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Monthly Update—Australian Labour & Employment

Monthly Update—Australian Labour & Employment

Read Monthly Update - Australian Labour & Employment July 2014 newsletter.

IN THE PIPELINE—HIGHLIGHTING CHANGES OF INTEREST TO EMPLOYERS IN AUSTRALIA

Senate Committee recommends approval of the Fair Work (Amendment) Bill 2014 (Cth)

The Senate Standing Committee on Education and Employment has recommended to the Senate that it approve the Fair Work (Amendment) Bill 2014 (Cth). The Bill, first tabled on 27 February, provides for the extension of unpaid parental leave and the insertion of flexibility terms into modern awards and prevents an application for a protected action ballot being made unless bargaining for a new Enterprise Bargaining Agreement has commenced. The Bill is expected to be passed shortly at the next Senate sitting.

HOT OFF THE BENCH—DECISIONS OF INTEREST FROM THE AUSTRALIAN COURTS

Return to sender: terminated employee not entitled to retain company documents

The Federal Court has held that a terminated employee is not entitled to retain documents after termination for the purposes of prosecuting a claim against the employer.

Armstrong World Industries suspended its CFO on account of bullying allegations and dismissed him eight days afterward. The CFO made a general protections claim under s 340 Fair Work Act 2009 (Cth). There was a conciliation conference to resolve the claim, to which the CFO took two folders of documents. Representatives from Armstrong observed that those folders contained its documents. When the conference failed to produce a settlement, the Fair Work Commission certified that the dispute could be litigated within a window of time.

Within three days left before that window closed, Armstrong World Industries sought an injunction for the destruction of its documents and their electronic copies in the possession of the CFO. In retaining those documents, Justice Beach found that the CFO had contravened s 183 of the Corporations Act 2001 (Cth), prohibiting the use of company documents for personal advantage. The CFO argued that the documents were necessary for the prosecution of his claim, but Justice Beach noted that the reverse-onus provisions of the Fair Work Act 2009 relieved him of an obligation to provide evidence. Nevertheless, the CFO could obtain access to the documents by legitimate means such as discovery.

Lessons for Employers

This decision gives employers a strong basis to request and recover documents from terminated employees and grounds to take back those documents notwithstanding any claim that might be required by the employee for the conduct of litigation. Furthermore, employers should note that such documents cannot be used by directors and officers against the company unless they are properly obtained.

Delay in reinstatement inexcusable: Perram

Justice Perram has declined to stay an order for the reinstatement of an employee after the deadline for reinstatement had passed. Lynda Pykett sued her employer, TAFE NSW, for unfair dismissal on the basis that hers was not a genuine redundancy. She succeeded, and Commissioner McKenna ordered on 16 June that the employee should be reinstated by 25 June. The employee notified TAFE that she would present for work on 27 June. On 26 June, the solicitors for TAFE notified the solicitors for the employee, after hours, that the employee ought not return to work on 27 June since TAFE would seek a stay of the orders.

These facts were not well received at the stay application. Justice Perram observed that by failing to reinstate the employee by the 25 June deadline, TAFE breached a court order and thereby breached s 675(1) Fair Work Act 2009 (Cth), punishable by 12 months' imprisonment. Justice Perram considered that TAFE should have brought the matter before the court directly when the problem arose, instead of waiting until the following Monday. Moreover, his Honour required TAFE to reinstate the employee immediately. In any event, his Honour found that TAFE should have sought the stay as soon as it had received the judgment of the Commission instead of waiting for two weeks and, in so doing, breached a court order.

Lessons for Employers

Employers should take away two points from this decision. First, employers must obey reinstatement decisions. They cannot be ignored on the basis that the employer intends to appeal; they must obtain orders from the court to that effect. Second, employers should instruct their solicitors immediately should they wish to appeal if they wish to prevent the return of the employee to work.

Federal Circuit Court opens door to discrimination claim for dismissal in event of sickness

The Federal Court has permitted an employee, who was dismissed after taking 10 months' leave to fight cancer, to proceed in a claim against his employer for adverse action. The employee was employed by Enghouse Australia Pty Ltd but after contracting stomach and liver cancer had gone on leave for 10 months. During that time, he had exhausted his personal leave and had taken unpaid leave. At the end of that 10-month period, he promised to return in two to four weeks. In response, Enghouse dismissed him.

Enghouse Australia argued that the adverse action provisions of the Fair Work Act 2009 (Cth) did not protect the employee. Those provisions provide that an employer may not dismiss an employee who is temporarily absent on account of illness. However, Judge Driver of the Federal Circuit Court agreed that the duration of the employee's illness took him outside the protection of the provision. Nonetheless, Judge Driver recognized that such action, although authorized by a Commonwealth or State law, could still constitute discrimination under s 351 of the Fair Work Act 2009 (Cth). Accordingly, the employee was given leave to proceed.

Lessons for Employers

The key takeaway from this case is that simply because an action is not prohibited under certain discrimination legislation does not mean that it is not prohibited under all relevant discrimination legislation. Accordingly, employers looking to dismiss employees who have taken extended sick leave should always seek advice before dismissing an employee on the basis that the three-month test in the Fair Work Act has been satisfied.

Law firm investigative reports no longer confidential?

Justice Whelan of the Federal Court has held that an investigatory report into the conduct of an employee is not covered by client legal privilege. Accordingly, it may be disclosed to the subject of the report.

Doutta Galla Aged Services employed John Bartolo in its aged care facility. Doutta Galla appointed a law firm, Aitken Partners, to investigate the circumstances in which Bartolo had sent a particular email. Aitken Partners sent their report into the matter to the board, which recommended Bartolo's termination to the CEO. Bartolo alleged in the Federal Court that the termination amounted to adverse action and sought discovery of the report. Doutta Galla objected for the reason that the report was protected by client legal privilege. Justice Whelan disagreed as the investigation was not required to be undertaken by lawyers. Justice Whelan conceded that some parts of the report may be privileged but the entirety of it certainly was not. Furthermore, in her Honour's view, it would be unfair to prevent Bartolo from obtaining the report when it formed the basis of the reasons for the recommendation of his termination. 

Lessons for Employers

Employers should note that the decision is not a definitive ruling on the subject: this is a decision of one judge on an ancillary aspect of the case. Employers should consider, however, arranging for one of its officers to sign the report and include it in their brief to the instructing solicitors in order to maximise the prospects of it being covered by client legal privilege.

ACKNOWLEDGMENTS

Thanks to Andrew Berriman (Associate) for his assistance in the preparation of this Update.

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