Are you bound by Custom and Practice?

AMIC is currently assisting dealing with a Fair Work Commission dispute for one of our members, which relates to an interpretation of the company’s Enterprise Agreement.

In this matter the Union (applicant’s representative) is seeking payment of a public holiday that the company argues is not owed to the employees in question. However, there the Judge has raised the possibility that Custom and Practice as a determining factor in the matter.

What is a Custom and Practice?

A custom and practice is essentially a practice that has developed over a period of time or by arrangement that has never been specifically agreed between the employer and the employee but can be argued to have formed part of the terms and conditions of employment.

As an example it could be where employees are taking a 20 minute paid morning tea break when the employment contract makes no mention of a morning tea break. Further no-one knows much about how, when or why it started except to say  “we have done it for years” A second example is paying staff a bonus where staff expect it every year even though it is not written into the employment contract.

Arguing Custom and Practice

Custom and practice must be proven by the applicant not disproved by the other party. (The respondent)

The four criteria used to test a Custom and Practise are:

  1. Any custom and practice must be established and long-standing and followed by the parties over a long period of time.  If the custom and practice has been carried out only on a temporary basis then any employment tribunal claim is likely to be defeated,
  2. The custom and practice needs to have been continuously applied on every occasion that it has arisen and above all it must be reasonable,
  3. The custom and practice must also be certain and followed over a period of time, with very few if any exceptions,
  4. The custom and practice must be known to the parties and communicated usually verbally or by carrying out the practice on each and every occasion with an expectation that it will be implemented.

 A Custom and Practice case is difficult to prove and becoming increasingly difficult as Enterprise Agreements and Awards become more specialised and employers become more familiar with the complexities of negotiation.

However to safeguard your business against such an argument it is prudent to look at workplace practices and compare them with your Enterprise Agreement or relevant Award.

Further it is very important to keep accurate up to date records of any variations made to an Enterprise Agreements or Award and to seek industrial advice from AMIC before agreeing to any changes to the conditions of employment that are outside the terms of either of the above.

Fortunately, the member has accurate records that show the rationale for the current dispute.  Ultimately though it may mean that businesses who want to “treat” their employees with a little extra incentive may not be able to continue to do so until the particular change is negotiated and enshrined in the employment contract.


Summary Dismissal

AMIC represented another member in an Unfair Dismissal claim that had been lodged by one of their dismissed employees.

As the dispute is currently before the Fair Work Commission the details of the dispute are confidential however the generic principles of the argument are similar to many other unfair dismissal cases, and therefore, can be reported.

 For an employer to action a summarily dismissal, the employee must have engaged in serious misconduct.

The Fair Work Ombudsman defines serious misconduct as;

“an employee deliberately behaving in a way that is inconsistent with continuing their employment”

This includes:

  1. Causing serious and imminent risk to the health and safety of another person or to the reputation or profits of their employer’s business,
  2. Theft, fraud, assault, or
  3. Refusing to carry out a lawful and reasonable instruction that is part of the job.


The terminated employee was in a supervisory role and in a position of trust. But on occasion the owners of the business had reasons to talk to him about his appearance and other minor issues. Nothing that warranted termination however.

It was reported to the employer that the employee was involved in conduct that would fill the first criteria.

The employee was questioned about the alleged behaviour but assured his employer that this was not the case. Leading up to the dismissal the employee was asked the same question four to five times, denying the allegation each time.

Eventually though, the employee was witnessed engaging in the behaviour he had been questioned about, which was reported to the employer. The employer contacted AMIC to discuss the matter and in particular mention the following points:

  1. The employee repeatedly denied the allegations resulting in the employer losing all trust in the employee and his judgement,
  2. The negative impact on the other employees,
  3. The complete breakdown in the employer/employee relationship, and
  4. The very high risk of a violent workplace incident as a direct result of the employee’s behaviour.

At conciliation both parties made their submissions and then went into private session with the conciliator. First the applicant and then us, the respondent.

In our private session we were informed that the applicant was seeking:

  • Eight weeks wages,
  • Being allowed to resign, and
  • A statement of duties from the Employer.

 After a period of negotiation the applicant agreed to:

  • Being allowed to resign, and
  • A Statement of Duties.

The applicant had, surprisingly withdrawn the demand for 8 weeks wages.

The process for completing the settlement involved the Applicant providing a letter of resignation and once received the Respondent would provide the Statement of Duties.

After the exchange of letters the Applicant would forward a signed copy of the agreement to the respondent who in turn would sign the agreement, scan and return to the applicant for their records.

For reasons unbeknown to the Respondent and AMIC the Applicant did not provide the agreed Letter of Application within the agreed timeframe. With no other choice, after three weeks, the Applicants representative submitted an Application for Discontinuance and the dispute was closed by the Fair Work Commission.


What contributed to the successful outcome?

Despite the Applicant not adhering to their part of the agreement AMIC and the Applicant has already removed the eight week demand from the table. A saving of nearly $7000.

We were in a strong position because:

  • The applicant was committed to the process,
  • The had a clear picture of what they were willing to concede,
  • Their rationale for the termination was appropriate and supported by witnesses and good record keeping.

The tip from this particular dispute is to keep accurate records of the process went through to try and resolve the issue prior to termination.

It may seem a pain at the time but the above outstanding win shows that it was worth the time and effort to do so.


Unfair Dismissal

In a third dispute AMIC represented a member for an Unfair Dismissal in which the Applicant had engaged legal representation.

The Applicant was dismissed for repeated aggressive and disruptive behaviours and not following a reasonable request from her supervisor. Further the employee had over the course of the previous fifteen months been charged with three serious offences. One of which had the potential to effect the workplace.

The process for an unfair dismissal is that firstly an application is submitted and then a conciliation date is set to hear the dispute for the sole purpose of attempting to resolve the matter. Conciliation has an 80% success rate.

Between the application and the conciliation telephone conference either party may contact the other with an offer of settlement.

During the above period the Applicants representative provided the respondent with a letter outlining the remedy (the settlement) the Applicant was seeking to resolve the issue.

Their remedy demands were:

  • Being allowed to resign,
  • Receiving a Statement of Duties, and
  • Twenty six (26) weeks’ pay as compensation for the unfair dismissal.

Twenty six weeks compensation is rarely awarded by the Fair Work Commission and only occurs when the Applicant is clearly not at fault in any way.  In this case the applicant was at fault, therefore the Respondent replied to the letter rejecting the remedy demands. The dispute proceeded to the conciliation conference.

At conciliation both parties presented their submissions and following procedure went into private council with the conciliator. The Applicant being the first.

When the Conciliator spoke to AMIC and the Respondent she provided that twenty six weeks was not reasonable and the Applicant had been informed of this. The Conciliator also raised faults of procedural fairness of the Respondent and that if the issue was not resolves at Conciliation there was a possibility that the Applicant may be awarded a considerable financial settlement.

After more offers and counter offers the parties agreed on eight weeks settlement, being allowed to resign and being provided Statement of Duties.

Although the eight weeks was greater than the respondent wanted to pay it was considerably less than the Applicant wanted. An eighteen week saving is a welcome under the current financial constraints Australian is currently experiencing.

Whilst not specifically named by the Conciliator it is understood that the procedural faults of the Respondent were a failure to keep written records of how the bahaviou8sr and poor performance of the Applicant was managed at work.


Why were written records not kept?

The Respondent treats their employees as family and as such wanted to continue dealing with the issue informally. Treating your business as family is an admirable trait but unfortunately this time it proved to be an error.

AMIC cannot stress enough the need to keep accurate records of all issues but in particular those that involve Conduct and Performance and termination.

Records are admissible in court and considered evidence by the Commission. They do not need to be comprehensive.