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HR Highlight: What is reasonable?

Posted by Elisha Radwanowski, ACAPMA on 26 February 2013

Reasonable business grounds, reasonably practicable, reasonable person test; from the Fair Work Act to the Work Health and Safety laws, businesses need to have a good understanding of what is ‘reasonable’ if they want to remain able to effectively manage their operations.

Understanding reasonable

Operating under, and complying with layers of, legislation is part of doing business. It comes with the territory. What it brings however, is a need for business owners to ‘pop on the lawyer hat’ from time to time. This is not a pleasant process for most. Taking a critical and legal reading of simple common terms can cause confusion and frustration.

One such term is reasonable. The legal concept of reasonable governs many aspects of business life - from justifications for facilitating flexibility, through to what businesses should know, should do and should implement in terms of safety.

Fair Work Act (FWA) and Reasonable Business Grounds

The FWA and the National Employment Standards (NES) provide for many employee rights. Many of these are non-negotiable. Some however, like flexibility, require the business to justify its response to the request on the basis of reasonable business grounds. So what is reasonable business grounds? The Act does not explicitly list out what is reasonable. Based on case law and explanatory notes we do know this…Reasonable is based on the effect on the workplace and the business.

This includes:

  • Ability to organise work
  • Ability to account for flexibility in current systems
  • Cost to the business
  • A time based factor – that is to say is it what is reasonable right now in the businesses development

Work Health and Safety (WHS) and Reasonably Practicable

The WHS laws add a layer of ‘reasonable’ to businesses with the standard ‘to the extent that it is reasonably practicable’. This is the standard for acquiring knowledge and assessing best fit for controlling risk. Like Reasonable Business Grounds above, it a dynamic idea that changes based on the situation of the business. It is a concept of balance best described through example; if it is extremely unlikely that an injury will occur, and it is likely that the injury will be minor, then it is not considered reasonably practicable to spend 10 per cent of the businesses turnover to eliminate the risk of injury.

Reasonably Practicable is then best described when a situation is NOT reasonably practicable.

Reasonable Person?

In the application of the FWA and WHS laws, regulators and courts will often apply a ’reasonable person test’. This test is applied to determine what a reasonable person would, or should have known, assumed, understood or done in a particular situation. In some cases a reasonable person is taken to be a regular person with general knowledge – or Joe Public off the street. In other instances a reasonable person is taken to be a person of similar standing in the same, or a similar industry – or a learned colleague or similar business.

Am I being unreasonable?

The result of all of these layers of reasonable is this - businesses must make the effort to consider situations, risks and relationships through three filters:

  1. What would a reasonable person off the street do, know, expect etc?;
  2. What would a reasonable person in this industry do, know, expect etc?; and
  3. What is reasonable for this business?

Perhaps most importantly, businesses need to get into the habit of documenting the decision making process, so that questions of reasonableness, that may arise at a later date, can be adequately addressed. Documenting the decision making process allows that important time element to be taken into account.

As is the case in many areas of business life complaints often take some time to surface. Having a clearly documented decision making process that considers what is reasonable for the business at the time of the decision. This avoids the potentially damaging situation of applying what would be reasonable to the business at the time of the complaint.

Here to help

ACAPMA members are reminded that the ACAPMAlliance Workplace Relations Professionals are available to assist with position descriptions and managing safety in your business. For more information just call 1300 160 270.

HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by calling 1300 160 270 and speaking to one of the ACAPMA Workplace Relations Professionals – its free for members.

ACAPMA membership is affordable at only $550 per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts. Click here to learn more about ACAPMA membership.

Elisha Radwanowski
BCom (HRM & IR)
Workplace Services

Author: Elisha Radwanowski, ACAPMA
Tags: NES National Employment Standards reasonable business grounds reasonably practicle reasonable person test

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