5 minute read
You’re demoted
NATIONAL
The issue of demotion may arise in many circumstances, but when is it lawful?
Demotion is legally defined as a “significant reduction in … remuneration or duties; and … [the employee] remains employed with the employer.”1 Demotion should not be confused with a lawful and reasonable direction given to an employee to undertake duties, which form part of the scope of employment.2
So, when can you actually demote an employee without the risk of terminating their employment and facing a claim? Well, there are limited situations, but it can be done legally.
These circumstances include: • a provision or clause in an employment contract that contains an employer right to demote or vary certain aspects of the role, such as title, remuneration, location, department, classification;4 • a provision or clause in a Modern
Award, Collective or Enterprise
Agreement;5 and • consent or authority (best practice – written) from the employee.
If a demotion is lawful, the contract will be deemed as having been terminated.6 If the employee remains engaged by the business after acceptance of the demotion, he or she would be subject to a new employment contract.7 That should be reflected in writing and presented to the employee as soon as practicably possible.
If there are no express provisions in the employment contract or applicable instruments or if authorisation is not obtained from the employee, an employee can claim to have been demoted, even if the employee remains employed with the business in the demoted role without completely consenting to the demotion.8
If you are ever faced with the possibility of having to demote an employee, it may be worth considering alternatives, particularly in situations where the employee may not consent to the demotion.
If the reduction is “significant”, an employee may claim that he or she has been dismissed. That leaves us with the question, what is “significant”? There is case law that provides guidance on this question. For example, in a 2016 decision,3 it was determined that a reduction of $1.00 per hour in an employee’s remuneration and removing certain supervisory If you are ever faced with the responsibilities constituted “significant possibility of having to demote If you require any reduction” in the employee’s wages. an employee, it may be worth further information or assistance, please do considering alternatives. not hesitate to contact If a demotion involves our Legal and HR team “significant reduction” in directly on 1800 888 duties or remuneration 479 (option 1). but is rejected by an employee, the business may need to pay out the applicable notice and redundancy package required.
1 Fair Work Act 2009 (Cth), s 286(2)(c). 2 Miller v University of New South Wales [1999] 1307 IRCommA. 3 Phillip Moyle v MSS Security Pty Ltd [2016] FWCFB 273. 4 Hermann v Qantas Airways Ltd, PR925901. 5 Ibid. 6 Charlton v Eastern Australia Airlines Pty Limited, PR972773 [2006] 154 IR 239. 7 Tokyo Network Computing Pty Ltd v Tanaka [2004] NSWCA 263. 8 Irvin v Group 4 Securities Pty Ltd, PR925901.
NATIONAL
Least Cost Routing — reducing merchant fees
As MGA members will have read from previous articles, MGA has been advocating to reduce the ever-increasing costs of merchant (your business) banking fees.
In a recent speech, the Assistant Governor of the RBA Michele Bullock strongly advocated merchant payments choice in the online and offline world and competition in the debit card market in Australia.
Debit cards are the non-cash payment method of choice for many Australians. Debit cards are connected to a customer’s deposit account and draw funds for payment directly from that account. Over the past 10 years, the annual number of debit card transactions per person in Australia has risen from around 80 to around 260.
Most debit cards in Australia are dual-network cards. That is, payments made using these cards can be processed across two networks. The network brand on the front, and the most obvious, is typically an international scheme – Mastercard or Visa. On the back is usually the eftpos brand, the Australian domestic debit system.
The Payments System Board and the Reserve Bank have been supportive of these cards because they provide convenience and choice to both consumers and merchants. When dipping or swiping their card, consumers could choose the credit button to direct the transaction through the international scheme or the cheque/savings button to direct it through the eftpos system. Merchants could also indicate to customers which network they would prefer to be used. So dual-network cards can play a role in keeping downward pressure on the costs of card acceptance to merchants (and indirectly to consumers).
The move to contactless payments (‘tap-and-go’), however, has muted some of the competitive pressures that can come from dual-network cards. Since eftpos moved to tap-andgo later than Mastercard and Visa, a substantial number of payments that were previously processed by the eftpos network are now being processed by the international schemes. While consumers would not have noticed anything different, businesses have seen their costs of card acceptance rise as processing through the international schemes is more expensive than eftpos.
The RBA has attempted to ensure that merchants (your businesses) continue to have the choice by obtaining commitments from banks to allow their merchant customers to choose the network through which contactless transactions are processed.
Some smaller acquirers – for example, Tyro and First Data – have been faster than the major banks to provide their customers with this functionality. But the major banks are now offering, or are about to offer, merchant choice. This should assist in keeping downward pressure on the fees that merchants pay.
But as payments move to different form factors, such as mobile phones or wearables (watches and rings), and new technologies are introduced, there is a risk that some may use it as an opportunity to lock out competitors. The Reserve Bank is of the view that in moving to new technologies, merchants and consumers should continue to have a choice of debit card network.
Rules or policies of any scheme that have the effect of removing choice will reduce competition and result in rising costs to merchants. The RBA will be looking closely at developments in the debit card market to ensure that, as far as possible, there is a level playing field for the alternative debit schemes.
Assistant Governor of the RBA Michele Bullock said, “The RBA will also work with the ACCC as necessary to identify and address any anti-competitive behaviour. In the specific case of least cost routing, we (RBA) would not want to see the benefits to competition from this innovation thwarted by issuers taking eftpos off dual-network cards.”
