Dismissal declared unfair due to “lack of procedural fairness”

A truck driver terminated for urinating outside the entrance to a Woolworths warehouse has been awarded approximately $16,000 in compensation following his successful unfair dismissal application.

In support of its decision to terminate the driver’s employment, Sargeant Transport Pty Ltd (Sargeant Transport) relied upon the employee’s “unprofessional” and “unacceptable” conduct and the need to maintain good relations with Woolworths – who imposed a three-month ban on the driver from its sites – as valid reasons for dismissal. Sargeant Transport also alleged that the driver had denied the incident when initially questioned and lied to his employer during the course of the investigation. Despite agreeing with Sargeant Transport that the driver’s actions lacked adequate explanation and constituted a breach of company policy, Commissioner Bissett found that the lack of procedural fairness afforded to the driver during the employer’s investigation rendered the dismissal unfair.

The driver, who had no record of disciplinary issues in his four years’ service with the company, was advised of his dismissal over the telephone, shortly after the company’s representative had reviewed CCTV footage of the incident. The CCTV footage was critical to the decision to dismiss the

employee which was made by the representative prior to advising the employee of the content of the CCTV. In her decision, Commissioner Bissett expressed the following sentiment in regards to this issue; “I find it disturbing that neither Ms Jewell [of Sargeant Transport] nor anyone else from the Respondent sat with the Applicant and explained to him the allegations, the evidence and the potential consequences of the allegations if proven, nor asked him why he should not be subject to a disciplinary outcome (including dismissal)”.

The Commissioner also identified the company’s failure to provide other information relevant to the misconduct allegations, such as the length of the Woolworths ban, to the driver.

The dismissal was found to be harsh and unreasonable in the circumstances, and consequently unfair under the Fair Work Act 2009. The importance of procedural fairness in the context of unfair dismissal applications was emphasised by Commissioner Bissett in her closing remarks;

“The existence of a valid reason must be balanced against the lack of procedural fairness. Procedural fairness is an important consideration. […] Its proper application ensures a robust and just process for all involved.”

Cowan v Sargeant Transport Pty Ltd [2014] FWC 5330

What does this mean for employers?• As well as identifying a valid reason to terminate employment, employers must ensure that employees are

afforded procedural fairness during the course of disciplinary investigations.

• Employers must be clear and unambiguous in their disciplinary discussions with staff, to ensure that they are made aware of the allegations and evidence against them.

• Prior to making a decision to terminate, employees have the right to be advised of the reasons for the proposed dismissal and be given the opportunity to respond, including providing information of matters in mitigation of their actions.

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Federal Court determines ‘higher compensation’ for sexual harassment in the workplace

A recent decision of the Full Federal Court, significantly increasing the amount of damages awarded to a former employee, has found that community standards now demand higher compensation for non-economic losses in sexual harassment cases.

In its original decision, the Federal Court found that Ms Richardson had been subject to unlawful sexual harassment by a co-worker in the workplace and held her former employer, Oracle Corporation Australia Pty Ltd (Oracle) vicariously liable under the Sexual Discrimination Act 1984 (Cth) for the unlawful actions of its employee. Ms Richardson was awarded $18,000 in general damages for ‘pain, suffering and loss of enjoyment of life.’

On appeal the Full Federal Court, comprised of Justices Kenny, Besanko and Perram, found the original damages awarded to be “manifestly inadequate” and increased the award of general damages to Ms Richardson to $100,000, plus $30,000 damages for economic loss. The Full Court accepted that there was the necessary causal link between the sexual harassment and Ms Richardson’s decision to leave her employment with Oracle, meaning that in addition to general damages she was entitled to be compensated for her economic loss.

In the reasons for her decision, Justice Kenny identified that damages awarded in past sexual harassment cases were significantly less than and out of step with amounts awarded in comparable bullying and harassment cases, such as:

• the Victorian Court of Appeal’s decision in Willet v Victoria which awarded a former State police officer $250,000 for pain and suffering.

• the decision of the Supreme Court of Victoria in Swan v Monash Law Book Co-Operative, where Ms Swan was awarded $292,000 for the loss of past and future earnings, in addition to $300,000 for pain, suffering and loss of enjoyment of life.

Justice Kenny acknowledged that whilst the original award of damages fell within the historically “acceptable” range, there was reason to believe that community standards “now accord a higher value for compensation for pain and suffering and loss of enjoyment of life” in sexual harassment cases.

Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82

What does this mean for employers?

• There is an upward shift in compensation being awarded for cases of sexual harassment in the workplace.

• Ensure that there is a comprehensive sexual harassment policy and procedure in place.

• Ensure that appropriate training, education and support systems are in place for employees.

• Ensure that there are clear guidelines and processes for investigating and dealing with sexual harassment allegations in a prompt and fair manner.

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FWC rules on ‘Notice of Representational Rights’ documentation

A recent decision of the Full Bench of the Fair Work Commission (FWC) has held that a Notice of Representational Rights issued to staff, which included additional content to that prescribed by the Fair Work Regulations 2009, rendered the employer’s application for approval of its enterprise agreement (EA) invalid.

In making its decision, the FWC Full Bench considered whether the employer (Peabody Energy) had complied with the requirements of subsection 174(1A) of the Fair Work Act 2009 (Act) in stapling two additional documents to the Notice of Representational Rights issued to staff at the commencement of the bargaining negotiations.

Subsection 174(1A) of the Act provides that the Notice of Representational Rights must contain the content, and be in the form, prescribed by the Regulations and must not contain any other content.

The Full Bench held that the mandatory language used in the Act makes it clear that there can be no departure from the content or form of the Notice prescribed. However, the Act does not preclude an employer from providing additional material to its employees at the same time as the Notice is given.

The case required an assessment of fact as to whether the stapled materials formed part of the Notice, or alternatively could be said to merely have accompanied the Notice. The Full Bench relied upon the information contained in the employer’s F17 statutory declaration, identifying the 3 documents as a “pack”, to find that the stapled materials formed part of the Notice which, consequently, failed to comply with the Act.

The Full Bench concluded that a failure to comply with subsection 174(1A) rendered the Peabody Energy’s application for approval of its EA invalid, and dismissed the application.

Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union (CFMEU) (2014) FWCFB 2042

What does this mean for employers?

• Notice of Representational Rights must take the same form, and content, as prescribed by the Regulations which should not be altered.

• Extra information provided to employees in the process of EA bargaining (i.e. bargaining nomination slips) must be kept separate from the Notice of Representational Rights.

• Employers should be aware that failure to issue the Notice in the prescribed form will invalidate the EA application and prevent FWC from approving the EA.

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Decision overturned: Union eligibility rules prevail in representation dispute

The Full Bench of the Fair Work Commission (FWC) has upheld an employer’s appeal against an earlier decision to allow a CFMEU industrial officer to represent two non-member applicants seeking relief for unfair dismissal.

At first instance, FWC considered whether the CFMEU representative (Mr Cousner) was required to seek permission under section 596 of the Fair Work Act 2009 (Act) to appear at the unfair dismissal arbitration on behalf of the applicants. Commissioner Spencer considered the exception contained in subsection 596(4) of the Act, which excludes an “employee or officer” of an “organisation” from the categories of persons required to seek permission to represent parties at FWC. The Commissioner held that the provision did not require the “organisation” to have “coverage” of the person seeking representation. Having been satisfied that he was an employee or officer of the CFMEU, Commissioner Spencer allowed Mr Cousner to provide representation in the matter, without the need of seeking permission to do so, despite the applicants failing to meet the CFMEU’s membership eligibility requirements.

The FWC Full Bench overturned the decision on appeal, finding that the union’s capacity to represent persons under the Act is limited to those persons eligible for membership of the union in accordance with its registered rules.

Contrary to Commissioner Spencer’s findings, the Full Bench held that the construction of section 596 of Act did not permit representation by a registered organisation irrespective of its membership eligibility requirements. The Full Bench stated that such an interpretation, as submitted by the union, would undermine the scheme and criteria set out in the Fair Work (Registered Organisations) Act 2009, the legislation governing registered organisations. Senior Deputy Presidents Acton, O’Callaghan and Commissioner Simpson found that the provisions of the Act were not intended to depart from the principle established under previous legislation, and confirmed in several High Court authorities, to restrict a union’s capacity to represent the interests of party to parties falling within the scope of the union’s eligibility requirements.

McCarthy v CDJV Construction Pty Ltd [2014] FWCFB 5726

What does this mean for employers?

• In addition to unfair dismissal applications, the issue of employee representation employees is important in over matters under the Act, such as right of entry, protected action ballots, and enterprise bargaining.

• The decision makes it clear that a union may only “represent” an employee if they are eligible to be a member of the union in accordance with its rules.

• Employers should seek assist to challenge the ability of a union to represent an employee who is not eligible to be a member of that union.

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SIAG welcomes Alexandra Klimovics, senior lawyer, to its legal team.We take this opportunity to welcome Alexandra Klimovics, senior lawyer, to the SIAG team.

Alex has 8 years’ experience advising and representing clients in all areas of workplace law, with particular experience within the construction and real estate industries.

She regularly appears before the Fair Work Commission and Federal Courts in unfair dismissal and adverse action matters, and has also acted for employers in discrimination claims and industrial disputes.

Alex’s experience across all aspects of employment and industrial relations also includes:

• conducting reviews of, and training on, the National Employment Standards, Modern Awards and their impact on terms and conditions of employment;

• implementing specifically designed workplace relations regimes for individual clients and industry associations/franchise systems, including enterprise agreements and common law contracts of employment;

• developing workplace policy and procedure manuals;

• advising on performance management and legal issues surrounding the end of employment, including exposure to claims and enforcement of post-employment restraints;

• advising in relation to transfer of business, especially re: redundancy, employee entitlements and transferring industrial instruments.

Having practiced in both the private and public sectors, Alex takes a practical approach to her work with a strong focus on client service and commitment to achieving solid commercial outcomes.

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IR Reforms and Workplace Laws: Where are we now and where are we going?The Coalition Government currently has three bills before parliament, namely the Fair Work Amendment Bill 2014 (FW Bill), the Fair Work (Registered Organisations) Amendment Bill 2013 (RO Bill) and the Building and Construction Industry Bill 2013 (BC Bill). These Bills represent the Government’s first steps in its current term towards the workplace reforms proposed in its 2013 “Policy to Improve the Fair Work Laws” (the Policy). These bills only go so far however and it is notable that the Policy placed significant emphasis on a review of workplace laws to be undertaken by the Productivity Commission

during the Coalition’s first term in Government, thereby enabling a focus for debate on workplace laws prior to the next Federal election. Whilst there may be mounting pressure from various interested parties, the Coalition has been clear that any significant workplace law changes will be subject to a mandate after the next Federal election.

For the purposes of this article we shall be summarising key changes proposed under the FW Bill and the draft terms of reference for the Productivity Commission review. Continued next page>

IR Reforms and Workplace Laws: Where are we now and where are we going?FW Bill

The key changes to the Fair Work Act 2009 (the FW Act) proposed by the FW Bill include:

(1) Individualflexibilityarrangements(IFAs)• Non-monetary benefits could be considered

when assessing the fairness of the IFA;• IFAs to include a statement by employee

setting out why the arrangements genuinely meets their needs and they are better off overall under the arrangement;

• Minimum notice for terminating IFA extended from 28 days to 13 weeks;

• IFA provisions in Enterprise Agreements must cover conditions relating to hours of work, overtime, penalty rates, allowances and leave loading.

(2) Greenfieldsagreements• Subject to good faith bargaining rules;• Employers to be able to seek FWC approval

of a proposed agreement if no agreement is reached after 3 months of negotiations.

(3) UnfairDismissal• Simplifying the process for FWC to dismiss

unmeritorious unfair dismissal claims.

(4) Union Right of Entry• Repeal of recent FW Act amendments that

provide for lunch rooms as default location for workplace union meetings and facilitation of union access to remote worksites;

• Entry for holding meetings with members or prospective members dependant on union being covered by an enterprise agreement applying to the work performed at the premises or the union being invited by a member or prospective member.

(5) AmendmentstoclarifycertainNES entitlements

• Clarifying payment of leave loading on termination

(6) Transfer of business• Facilitation of easier transfer of business

between associated entities.

Should the FW Bill be passed by the end of this year it is increasingly likely the Government may seek to bring forward further legislation before the Parliament in accordance with its stated Policy. Those reforms are likely to include expanding the limits on taking industrial action and the measures to ensure that productivity matters have been considered in enterprise agreement negotiations.

Productivity Commission terms of reference

Whilst not yet formally released by the Government, the draft terms of reference for the Productivity Commission were leaked to the media in March 2014. It is not anticipated that the final terms of reference will represent any significant change from the draft. The draft terms are broad and wide-ranging and include the impact of the workplace relations framework on matters such as employment levels, productivity, competitiveness, business investment, labour market adaptability, and flexibility in managing and engaging employees. The terms also include how Australia’s workplace laws could be improved to maximise outcomes for all stakeholders.

It is noted that the terms of reference are sufficiently broad as to be able to encompass the major concerns raised by industry employer groups, namely award penalty rates, individual agreements and unfair dismissal protections.

Employers will be afforded the opportunity to make submissions to the Productivity Commission review once it gets underway.

It is this Productivity Commission’s review findings and recommendations, which are to be released prior to the next Federal election, that will likely focus the policy debate as we lead into the election in 2016.

Please contact SIAG if you would like any further information.

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High Court rules on mutual trust and confidence

In a landmark decision, the High Court of Australia has held that there is no term implied by law of mutual trust and confidence in Australian employment contracts.

In the case of Barker v the Commonwealth Bank of Australia (CBA), Mr Barker’s employment with CBA was terminated by redundancy in 2009. CBA advised Mr Barker that his position was no longer required and, where he could not be redeployed within the company, his employment would be terminated upon four weeks’ notice. Despite CBA’s purported preference that he be redeployed, Mr Barker was denied access to his work email and voicemail, and therefore unable to receive information concerning alternative positions. The external recruitment firm involved in the redeployment exercise also failed to contact Mr Barker.

Mr Barker commenced proceedings against the employer in the Federal Court of Australia, alleging that CBA’s breach of the implied term of mutual trust and confidence had resulted in him failing to be considered for redeployment. The primary judge agreed with the employee, ruling that a term of mutual trust and confidence could be implied into the employment contract between Mr Barker and CBA, and that the company’s failure to follow their redeployment policy constituted a breach of that term.

On appeal to the Full Federal Court, the majority upheld the existence of the implied term requiring that “parties will not, without reasonable cause, conduct themselves in a manner likely to destroy or seriously damage the relationship of trust and confidence between them.” However the decision found that the primary judge had erred in determining that the term compelled CBA to comply with the redeployment policy. Mr Barker subsequently appealed to the High Court.

On 10 September 2014 the High Court unanimously ruled that a proposed term of mutual trust and confidence was not implied by law into Australian employment contracts. Furthermore, the facts of the particular case did not demonstrate that terms should be implied as a matter of fact.

In their ruling, Chief Justice French, Justice Bell and Justice Keane stated that the decision did not reflect upon the question of whether there is a general obligation to act in good faith in the performance of contracts, as this was not a question put before the High Court in the appeal.

The High Court also observed the capacity for parliament to enshrine a term of mutual trust and confidence in legislation, however this does not appear to be a current item on the Government’s agenda.

CommonwealthBankofAustraliavBaker[2014]HC3210September2014

What does this mean for employers?

• Employers should review their employment contracts and seek advice regarding whether any additional terms can be implied into their contracts.

• Whilst the High Court’s decision offers some relief for employers, the existence of an implied term of “good faith” in Australian employment contracts remains undecided and is an issue to watch out for.

• In addition to implied terms, employers must take steps to ensure that their interactions with employees comply with the express terms of any applicable Modern Awards, registered agreements and written contracts of employment.

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Dismissal declared unfair despite valid reason

The Fair Work Commission (FWC) has found that whilst an IT company had a valid reason to terminate a project manager who had claimed overnight expenses on 141 occasions over a period of 12 months, the long delay in investigating the misconduct and his untarnished long service resulted in the dismissal being unfair.

During 2011 and 2012, the Adelaide based manager was required to travel regularly to Melbourne for work. The manager prepaid his accommodation and submitted expense claims on a monthly basis, however in doing so failed to identify which nights he had spent in Melbourne due to his working requirements.

The findings of the IT company’s 2013 investigation into the expense claims concluded the manager had made 141 inappropriately expense claims between 2011 and 2012 and that such conduct constituted a breach of the company’s policies, practices and code of conduct. On the basis of the evidence presented during the hearing, on 23 December 2013 the company formed a clear view that the manager’s employment should be terminated. The company, however, did not inform the manager of its findings until January 2014 and, following a period of paid suspension, subsequently dismissed him in March 2014.

FWC agreed that the employee’s failure to comply with the business’ Conduct Guidelines

and the obligations established by its expense reimbursement policies and lack of care in lodging inappropriate expense claims, that were of such a magnitude and were repeated over the period from 30 October 2011 to 26 September 2012, must be regarded as behaviours which represented a valid reason for termination of his employment.

However in his decision, Senior Deputy President O’Callaghan found in the circumstances that termination of the employee’s employment was harsh, given his substantial service and employment history, and unjust, given the long delay in the investigation process, the limitations of the employee to respond to the allegations against him and the company’s limited consideration of his ultimate responses. Further, SDP O’Callaghan held that the company’s decision to require the employee to continue to work, when it had made an “in principle” decision to dismiss him, contributed to the injustice of the decision.

On finding that the dismissal was unfair, the company was ordered to reinstate the manager’s employment and make a payment to him in compensation for his lost earnings. The amount of compensation ordered was reduced by the amount over claimed by the employee, and further discounted by 50% on account of the employee’s misconduct having contributed to the decision to dismiss.

CamillerivIBMAustraliaLtd2014,FWC5894(10September2014)

What does this mean for employers?

• Ensure that investigations into alleged misconduct are conducted in a fair and timely manner.

• Provide employees with sufficient detail of the allegations against them and genuinely consider their responses.

• Consider appointing an independent third party to conduct the factual investigation and make recommendations to avoid pre-determinations.

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Superannuation freeze spurs ACTU guide to industrial responsesThe Federal Government has announced that the superannuation guarantee (SG) – the compulsory superannuation contribution made by employers on behalf of their employees – is to be frozen at 9.5% for the next seven years. Under the proposed amendments, the planned increase to 10% has now been postponed to 1 July 2021, after which annual increases of 0.5% will apply until the rate reaches 12%.

While the announcement was welcomed by employer organisations, the ACTU has labelled the deal between the Coalition and the Palmer United Party as “disgraceful”, arguing that employees should not be disadvantaged by the SG freeze.

The ACTU’s newly produced “bargaining guide” for unions seeks to disregard the freeze and advocates the continued increase of SG contributions by 0.5% annually effective 1 July 2015, in line with the scheduled increases introduced by the former Labor Government. ACTU secretary Bill Oliver said that, in this way, unions will aim to help “shield” workers from the “cruel and unfair” budget.

In addition to disregarding the current Government’s SG increase timetable, the bargaining guide proposes a raft of additional industrial claims to cover the cost of the Federal Government’s “unfair” budget measures. These include:

• Reimbursement of the $7.00 GP co-payment if a sick note is required;

• An allowance of $13.75 per week for working parents if the current child care rebate is frozen at $7,500, rather than continuing to be indexed at CPI; and

• A travel allowance of $0.78 per km for employees who use their own motor vehicle on the employer’s business.

The ACTU have justified the publication of the bargaining guide by stating “A key consideration in formulating the claims was to avoid direct collisions with our general policy position that social insurance is the role of the public sector.”

What does this mean for employers?

• Consider the impact of the proposed SG freeze on your employees and your obligations under applicable contracts and registered agreements.

• Be aware that, despite the proposed changes to the SG legislation, unions will be actively campaigning for incremental SG increases for staff and other allowances during enterprise agreement bargaining.

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Meet our team

Brian CookManaging Director

Sophie McCowanDirector of Legal Services

Gary SeppingsDirector of HR Services

Alex KlimovicsSenior Lawyer

Sascha CookPrincipal Advisor

Fran WilliamsPrincipal Advisor

Megan HarrisHR Advisor

Rebecca DevittPublications Officer

Grant CookOHS Co-ordinator / Web/Graphic Design

Samantha SpencerAdministration Officer

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Fleur BehrensPrincipal Advisor

DISCLAIMER: “The Advisor” is intended to provide only general information which may be of interest to siag clients. Reliance is NOT to be placed upon its contents as far as acting or refraining from action. The content cannot substitute for professional

advice. Contact siag if assistance is required.

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siagtraining : development

For all enquiries please call 1300 SIAGHR (1300 742447) or web: www.siag.com.au © copyright SIAG 2014

Performance & Conduct Leadership & Management WorkshopOne of the key leadership and management challenges for our clients continues to be how to optimise staff performance and effectively deal with poor performance and misconduct.

There has been a growing demand from our clients to build line management capability in performance and conduct leadership and management. This demand has also been intensified by the greater profile of workplace bullying. This has been further demonstrated by the increased jurisdiction of the Fair Work Commission to hear workplace bullying matters.

SIAG provides client-based half-day Performance & Conduct Management Workshop. The objective of this workshop is to build line management capability in this critically important area of leadership and management.The course is facilitated by SIAG’s Director – HR Services, Gary Seppings, and can be run in groups at your organisation (maximum around 12 participants).

The workshop covers:

• The Importance of Leadership• Staff Engagement• Effective Performance Review & Development• Code of Conduct• Workplace Bullying• Sexual Harassment• Equal Employment Opportunity & Discrimination• At Risk Behaviour• Information & Communication Technology usage• Social Media • Grievances/Complaints Processes and Investigations• Unfair & Unlawful Termination – The Legal Framework• Disciplinary Action and Dismissal Processes• Organisational Culture – Current v Desired State and Action Plan to Close Gaps

Fee: $2,000 (plus GST)

If you would like to discuss the above, please contact Gary Seppings on (03) 9644 1400.