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Employers litigate as economy falters

Employers litigate as economy falters

Employers are cracking down on legal claims from outgoing employees, handing lawyers a rush of litigation in the process.

EMPLOYERS are cracking down on legal claims from outgoing employees, handing lawyers a rush of litigation in the process.

According to a workplace relations legal expert, this trend is likely to continue, with a predicted increase specifically in restraint of trade litigation.

Shana Schreier-Joffe, partner at Harmers Workplace Lawyers, said that when economic circumstances were favourable during the boom, companies were more willing to settle claims with outgoing employees on issues such as unfair dismissal and restraint breaches.

However, in the midst of the economic downturn, companies have shown that they are prepared to litigate more readily as they actively seek to discourage similar actions from other employees, Schreier-Joffe said.

In economic downturns, litigation tends to boom, the legal expert said. "During the boom times, however, often employers had been willing to sign blank cheques in order to settle claims quickly, or they tended to disregard breaches of restraint of trade conditions. Now, however, they appear to be prepared to litigate more vehemently," she said.

Increased litigation around bullying and harassment, as well as discrimination claims have also been prevalent, the firm said. She expects these to continue in the upcoming months.

"For employees excluded from unfair dismissal remedies, there is little other recourse available to them other than to bring claims of bullying and harassment or breach of contract.”

Schreier-Joffe said that while employees may still be sceptical about their employment opportunities in the current economic climate, they may be tempted to leave their current employers as the economy continues to strengthen. As this happens, and employees are hired by competing firms, it is likely that there will be an increase in restraint of trade litigation as employers continue to vigilantly guard their assets.

Next year will bring a raft of workplace legal challenges for employers, Schreier-Joffe said.

From 1 January 2010, the Fair Work Act, National Employment Standard and Modern Awards will all have an impact on employment terms and conditions, she said.

Those employers previously excluded from the changes at the Federal level, will now be covered by the Fair Work Act, as the States other than Western Australia have referred their powers to the Federal Government, from 1 January 2010.

She said employers should also keep an eye on the so-called golden handshake legislation that has been introduced to curb executives payouts on termination, while the harmonisation of OH&S laws will also come into effect by mid-2010.


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