Workplace Law

In what important ways is employment law dependent on common law of contract? Explain the underlying elements of the expression “contract as a coat-hanger”.  Discuss these principles with Honeyball’s article on “The Primacy of Contract.”

Workplace Law – Part I

The contract is a subject of the English common law, its rules and principles originated from case law.[1] The concept of 'employment' was newly created  and added into contract law and it has become a coat hanger for both employees and employers. The expression “contracts as a coat hanger” has several underlying elements. First, the term "contract" is used when two parties, an employee and an employer, consciously enter into an agreement and agree upon certain terms that will apply to their engagement. Second, the law of contracts, as an independent regime of law is not only theoretical but also serves to bring recourse to any party that may feel aggrieved in the employment context. Last, other non-contractual remedies come to play when there is no remedy in the proper definition of contract law.


The author, Simon Honeyball says that the common interpretation of the perception of employment is a contractual concept of which there are three different forms.[2] The first approach is to define and regulate the concept of employment from the social aspect which is a prevailing analysis of the employment relationship between employers and employee.[3] The second approach is to compare contractual and status elements of employment, which is more abstract than the first approach and concentrates on non-contractual remedies. The third approach is to consider the statutory intervention which has made employment law dependent on the common law of contract.


Honeyball’s article on “The Primacy of Contract” can be dissected in several forms. First, contract law stems from common law and as such, different explanations can be implored from the primacy of contract. The multiple meanings of contract can be looked at from the perspective of the judicial background in the interpretation of contracts. Before statute law, contract law had been in application and judges used to and still do, rely on previously decided cases that fall under contract law. Honeyball argues that since there has been a progressive move from contractual remedies to those provided under statute, the contract or employment law has its ground norms in contract agreements.

[1] Richard Stone and James Devenney, The Modern Law of Contract (Routledge, 2015) 2.

[2] Simon Honeyball, 'Employment Law and the Primacy of Contract' (1989) 18 Industrial Law Journal 97

[3] Simon Honeyball, 'Employment Law and the Primacy of Contract' (1989) 18 Industrial Law Journal 97.


Explain the legal concept of the duty to maintain trust and confidence in the employment relationship.


The decision made by the English House of Lords in Malik and Mahmud v Bank of Credit and Commerce International SA[1] is regularly cited as a legal authority for cases relating to 'mutual trust and confidence' in employment relationships. It states that an employee might obtain  damage compensation for a breach of duty, except when any remedy arises out of termination.[2] The employment relationship is one of the classic fiduciary relationships. It may breach the law if both an employer and an employee do not perform their duty: Hospital Products Ltd v United States Surgical Corporation.[3] Since an employee is bound by the implied duty of fidelity during their period of employment they must not cause any damages by disclosing or using information acquired in the course of employment: Gooley v Westpac Banking Corp.[4] However, there is an exception when it reveals some form of iniquity, or wrongdoing or a danger to the public: Minister for Immigration and Citizenshup v Kumar.[5]


To maintain trust and confidence during the employment relationship, both an employer and an employee must comply with their legal duty. An employer has a duty to pay work-wages. An employer also has a duty to provide work for an employee to develop his/her skills otherwise it would amount to a breach of the employer's obligation.[6]  Moreover, an employer  has a duty to act reasonably and a duty of confidentiality to an employee.  An employer is bound by a duty not to misuse or disclose confidential information: Prout v British Gas plc.[7] On the other hand, an employee has a duty to obey all lawful and reasonable orders made by an employer in the workplace: R v Darling Island Stevedore & Lighterage Co ltd.[8] Sometimes, the contract does not specify the hours of work and those working hours are changed by an employer as required. An employee must comply with the changed hours unless it is unreasonable.[9] Also, an employee has a duty to exercise care and skill to an employer. Furthermore, an employee has a duty of good faith and fidelity which is both contractual and equitable.

[1] Malik and Mahmud v Bank of Credit and Commerce International SA [1997] UKHL 23.

[2] Rosemary J. Ownes, The Law of Work (Oxford University Press, 2nd Ed, 2011) 287-288.

[3] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64.

[4] Wayne Gooley v Westpac Banking Corporation [1995] IRCA 145.

[5] Minister for Immigration and Citizenship v Kumar [2009] HCA 10.

[6] Rosemary J. Ownes, The Law of Work (Oxford University Press, 2nd Ed, 2011) 285.

[7] Prout v British Gas plc [1992] FSR 478.

[8] R v Darling Island Stevedoring and Lighterage Company Limited [1938] HCA 44.

[9] Rosemary J. Ownes, The Law of Work (Oxford University Press, 2nd Ed, 2011) 258.


Explain and outline various forms of industrial action. Note the employer remedies, both statutory and at common law.


Workplace Law Exam Audio Notes I


What Is Industrial Action?

All types of industrial action such as strikes and boycotts were unlawful under the common law in the past: National Workforce v AMWU (No 2).[1]  Even formatting trade union was constituted as criminal activity.[2] Now, industrial action is defined in section 19 of the FWA.[3] The purpose of industrial action is for it to be used in support of a claim for increasing wages or improving workplace conditions, for consultating when addressing redundancies by technology changes, for discussing the matters of dismissed or mistreated worker or to support union rights.



Forms of Industrial Action


Employee Action

Forms of industrial actions by employees are strikes such as wildcat,[4] walkouts,[5] selective bans on particular work (including new work orders), rolling,[6] political or sympathy,[7] stop-work, go-slow,[8] work-to-rule,[9] ‘sabotage’,[10] picketing and boycotts.[11]

However, picketing is not unlawful and also it is not a form of industrial action. The action of picketing attempts to prevent people from entering or exiting a premises, therefore it may cause a private or public nuisance, civil assault or trespassing. It is more likely actionable as a tort.


Employer Action

Example of employer’s industrial actions are lock-out, unnegotiated changes, withholding pay, standing down and sneaking. The lockout is the best known form of industrial action by employers that involves locking employees out of the company or factory.


Remedy Under Statutory

Employees or employers who are affected or threatened by unprotected industrial action may seek injunctions under sections 418 and 419 of the FWA.[12] Section 418(1) provides that the Fair Work Commission (‘FWC’) must make an order that the industrial action stop, not occur or not be organised for a period specified in the order. Section 470(1) states that an employer does not have an obligation to make an payment to an employee in relation to the total duration of the industrial action on that day if an employee engaged, or engages, in protected industrial action against an employer.



Remedy under Common law

Employee’s refusal to perform work is a breach of contract which allows an employer to terminate the contract immediately. Under the common law, the action of unions in organising strikes may constitute as industrial torts. Interlocutory injunctions can be obtained if serious issues and balance of convenience are proven: American Cyanamid Test.[13] Damages are available yet rarely pursued.

[1] National Workforce v AMWU (No 2) (1997) 76 IR 200 , 209-211.

[2] Rosemary Owens Joellen Riley and Jill Murray, The Law Of Work (Oxford University Press, 2nd Ed, 2011) 589-591.

[3] It includes performance of work by an employee that is different from which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work.

[4] A wildcat strike action, often referred to as a wildcat strike, is a strike action undertaken by unionized workers without union leadership's authorization, support, or approval; this is sometimes termed an unofficial industrial action.

[5] In labour disputes, a walkout is a labour strike, the act of employees collectively leaving the workplace as an act of protest. A walkout can also mean the act of leaving a place of work, school, a meeting, a company, or an organization, especially if meant as an expression of protest or disapproval.

[6] In the Oxford dictionary, rolling strike is defined as a strike consisting of a coordinated series of consecutive limited strikes by small groups of workers.

[7] A political strike is a strike on political issues. Sympathy strike is that a striker has no direct grievance against her or his own employer, yet they support another group of employees on strike.

[8] A slowdown is a form of industrial action in which employees intentionally deliver the job late or reduce efficiency in their performance while on their duties.

[9] Work-to-rule is an industrial action in which employees are entitled to do no more than the minimum required by the rules of their contract, and precisely follow all safety or other regulations, which may cause a slowdown or decrease in productivity, as they are no longer working during breaks or during unpaid extended hours and weekends.

[10] Sabotage is a deliberate action aimed at weakening a polity or corporation through subversion, obstruction, disruption or destruction. In a workplace setting, sabotage is the conscious withdrawal of efficiency generally directed at causing some change in workplace conditions.

[11] A boycott is an expression of protest which is also an industrial action that abstain from using, buying, or dealing with a person, organization, or country for social or political reasons.

[12] Sections 418 and 419 replaces section 496 of the Workplace Relations Act.

[13] In American Cyanamid Co v Ethicom Ltd [1975] AC 396the court developed a set of guidelines to establish whether an applicant’s case merited the granting of an interlocutory injunction.


Explain the key elements of "workplace bullying." Also outline the key defence/s available to employers.


Definition of bullying

There is no statutory definition of “workplace bullying” in Australia. Yet, actions may be taken with respect to bullying under legislation covering occupational health and safety, workers' compensation, equal opportunity, and industrial relations. According to s789FC of the Fair Work Act 2009 (Cth) (‘FWA’), a worker who “reasonably believes” that they have been bullied at work may apply to the FWC for an order under section 789FF. Under s789FD of the FWA, workplace bullying is defined as "repeated,[1] unreasonable behaviour directed towards a worker or a group of workers that creates a risk to health and safety[2]": Arnold Balthazaar v Raelene McGuire; Department of Human Services (Commonwealth).[3] However, s789FD(2) provides that bullying does not include “reasonable management action carried out in a reasonable manner”.


Reasonable Person Test

The test for unreasonableness is required to assess whether behaviour is objective at the point of a "reasonable person, having regard to the circumstances". This is because unreasonable behaviour may also cause a risk to the health and safety of others.


Psychological Bullying

Psychological bullying is more difficult to prove than physical bullying. Examples of psychological bullying include verbal abuse such as name calling, teasing or taunts, practical jokes, exclusion/isolation, intimidation, allocation of tasks above or below ability, unreasonable criticism, impossible deadlines, deliberately changing work rosters to cause difficulty, and withholding information required to perform a task.



In Naidu v Group 4 Securities Pty Ltd (‘Naidu Case’),[4] Mr Naidu was an employee of Group 4 Securitas as a security guard. He was bullied by his manager and developed depression and post-traumatic stress disorder that caused considerable medical expenses.[5] As a result, the court awarded exemplary damages of $150,000 against Nationwide News, where the manager worked, given the company had direct knowledge of the bullying and failed to act.



Employers must take action when there is bullying, otherwise they will be liable for damages: Naidu Case. However, the following examples are not workplace bullying: reasonable management of performance, counselling and discipline, reasonable supervision, poor management and a single incident.

[1] Repeatedly: There is no set number of times that the bullying conduct needs to occur although it must occur more than once.

[2] Risk to health and safety: This implies that only a possibility of danger needs to be shown, not an actual danger to health and safety.

[3] Arnold Balthazaar v Raelene McGuire; Department of Human Services (Commonwealth) [2014] FWC 207.

[4] Naidu v Group 4 Securitas Pty Ltd [2005] NSWSC 618.

[5] Between 1992 and 1996, Mr Naidu's manager at Nationwide News subjected him to violent and financial threats, racial and sexual abuse, excessive and unpaid working hours, and directed Mr Naidu to perform personal tasks at the manager's home.

* Received 6/7 (Distinction). This essay was submited via Turitin. Please use as reference purpose.

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