Hutchison Ports Sackings a Textbook Case of Dangers of Cutbacks

By Glenda Korporaal

Sacking an employee by email or text may be technically legal, but a recent move by Hutchison Ports to sack almost 100 workers in Sydney and Brisbane by text and email stands as a warning for other employers on the many risks of following suit.

It has become a template of how not to do it,” says Sydney ­barrister Jeff Phillips SC.

“It’s very poor industrial relations and poor in an emotional sense for the people whose livelihood has been lost,” says Mr Phillips, who specialises in industrial relations law. “If you are a smart employer and you are losing money on a business and you have to lay off, you can explain it to the workers and soften the blow.”

Mr Phillips says dismissing an ­employee by email “is a bit like separating from your wife by email”.

“You may send emails to your partner about a range of issues, but you don’t get divorced by email. For an employee, their job is often the second most important relationship they have after their ­marriage.”

As the Hutchinson case has shown, with its bitter picketing of the workplace and intense media coverage this week, the process ­itself can provide fuel for legal or industrial action.

Mr Phillips says a key things in notifying any employee that they are being laid off is not to make them angry. “If you make people angry, or give them a reason to be angry, it makes them want to run off to their lawyers.

“I advise people to make it is pleasant as possible. Talk to them, tell them you are sorry. Give them a farewell dinner. Give them a present, buy the wife a present. Don’t make them angry.”

The president of the Australian Human Resources Institute, Peter Wilson, says that these days an email can be considered the equivalent of a letter in business communications.

But he describes managers who opt to dismiss their employees by text or email as “lazy or cowardly for not being prepared to have the discussion face to face”.

“There is the formal side and there is the best human relations side of how you deal with people.”

Mr Wilson says provoking hurt and anger with dismissal by email or text risks encouraging staff to take legal action to complain about the process.

“The best way is to explain that the situation is tough and the company is doing all it can to limit the job losses. If there needs to be job losses you should have a face-to-face meeting with the person ­concerned and nurse them through it.”

Mr Wilson says firing by email was used in by some US investment banks in the height of the GFC.

He adds that Hutchison’s handling of the issue has already caused it “a fair amount of reputational damage”. “Employers face both potential legal action and reputational damage if they try to take short cuts (with the dismissal process),” he says.

There is also the impact on the morale of remaining staff. “And then of course the word gets out on social media and your reputation can be trashed.”

Dominic Russell of Harmers Workplace Lawyers says the Fair Work Act requires employers to provide written notice of a termination, which can include sending a letter or delivering it in person.

He says the Electronic Transactions Act provides that email can be an acceptable method of conducting a business transaction but the law is still “unsettled” on whether this could include a ­termination of employment notice. He says it could apply if the employee has given consent to receive electronic notifications from their employer, but the process of sacking by email is fraught with potential legal difficulties.

“Some of the difficulties with sending a text message or an email is that the employer can’t guarantee that a person has received it,” he says. “You can’t presume that people are sitting by their phone at ­midnight waiting for a notice of termination. One of the issues highlighted by the Hutchison Ports case could also be that terminating a large number of employees as a group means that they might not have received consent from each of them.”

He says sending an email or a text can also raise uncertainties about the exact date when the ­termination is to take effect.

If the employee has not received the text or email, or hasn’t read it until some time after it was sent, it can delay the effective date of termination.

Mr Russell says there is an increasing trend by employees to use electronic communications to communicate with their employer for events such as calling in sick. But an employer who notifies someone of dismissal by email or text “runs the risk that their ­conduct could weigh against them in an unfair dismissal case”.

“It can invite a lot of speculation from employees as to whether the employer has done the right thing by them. It is far more likely to create waves and it not sensible unless there is a clear policy in place about electronic communications.

“Handling it face to face is by far the safest way.”

Mr Russell advises his employer clients to set out clear policies on what is the acceptable process of communicating with their employees in specific situations. “There is no legal reason why you can’t use an email to terminate somebody’s employment,” says Andrew Stewart, the John Bray Professor of Law at the University of Adelaide.

“But the obvious consequence of taking that route will include ­increasing the distress of the employees and, in this case, provoking the anger of their union.

“In most cases it (sacking ­people by email) would be regarded as a provocative or inflammatory move. Most of us would like to be told face to face if we are going to get the chop.”

Professor Stewart says one exception can be if there has been a long process of negotiation between the ­employee and the employer and the email is the last in a chain of discussions.

“If there has been a long, drawn-out process and the final blow falls by means of email, I can imagine situations where it might be considered acceptable.

“But when the news comes out of the blue, this means of delivering the message seems particularly brutal.

“We are not talking about the legal issue here. It’s more about the ethics of doing it that way. More importantly is what impact it has on relations with the employees who are left.

“If you were shutting down the whole business you might not worry about it. But if you are expecting to continue employing people it is not exactly sending a message that you are a caring ­employer.”

Professor Stewart says under the Electronic Transactions Act emails can be considered as providing ­notification in writing.

“If there is a requirement for written notice then usually an email will suffice,” he says.

“If there are legal issues, it won’t be about the email, so much as whether there has been proper consultation about the dismissal.”

Garry Brack, chief executive of the Australian Federation of ­Employers and Industries, says employers must weigh up many factors when considering how to handle a lay-off. “When employers look at questions of retrenchment and ­redundancy they are always ­concerned about the things that can go wrong,” he says.

“Experience shows if there is a difficult environment to start with — if there has been a history of ­difficult industrial relations — employers may be concerned about things which can go wrong. These could include the potential for sabotage or unfounded workers’ compensation claims.

“When you are looking at ­redundancies, especially in this ­industry, you are always weighing up what might go wrong.”

Original story published here.