not the principal. TIP: It is commonly understood in the market to be the case that a company cannot be a common law or deemed employee for Superannuation Guarantee purposes. This view has been confirmed by the Commissioner of Taxation in ruling SGR 2005/1 at paragraph 13 which says: Where an individual performs work for another party through an entity such as a company or trust, there is no employer-employee relationship between the individual and the other party for the purposes of the SGAA, either at common law or under the extended definition of employee. This is because the company or trust (not the individual) has entered into an agreement rather than the individual. However, the individual may be the employee of the intermediary company or trust, depending on the terms of the arrangement. Now all that being said, the Courts have said that incorporation is technically just one factor in the characterisation of an employee for superannuation purposes, deploying Justice Gray’s fabulous metaphor from Re Porter: Ex Parte TWU (1989) 34 IR 179: “…the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck.” How far that goes in practice in light of the Commissioner’s ruling is something to ponder though. |
| DT: | I suppose if you got that wrong for an extended period of time, that can be quite a large historic liability that you are unknowingly carrying, all that unpaid superannuation. |
| NM: 19:00
20:00 | Absolutely and then you’re at risk of fines or penalties from ATO as well for the non-payment. I had a case last year where it turns out that the principal had assumed, as many do, that the contractor would be making their own superannuation contributions, and look in a practical sense, if the contractor has been making superannuation contributions to their own fund, then there’s less likelihood that it would ever come to the ATO’s attention and if they did come knocking, at least there wouldn’t have been a failure to make the contributions in themselves but there could still be a penalty imposed on the principal for not complying with its obligations to make the contributions. So that’s definitely one to watch out for. It seems to be misunderstood by many principals that have contractors on their books. So we tend to recommend that if we’re doing say, a new independent contractor agreement for a client, then we deal with it by saying that if there’s a legal obligation to make superannuation contributions, then the principal will make them but that will be deducted from the fee. So that it isn’t an additional cost to the principal, but that comes down to commercial negotiation of course about whether that dollar figure is something that the contractor can live with. |
| DT:
21:00 | I suppose although in the gig economy space the law is still evolving and being tested and you mentioned the Fair Work decisions earlier, but as you said presently I suppose under Australian law as it currently stands, it’s still a distinction between an independent contractor relationship and an employment relationship and there would be a great many historical cases where an employer has gotten that distinction wrong with some fairly severe consequences for the employer. Superannuation contributions are one you have just mentioned, are there any others that you’ve seen in your practice that can be quite severe for employers if they do get that distinction between an independent contractor and an employment relationship wrong? |
| NM:
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| Yes, these things usually start because, you know as is the case with many of the matters you’ll probably deal with too David, it’s all fine until it’s not fine and a contractor could be happily contracting away for a number of years without any issue, probably enjoying the flexibility that comes with the contracting relationship, probably also receiving a higher hourly rate or daily rates in return for the fact that they are not getting employee entitlements and then the principal typically decides they want to terminate the arrangement, suddenly the contractor is not so happy about being a contractor anymore and sees the opportunity to make a claim for back payment of annual leave for example and potentially for superannuation. So you might not just have the employee entitlements to deal with in a backdated claim for them which can add up. If you think about an employee being entitled to 20 days or four weeks of paid leave a year and if the contract has been around for a number of years, that 20 days per year can quickly add up and couple that with potentially underpayments of superannuation and you haven’t even started thinking about how would the tax position be unravelled, you’ve not been withholding tax and remitting it to the ATO. It’s not always in the contractor’s interest to actually start unravelling the tax affairs and that can actually sometimes be the reason that these matters settle earlier rather than later because the contractor acknowledges that they may have years’ worth of GST to unravel and sort out the income tax. That’s not necessarily going to be a good thing for the contractor, but that’s another complication. And then if you get to the more serious end of the scale, if it’s gone beyond just a dispute about entitlements and the contractor makes a complaint to the Fair Work Ombudsman, which is the regulator, or the Ombudsman, for some reason, decides to carry out on its own initiative, an investigation into contracting relationships within your business. TIP: The Ombudsman will inquire into and investigate breaches of the Fair Work Act and take appropriate enforcement action. In the 2018–19 financial year alone, they recovered more than $1 million in unpaid wages through 274 compliance notices. Then it’s getting more serious and there are provisions under the Fair Work Act which are referred to as Sham Contracting Provisions. They prohibit the principal from misrepresenting an employment relationship as an independent contracting relationship or deliberately moving somebody from an employment relationship to an independent contracting relationship where the actual arrangements on the ground just don’t have the hallmarks of an independent contracting relationship. You don’t see it so much nowadays because I think a lot of businesses are on notice that overt sham contracting can get them into deep hot water. TIP: Sham Contracting is prohibited under s 357(1) of the Fair Work Act 2009 (Cth) and contravention can give rise to civil penalties. In the recent case of the Fair Work Ombudsman v Quest South Perth [2015] HCA 45 the HCA held that at paragraph 16 that s 357(1)’s “purpose is to protect an individual who is in truth an employee from being misled by his or her employer about his or her employment status.” There’s a number of cases going back a few years now, where there’s significant penalties being handed down in the Federal Circuit Court, which is the normal jurisdiction for these types of claims where the Ombudsman has prosecuted businesses for engaging in sham contracting. They view it very dimly. There are civil remedy provisions, which means that they can attract fines of up to $63,000 per contravention for a corporation and up to $12,600 per contravention for an individual knowingly concerned. Those provisions attracted a lot of media attention when they first came in a few years ago because it meant, people like HR managers or other people involved in managing the business and managing these relationships could actually be individually liable for their actions. |
| DT: 26:00 | That’s really interesting. When you said a person knowingly concerned, my first thought was ‘wow, does that mean directors are actually personally liable?’ but in fact it’s much more than that. |
| NM:
27:00
28:00 | I think one of the first cases where a HR manager was being individually named as a respondent in the proceedings and basically there was a fine imposed onto him. He basically stood back and let the owner of the business force employees into independent contracting relationships. TIP: That’s right a person who’s knowingly concerned in a contravention doesn’t have to be a director. A person is involved in a contravention of a civil remedy provision under section 550 of the Act if the person has aided, abetted, counselled or procured the contravention. Has induced the contravention whether by threats, promises or otherwise, has been in any way by act or omission directly or indirectly knowingly concerned in or party to the contravention, that’s a big one, or has conspired with others to affect the contravention. The Fair Work Ombudsman has prosecuted cases under section 550 against HR managers, including in the case of FWO v Centennial Financial Services [2011] FMCA 459, a 2011 decision, where a HR Manager was found liable for his company’s sham contracting and penalised $3,750. In a more recent case FWO v Step Ahead Security Services [2016] FCCA 148, a 2016 decision, a director of the company liquidated the company when the FWO started proceedings about unpaid entitlements. The FWO sought, and obtained, orders that the director not only pay $51,400 in penalties, but also that he himself pay the unpaid employee entitlements of nearly $23,000. The evidence was quite clear, they had done that in order to avoid employee entitlement costs and that although the HR manager tried to assert in his evidence that he was unaware that they were doing anything wrong, ultimately that evidence wasn’t accepted and with his experience, he should have known better. It can place HR professionals in a very difficult situation, particularly if they are advising the business correctly that it’s not something they should be doing but the business does it anyway. |
| DT: | Yeah, there is a tension there of course because they are in a position to tell the business what the law is in this area but not in a position to control/influence. |
| NM:
| Yep, not in a position to make the decision for the business. So I have some sympathy for those in the HR world who are trying to do the right thing. I mean, what’s their alternative? They resign and leave because they become sufficiently concerned about their own personal liability? Possibly? |
| DT: | Yeah, that’s putting a huge amount of personal economic strain on someone who’s not really in a position to withstand it. |
| NM: | Yeah absolutely! |
| DT: 29:00 | It sounds like there are some real costs to businesses for getting this distinction wrong, particularly if they’re found to be engaged in sham contracting. Nicola, what would your tip be to ensure that a business that does seek to use contractors as part of its labour force, really puts beyond doubt the status of its workers as contractors? |
| NM:
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| Look there’s a few things you can do. Firstly, I would say to any business who engages contractors, dust off the written agreements, hopefully you’ve got them. If you don’t have them, then the first port for a call is to get effective independent contractor agreements in place. If you do have them, dust them off, have a look at them. It is important that the agreement has certain terms in it, for example you want a clear statement that there is no employment relationship, you will probably want to see that the contractor isn’t precluded from providing the services to other principals. You may of course want to say that it shouldn’t be in competition but exclusivity is one of the indica that would point away from there being a true independent contracting relationship. So there’s some key elements that you want to get right in the agreement. You may also want to include an indemnity in the principal’s favour, so if there is any loss or costs suffered by the principal at some later date because the contractor challenges it, you’ve got the indemnity to fall back on effectively meaning it is pointless for the contractor to make that challenge in the first place. So the agreement’s really important. A common issue I come across is, it’s not particularly clear in terms of the documentation whether this person is an individual contractor contracting with an ABN or whether there is an incorporated entity sitting there between the principal and in between the contractor. I see an awful lot of agreements that kind of muddle the two concepts together, so that’s another thing to look out for. There’s no doubt that when you’re engaging contractors, preference, as far as I’m concerned legally, is to engage them through their own incorporated entities or other corporate vehicle. In practice, that just gives you an extra level of protection that the contractor, that the person who’s actually providing the services is an employee of that entity, so the chances of them then being found to be an employee of your own entity, is vastly reduced because there’s clearly an employer in the mix. The only thing I’d say about those arrangements is that there has been one case that’s found that even when you’ve got an incorporated entity interposing, the principal was still ultimately found liable for the superannuation. TIP: A real life example of a rooster disguised as a duck, to borrow from Justice Gray. So there were other problems in that case that I won’t go into today. It’s generally considered fairly foolproof to have the incorporated entity as the contracting party, but I just wouldn’t be able to give a client 100% guarantee that that was going to mean that there was absolutely no potential fallout from the arrangements. So that’s something else I like to talk to clients if they come to me asking questions around trying to protect themselves. The bottom line is review your arrangements. If you’ve got a contractor who’s been with you for a number of years, who looks and smells like an employee, who sits in the office, who if you asked any other one of their colleagues they would just assume they were an employee, then start having a think about that particular arrangement. I’m not saying end the arrangement because that can trigger the dispute, but think about ‘do we need to get them onto new terms and conditions? Can we tighten those terms and conditions up?’ Where can we start looking at, perhaps a different way of this arrangement operating in practice because, you can have the best agreement in the world, and you should have a strong agreement, but the Courts look behind agreements. You know, they pierce that veil to say well, the agreement is one thing but what’s actually happening on the ground, in practice and as I say, you can have the best drafted agreement in the world but if all the other hallmarks are pointing to this person being an employee, then the agreement won’t be enough to get you off the hook as the principal. They would be my tips. |
| DT: | Let’s talk now about working from home. At the time of this recording, it’s late April and I’ve certainly been working from home for quite a while. I imagine most of our listeners have been too. Nicola, have you been working from home recently? |
| NM:
34:00 | I have David. This is my first day in the city and thanks to your kind invitation, I actually washed my hair, put some makeup on and I got on the Jetcat this morning. So it was a real novelty factor. So yeah look, I’ve been at home, as have most of my office for about 5 weeks now, so yeah it’s a very different world obviously at the moment and employers have had to embrace flexible working and working from home like never before and at speed which I don’t think any of us were prepared for. |
| DT:
| I suppose even before Coronavirus kind of forced us all into working from home, there were a number of businesses where working from home was already being pursued as an alternative to the entire workforce working in the office. I know of one particular employer who, a number of years ago, had four floors of an office building to house all their staff. They moved to a working from home one day a week arrangement with all of their staff. Their headcount has grown but they’ve now sublet two of those floors and reduced their fixed overheads dramatically. How have you seen in practice that shift to working from home take it up amongst your clients? |
| NM: 35:00
36:00 | Oh it’s definitely much more popular than it’s ever been. Even if you leave aside Covid, I’ve seen numerous examples of the type that you mentioned David, with cost cutting arrangements and hot desking being implemented so you might only have enough desks for half of your workforce. There’s still been a reluctance, I find to allow parenting arrangements for employees to work from home in some pockets and ultimately that seems to be a trust issue. Do you trust your employees to work effectively and productively from home? I still have experiences with clients where they can’t quite get themselves to the position where they’re prepared to give it a go. The classic response is basically it’s just too hard and they do worry about whether the employee will be actually looking after their children or would be doing housework instead of working. It’s quite an archaic view but it’s still fairly predominant. I think it will be really interesting to see what shift there’s been once we’ve come out of Covid19 and we’re back in the workplace. I can’t help but think it will become much more popular and some of the cynics may have changed their views. |
| DT: | I suppose some of the employers who never would have considered trialling a work from home policy would have been forced to gather a body of evidence about whether or not their employees can actually work effectively from home. |
| NM:
37:00
38:00 | That’s right, and one of the biggest challenges seems to be, this idea or a feeling by managers, that if they can’t trust their employees, how are they properly going to manage them when they’re working from home? And I was speaking to a HR client last week who said, it’s no different to any type of performance management process or conversations that you might need to have in the office, it just takes a bit more effort and I think that’s really true. I’ve seen that myself, of managing a team from working from home. It does take more effort. You’re not able to just call out to each other in the office and you have to make the time to pick up the phone or log on to the Zoom call and there’s no doubt when you’re managing a team, it requires more effort and time on your part and I can see why that can be off-putting but I don’t think we’re going to go backwards from it now. I think inevitably we will see more of it. We will be in a position where we’ll be in a difficult position economically and employees’ businesses will be having to look at ways where they can keep costs down, so it wouldn’t surprise me if we see a lot more examples that you mentioned about less floor being taken up and more working from home arrangements. It’s interesting though, because I have spoken to some people who actually haven’t enjoyed working from home. Lots of us have embraced it. There are so many positives that come from it but it’s definitely not for everyone and I think there’s actually, I know a few employees within my business who, I think would love the idea of it in theory but have actually realised doing it, this is probably not for them. But you’re always going to have that mixed bag aren’t you. You are going to have people who enjoy it or enjoy it some time but don’t want to do it full time. |
| DT:
| Yeah. There are different personality types that thrive in different environments, I suppose, and in that way, it is probably very similar to the cultural discussion around open plan and closed offices. Some people really thrive in that environment of having a bull-pen to throw ideas around and have impromptu discussions and some people who really don’t like the distraction. |
| NM:
39:00 | Yeah and I think from my perspective, I don’t think working from home, all the time, is for most people. I think most people like the interactions and the social aspect of coming into work, if not they enjoy it from a work perspective also having colleagues around them, but I think there will be a lot more people who take it up, even if it’s just on an ad hoc basis or if it’s just one day a week or two days a week. I don’t think many of us will be crying out for full time working from home arrangements. |
| DT: | Not after a couple more months of this, that’s for sure! It sounds like a lot of employers are taking up working from home or certainly now, but even before social distancing measures required us to. How many of those employers who were testing working from home, do you think had a formal policy around working from home? |
| NM
40:00
41:00
42:00
| I think a lot of them did actually, certainly within my client base. When it came to having to get ready for working from home very quickly with Covid19, I was quite pleasantly surprised at how many of my clients already had policies that weren’t perfect, they didn’t fit the Covid19 situation perfectly, but they were a good start and they were certainly better than nothing. More often than not, in my experience, working from home policies often sit within flexible work policies, so you have an overall flexible work policy that sets out, because you’ve got to remember of course working from home although it’s obviously been the focus of Covid, it’s just one of a range of flexible work arrangements that an employer may offer to its employees. So yeah, you quite often see the policy set within broader flexible work arrangement policy. You’ll often also see working from home guidelines or working from home checklists that an employee will be required to complete before they begin working from home and there’s some important aspects to that, particularly around Work, Health and Safety. You’ve got to remember that working from home, you still are at work, it will still be considered the workplace from the perspective of Work, Health and Safety Legislation and also importantly, from a Workers Compensation perspective, and that’s a big issue we’ve been tackling in the Covid world. TIP: When working from home, workers are still covered under the Work Health and Safety Act 2011. Work Safe NSW says that reasonable steps should be taken to ensure a worker’s at home work area meets workplace health and safety requirements. An assessment of the work area should be carried out, where possible, before the worker starts working from home. Worksafe NSW advises to consider:
Now obviously, when an unprecedented pandemic causes your entire workforce to take up working from home rapidly, it isn’t possible to perform that kind of sophisticated assessment of the work area as Nicola says. The speed at which these arrangements had to be set up, most employers were not able to do the full ergonomic assessment or workplace assessment of the home environment that they would normally do. So there needed to be a practical solution to that, so my team developed some guidelines, so you present those guidelines to employees as ‘these are our expectations of what you’ll do when you’re working from home’ rather than a full checklist which would require them to tick, you know a number of boxes to see that their screen was 50cm from their keyboard or that their seat was so many centimeters from the ground, that type of thing. It’s just not being realistic for HR teams to be able to send those checklist out and have employees complete them and then monitor who’s returned, who’s not, who’s not sent photos of the home environment set up, but at a minimum, I would still recommend to anyone who has employees working from home, has sent out guidelines. They can be as simple as talking about the need to get up and stretch, to not lie on your bed with your laptop on your chest. I’m sure none of us would do that. |
| DT: | No certainly not more than once a week. |
| NM: 43:00
44:00
| But there’s some real common sense tips and tricks there and the workers comp questions have been an interesting one too. We’ve got a workers compensation and risk team at McCabe Curwood and I hosted a joint webinar with them, a few weeks ago for our clients because I was tending to find that we were fielding a lot of questions around when could the employer be liable, from a workers compensation perspective, for injuries that arose from working from home and it’s a fairly low bar in New South Wales. I mean, really if the employment is a substantial contributing factor to the injury, then the policy will kick in and liability will be accepted by the Workers Compensation insurer. The typical questions – the employee goes to make a cup of tea while they’re working from home and trips over the cat – yes, probably a workers compensation claim would be accepted in those circumstances. So, if you think about it being accepted in those circumstances, it’s not surprising that, you know an RSI injury on your wrist because you don’t have your normal mouse or RSI support that you would have had in the office, those claims are going to be successful as well. So in practical terms, I appreciate particularly through the pandemic, employers are not going to be able to afford to set up all their employees with perfect workstations and having them ergonomically assessed. But we approached it on a fairly practical perspective of saying, look if you have a mouse or mouse pad or a keyboard, take them home from the office with you and even allowing employees to take their own chairs home. Chairs have been a big issue. |
| DT: | Yeah right. |
| NM: | People sitting on dining room chairs or kitchen benches for long periods of time and we’ve said if you want to come in and get your chair, then do that. So there’s some small things you can do that don’t necessarily cost a lot of money but can still protect the business from potential claims. |
| DT: 45:00 | I suppose, even after you put all of those guidelines in place, there’s really nothing stopping an employee from not going to their perfectly ergonomic home office and working from the couch or even from bed. |
| NM:
| That’s right, absolutely. There’s a case from a few years ago and I can’t remember all the details but basically it involved an employee coming downstairs from their home office to sign for an online shopping delivery and tripping over to wire and there was a discussion around what was the employment really a substantial contributing factor in that case, and it was found to still be covered under Workers Comp Jurisdiction. So I suppose that gives you an idea of how low that bar really is. |
| DT: | Yeah, it sounds ankle high! So, is that really the content that you’d expect to find or that you would want to find in a good working from home policy, particularly around workplace injury and work, health and safety? |
| NM: 46:00
47:00
48:00 | Yeah, you would want that policy to be setting out the expectations around work, health and safety, ensuring so far as reasonably practicable, you’ve given the employees the tools and the equipment they need to work safely from home and explain to them the importance of doing that. You also obviously then need to think about a whole host of other practical issues such as confidentiality. Are you comfortable, for example, that the employee has somewhere safe at home to store confidential information particularly if that’s in hard copy. The working from home policy also deals with things like an expectation that you’re not caring for any dependents while you’re working from home. Obviously that’s up for grabs in the Covid19 situation, but normally you want a statement in your working from home policy that deals with the fact that there’s an expectation that, you know, you are working. Sounds like common sense but you are actually working from home when you’re working from home. I have had clients come to me to say ‘an employee returning from parental leave can’t get a child in childcare and can they work from home until they can get a childcare place’. Not ideal obviously. I think if the employer agrees to that, it needs to go into the arrangement with open eyes as to how much realistically the employee will be able to do and how they’re going to deal with the situation, in practical terms, if the employee isn’t delivering. Quite often what will happen is the employer tries to be nice and actually it backfires on them and in the end of the day because the employee then doesn’t respond well to those performance management conversations or to being told the arrangements are not working anymore and they’re going to have to revisit it. So there’s some of the pitfalls but again, that comes back down to trust. I think in every situation I’ve seen where there’s been an issue arising over working from home arrangement, it comes down to trust and if there’s give and take and there’s trust, they’re the key ingredients for the arrangement having a good platform, at least to go from and hopefully work out well. |
| DT: | What are some of the tools that employers can use to help them manage performance with employees who are working from home? Because that is such a difficult thing to do when you don’t have visibility over your employees in the office. |
| NM:
49:00 | It’s been a big topic of conversation in the world Covid19 and I think anyone who analyses that particular issue would agree that communication is key. It is much harder to monitor an employee’s performance out of sight and out of mind, so yes you’ve already got a threshold issue that it’s going to be harder because you’re not face to face with them in the office, but it’s really important, not just for performance management, but for employee health and wellbeing as well that you’ve got that regular line of communication preferably, you know, on Zoom or a similar platform where you can actually see each other. |
| DT: | I know that that’s been something that I think has been working for us during the Coronavirus, that there might be a temptation to give instructions or supervision in writing because that’s a tool we’re more used to when dealing with people remotely. We use GoogleMeet but actually having that video call allows you to have face to face contact and also know that you are not speaking to someone who’s lying in bed. |
| NM:
50:00
| Yeah, they’re upright! They’re not in their pyjamas! It’s a good start! Yeah. Some of the sort of feedback I have had during the pandemic has been that people feel, people are already feeling isolated, they’re not out seeing friends and family the way they would, so the last thing they need is to then also feel isolated in their working environment with managers not checking in with them. I appreciate we don’t all have time to have team meetings everyday but, you know, in our team we do have a quick 15 minute Zoom call every morning so we can see each other, check what we’ve all got on for the day and then we go and get on with it. I appreciate for lawyers it’s actually easier to monitor productivity because for most of us we still got the billable unit. In other, you know, organisations or even other law firms, they don’t have the billable unit. It is much harder but then again how do you monitor productivity when you’re in the office. You could have an office environment where you’re all out and about a lot or some people work from home, some people don’t, some people work part time so there’s no crossover in the office, so how have you been managing it an a way, in that environment and what tools can you take from that that would also equally apply when people are working from home. |
| DT: | We’ve talked a bit about the risks of working from home – the safety risks, the productivity risks but what are some of the benefits of working from home for both employees and employers? |
| NM: 51:00
52:00
53:00 | There’s obviously as we touched on earlier David, there’s the cost benefit for employers if they don’t need to pay for floor space to house their entire workforce then you’ve got immediate cost savings potentially for the employer, so lower overheads. You also get, I think, if it’s an arrangement that’s working well then for employers and employees, there’s a sense of trust, flexibility and that has some real positive impacts on employees’ morale, wellbeing, employee engagement and we do see that. I’ve got one particular client who most of them work remotely and the Covid19 situation wasn’t new for any of them. They all have said that they actually feel more engaged in the team and in the organisation working from home than they ever did in the office, which I thought was quite surprising feedback. So the people who do it and who it’s working well for, will bestow the virtues of it forever and a day. I know from my perspective and many others that I work with in the current situation, people have realised how long we spend commuting to get to work and from work and how better that time can be spent, whether it’s exercising or spending more time with family, so I think people will be revisiting, you know the commute and it might encourage them to say work from home one or two days a week. I suppose you’ve got greater flexibility at home to work potentially not core hours and I know we are generally seeing much more flexibility in working environments, even if you’re in the office as to when you need to be in the office and what those expectations are. I think that’s been a real pleasant surprise for people who have been working from home in the current environment. If they want to get up at six and log on for half an hour and then go for a run and still be back to take the team meeting, then you can do that. |
| DT:
| It’s definitely a benefit that I’ve seen that we’re moving increasingly away from this idea of you have a block of hours of work and then a block of eight hours of leisure time and then a block of eight hours of sleep and then you do the same 3 blocks all over again the next day, and you have kind of all of those aspects of your life in individual slices at times that work for you and it’s hard to imagine that after this really extraordinary experience and certainly people being forced to plunge head first into working from home, that we would really go back to the way things were completely after all of this. |
| NM:
54:00
| I think that’s right, yeah. That’s interesting because there can be, I know we’ve talked about this, the work, health and safety implications and some of the negatives that come out of it, but I think one of the more potentially destructive elements that I’ve seen coming out is just an inability to switch off from work, and this idea that the lines have just blurred so much between work and home and with that, as we just talked about, there’s so many benefits that come from that but there’s also some negatives that I think we just have to be aware of and try and counter. I’ve heard a lot of people say the laptop’s there on the kitchen table so they just are compelled to keep coming back to it in the evening. You don’t have to commute to take that time to switch off from work and I’ve heard a lot of people say they are finding it really hard to switch off in the evening and sleep well and the like because of that inability to distinguish homelife from work life now. |
| DT: | I suppose for part time employees as well because there’s not that distinction of seeing a part time employee in the office on this day and out of the office on another day there’s probably a greater pressure to do some work on non-working days as well. |
| NM: 55:00 | That’s right. I think people are living in this situation, at the moment anyway, where they’ve got school age children at home. I know a lot of people who would normally work three days but who are just spreading those hours out over 5 days because it’s not realistic for them to be at their desks, all day everyday, for 3 days a week and it’s easier to split those hours up over the week. And I think that leads to, in our post Covid world, the potential for just looking at things a bit differently and thinking outside the box as to what a part time arrangement needs to look like. Does it need to be 3 full days? Can it actually be 3 days worked over 5? Do you have to be in the office? There’s all those things that are going to be in the mix when we come out of this pandemic. |
| DT:
56:00 | We’ve talked about both the benefits and the detriments to working from home but as a takeaway, if you had to give any employers, even lawyers who are listening to this podcast who are running their own practices, if you had to give those people a tip about making working from home work for them, what would your tip be? |
| NM:
57:00 | I think you need the policies. You need the framework around how this is going to work and what are the expectations of the employer and what are the expectations of the employee so it’s important to have the policy as the framework, but then on a more practical perspective, I think communications is king. I think having the discipline to have video calls, to have the team meetings, is my biggest tip and to stay in regular communication with your team. I know myself that pre Covid, I used to work one day a week from home but it didn’t tend to be a day where I would necessarily see or speak to any of the team unless an issue actually arose. I still think that despite most employees working from home saying, you know call me, I’m available, I’m working, there is an out of sight out of mind approach that people take in the office and they think we won’t bother that person they’re at home today and I think one of the good things about Covid has been that everybody knows that everybody is around and accessible and… |
| DT: | Dispelling that barrier… |
| NM:
| Yeah, I won’t go back to the way of working on my day from home. I’ll be making sure that I use the video conferencing facilities on that day rather than just the telephone for example, but that all comes back to the comms point. |
| DT:
| Yeah. That’s a great tip! That can be really challenging for employees being unable to distinguish between work life and home life particularly when work and home are the same place for a while. Nicola, what kind of advice would you give to an employee to help them switch off from work and to delineate between work and home? |
| NM:
58:00 | I mean it might sound quite obvious David, but I think to the extent you can, having a separate space for doing work that’s particularly not the bedroom, is a good starting point. I appreciate in the Covid world, we don’t all have the luxury of having your own office space but I do think it’s pretty unhealthy to be working in your bedroom. The kitchen table is probably a better place, if you have one. So keeping the IT equipment out of the bedroom is my first tip and trying as much as possible, and I know it’s hard to keep to set working hours. I think from employers perspective, it’s important from our health and wellbeing perspective, that the employer is making it clear that just because you are working from home, the expectations around you know, hours haven’t changed and that there is no expectation unless it suits you that you’ll be working at sort of odd times of the day and night. So again, communicating that and getting your employees to believe that you actually mean that is one of the first hurdles. |
| DT: | I suppose that expectation really works both ways, doesn’t it? There’s an expectation that you have to be working during those ordinary business hours but at the same time that you’re not working outside of them. |
| NM: 59:00
1:00:00 | And look, one size doesn’t fit all and I think that’s the key takeaway from any working from home relationship or arrangement that one side doesn’t fit all. There could be employees who still want to work a fairly standard 9 to 5/9 to 6 day and others who actually enjoy the flexibility of having a few hours off in the middle of the day and logging on in the evening, so I think one of the challenges for managers is not imposing I suppose their own views and expectations on employees and if there is trust, managers discussing individually with their employees what’s going to work for both the business and the employee, recognizing that we’ve all got different ways of working and I think that’s going to be one of the things that changes. There needs to be a certain level of acceptance and respect for the fact that you’ll actually get better work out of an employee and better productivity, better employee engagement and attraction and retention if you are able to flex, at least to some degree to employee’s preferences and realise we all work in different ways and we have own preference about when and where we do that from. |
| DT: | Yeah, I suppose hopefully that opportunity comes out of this crisis! |
| NM: | Yeah, absolutely. |
| DT: | Nicola Martin, thanks so much for joining us on Hearsay. |
| NM: | Thanks David for having me. |
| DT:
1:01:00
1:02:00 | You’ve been listening to Hearsay The Legal Podcast. I’d like to thank our guest Nicola Martin, employment group practice leader at McCabe Curwood, for coming on the show. If you liked this episode about employment law and working from home, listen to our episode about legal process outsourcing and technology assisted review with Paul Prideaux and Jonathan Bartholomew, for another episode on the changing nature of work. Or, for something different, try my interview with Dr Jason Harris about the effectiveness of the voluntary administration regime in Australia. If you’re an Australian legal practitioner, you can claim 1 continuing professional development point for listening to this episode. Whether or not something entitles you to claim a CPD unit is self-assessed, but we suggest that this episode constitutes an activity in the substantive law field. If you’ve claimed 5 CPD points from our audio content already this CPD year, you may need to access our multimedia content to claim further points. Visit htlp.com.au for more information on claiming and tracking your points on our platform. The Hearsay team is Tim Edmeades, our audio producer, Kirti Kumar who produces all of our great episode summaries and quizzes, Araceli Robledo who’s responsible for our marketing, and me, David Turner, your interviewer. Hearsay is supported by Nicola Cosgrove and Chris Cruikshank co-founders of Assured Legal Solutions. You can find all of our episode summaries, transcripts, quizzes and more at htlp.com.au. That’s HTLP for Hearsay The Legal Podcast.com.au. Thanks so much for listening. |
[1] Hollis v Vabu [2001] HCA 44.
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