Monthly Update—Australian Labour & Employment

Monthly Update—Australian Labour & Employment

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In this edition of the Update, we examine three recent unfair dismissal decisions of the Fair Work Commission ("Commission"). The first sheds light on when a redundancy will be regarded as a "genuine redundancy", and thereby provide a defence to an unfair dismissal claim. The second demonstrates the wide scope of protection afforded under the regime and is a cautionary tale to employers who might seek to dismiss an employee on the basis of a seemingly "open-and-shut" case of serious misconduct. The third case, in contrast, reveals the limits of the protections in relation to employees who engage in serious misconduct.

Finally, we look at the review of one of the first actions taken by the Australian Building and Construction Commission ("ABCC"), in which the Federal Court dismissed the ABCC's claims that certain Construction, Forestry, Mining and Energy Union ("CFMEU") officials acted unlawfully in denying two caulking workers access to a construction site. It is likely that this will be the first of many cases targeting such conduct brought by the newly reinstated regulatory body.


Failure by Employer to Consider Redeployment Options Means that Dismissal Is Not a Genuine Redundancy

Factual Background. The respondent employer, Asciano Services Pty Ltd (trading as Pacific National Bulk), is a freight logistics company. As a result of a reduction in customer demand, the employer altered its operational requirements and initiated a number of redundancies. Each of the seven applicants was given 14 days' notice of dismissal in a letter that identified the reason for the redundancy. The employer also held consultation meetings in which information was provided on the voluntary redundancy process. In addition, employees were given a list of current opportunities within the Asciano Group and invited to lodge expressions of interest in order to transfer to a new position. None of the applicants lodged an expression of interest, and each was selected for an involuntary redundancy. Each applicant lodged an unfair dismissal claim and sought reinstatement, however, Commissioner Johns found that the claims were not made out, on the basis that each was a genuine redundancy. He held that it would not have been reasonable to redeploy the applicants and also found that the employer had complied with its requirements to consult under the relevant enterprise agreement. The applicants appealed to the Full Bench.

Legal Background. Under section 385 of the Fair Work Act 2009 (Cth) ("FWA"), a person has been unfairly dismissed if the Commission is satisfied of all of the following: (i) the person has been dismissed (per section 386); (ii) the dismissal was harsh, unjust or unreasonable; (iii) the dismissal was not consistent with the Small Business Fair Dismissal Code (where applicable); and (iv) the dismissal was not a case of genuine redundancy (per section 389). According to section 389, a redundancy is genuine where the employer no longer requires the job to be performed by anyone and the employer has considered redeployment within the employer's enterprise or an associated enterprise. The employer must also ensure it complies with obligations in any applicable award or enterprise agreement to consult about the redundancy.

Under section 389(2), a dismissal is not a genuine redundancy if it would have been reasonable in all the circumstances for the dismissed employee to be redeployed within the employer's enterprise or an associated enterprise. This will depend on the facts of each case, but some relevant factors include: (i) the required qualifications of the position; (ii) the employee's skills, qualifications and experience; (iii) the location of the position; and (iv) the level of remuneration.

Decision. The Full Bench affirmed that there is no general obligation for employers to dismiss other employees in order to create vacant positions to which employees can be redeployed, nor any obligation to implement a "swap" procedure whereby employees whose positions are redundant can swap with other employees who wish to volunteer for redundancy. It found the mere fact that the employer had advertised positions after the termination of the applicants' employment did not indicate that there were positions vacant at the time of termination, or that the employer should have filled the positions by redeployment.

However, the Commission held that redeployment was reasonably available on the basis that: (i) the employer was a large business with a substantial number of employees who undertook the role that was made redundant (train driving); (ii) the number of employees performing the same role meant that implementing a swap would not impose any onerous training requirements; (iii) some potential swaps were available at depots close to the depots at which the applicants had been working, so the transfer costs would have been low; (iv) the employer had previously allowed swaps in similar circumstances; and (v) the employer had expressly raised the possibility of swaps during the redundancy consultation process. For these reasons, the Full Bench found that the applicants had been unfairly dismissed and thus quashed the original decision (and referred the applications to Commissioner Johns for rehearing).

Lessons for Employers. This decision confirms that section 389(2) of the FWA does not impose any general obligation on employers to take drastic action to redeploy employees, such as dismissing other employees in order create vacancies for redeployment, or undertaking a swap process. However, employers should be cautious about what is communicated to employees during the redundancy process. If an employer has previously undertaken measures to redeploy employees (such as by using a "swap" process) or simply identified the possibility of such measures during the redundancy consultation process, then these will form part of the circumstances the Commission will take into account in determining whether it was reasonable for the employer to have redeployed the dismissed employee (and thus whether the redundancy was genuine).

Employee Sacked for Tagging Colleagues in Offensive Facebook Video Succeeds in Unfair Dismissal Claim

Factual Background. The applicant was employed by Bendigo Health as a mental health nurse. In August 2016 he posted a video on Facebook and tagged two colleagues, commenting that it showed a male colleague "getting slammed" by a female colleague at work. He also left blobs of sorbolene cream on the desk of the male colleague. The male colleague complained to management, and the applicant was issued with a letter and given an opportunity to respond to the allegations. During a formal meeting, the applicant admitted to the conduct. Shortly after, the applicant was dismissed on the basis of serious misconduct and given four weeks' pay in lieu of notice. The applicant lodged an unfair dismissal claim seeking reinstatement.

Legal Background. According to section 382 of the FWA, a person is protected from unfair dismissal if they have: (i) completed the requisite minimum period of employment (twelve months for a small business or six months otherwise); and (ii) they are either covered by a modern award, covered by an enterprise agreement, or the sum of their annual rate of earnings is less than the high income threshold (currently $138,900).

The criteria for considering harshness in section 387 include: (i) whether there was a valid reason for the dismissal related to capacity or conduct; (ii) whether the person was notified of that reason and given an opportunity to respond; (iii) any unreasonable refusal by the employer to allow a support person to be present at discussions; (iv) whether the person had been warned about unsatisfactory performance before the dismissal (if applicable); (v) the degree to which the size of the employer's enterprise and the absence of dedicated HR management would affect the dismissal procedures; and (vi) any other relevant matters.

Decision. The Commission first considered whether the dismissal was "harsh, unjust or unreasonable" under section 387 of the FWA. First of all, it concluded that the Facebook post exposed the colleagues to humiliation and potential ridicule (as it would have been seen by a wide range of people, including friends and co-workers). Further, despite the applicant's insistence otherwise, the Commission found that the video contained clearly sexual overtones and implied that the colleagues were engaging in sexual activity at work. The posting of the video "affected the health and safety of his work colleagues" and also had the potential to affect the reputation of the employer. Thus it concluded that the conduct provided a valid reason for the dismissal.

Secondly, the Commission found that the procedural fairness requirements in section 387 had been wholly satisfied by the employer in terminating the applicant's employment. Thirdly, the Commission examined a number of other matters it considered relevant, including the applicant's post-termination conduct (which displayed contempt for his employer and involved highly offensive descriptions of his manager), the economic impact of the dismissal and the applicant's otherwise long and exemplary employment record. It also noted that the question of whether the applicant had engaged in serious misconduct was not relevant to whether the termination was "harsh, unjust or unreasonable".

In balancing all of these relevant factors, the Commission found that although the employer had a valid reason for the dismissal and had otherwise complied with section 387, the dismissal was nonetheless "disproportionate to the gravity of the misconduct" and was therefore harsh, unjust or unreasonable. This was the case notwithstanding that the applicant had engaged in serious misconduct and the employer had a valid reason for the dismissal. In justifying this decision, the Commission cited the economic and personal consequences of the dismissal as relevant (the applicant had young children, one of which was living with a disability), as well as the fact the applicant had no prior history of misconduct.

Lessons for Employers. This decision reinforces the far-reaching protections of the unfair dismissal regime. Even if an employee has engaged in serious misconduct that would otherwise justify termination and the employer has responded by terminating his or her employment in accordance with the requirements in section 387 of the FWA, the Commission may still determine that the dismissal is harsh, unjust or unreasonable, in light of any facts it deems relevant.

It reinforces the fact that an employer faced with a single instance of serious misconduct should bolster any dismissal decision by relying on additional grounds, such as ongoing issues with performance and/or conduct. If an employer does seek to rely on performance or conduct as a basis for dismissal (in addition to the serious misconduct), it should ensure it has followed a clearly documented management process and given the employee an opportunity to rectify any performance or conduct issues.

Commission Rejects Unfair Dismissal Claim, Finding that "Big Fish" Employee's Bullying and Intimidation Tactics Constituted a Valid Reason for Dismissal

Factual Background. The applicant, Mr Kirkman, had been employed by DP World Melbourne Ltd ("DP World") and its predecessor entity for more than 28 years. At the time his employment was terminated, he was an Equipment Controller at the Melbourne wharves and was involved with the Maritime Union of Australia, having also been its delegate to the wharves previously.

In May 2014, three DP World employees, Ms Bowker, Ms Coombe and Mr Zwarts, brought an application for anti-bullying orders in the Commission. The application was granted in 2015. One of those named as having engaged in bullying conduct was Mr Kirkman, although no specific findings were made against him.

In December 2014, Mr Kirkman was dismissed, with five weeks' pay in lieu of notice, at a second interview concerning four allegations brought by Ms Coombe and Mr Zwarts. At the first interview, he was given an opportunity to respond to the allegations, which concerned two conversations in January 2014: the first, between Mr Kirkman and Mr Zwarts, concerned Mr Zwarts' leaving the union. Mr Kirkman told Mr Zwarts not to get involved in matters relating to Ms Coombe and Ms Bowker and made disparaging remarks about Ms Coombe, including suggesting her behaviour was directed at promotion; and the second (occurring after Ms Coombe heard about the first conversation) involved Ms Coombe confronting Mr Kirkman, during which he repeated the remarks and accused her of lying.

DP World, in its letter dismissing Mr Kirkman, stated that these allegations constituted a breach of each of its Discrimination, Harassment, Bullying and Freedom of Association Policy; its Code of Conduct; Mr Kirkman's employment contract; the relevant Enterprise Agreement; and Mr Kirkman's Workplace Health, Safety and Environment Responsibilities. Mr Kirkman subsequently brought an unfair dismissal claim under section 394 of the FWA.

Decision. The Commission found for the employer in all relevant respects. Having been satisfied that the allegations were true, the Commission found that they constituted bullying behaviour, which breached the policies, agreements and responsibilities as stated by DP World in its letter dismissing Mr Kirkman. Accordingly, it provided a valid reason for dismissal. The only ground which the Commission did not accept was that Mr Kirkman breached the freedom of association provisions of DP World's policy. The Commission held that it was "acceptable in a workplace for employees to talk to other employees about their union membership" and noted that, in this case, the discussion did not cross the line such that it breached the relevant policy (as it was not primarily directed at the topic of union membership). The Commission also found, as another "relevant matter", that Mr Kirkman had been experiencing personal and financial issues. However, it found that, although his employer did not make any enquiries of those circumstances at the time of his dismissal (and was not specifically required to), Mr Kirkman was given an adequate opportunity to respond to the reasons for his dismissal and an opportunity to raise any personal issues that might be relevant.

Lessons for Employers. Employers should have policies against workplace bullying which can be effectively enforced. When considering disciplinary options against employees for bullying behaviour, employers need to be mindful that in order validly to dismiss an employee, the conduct must be specifically traceable to the individual.

ABCC Brings Unsuccessful Adverse Action and Discrimination Claims Against CFMEU in Relation to Union Conduct on Construction Site

Factual Background. A subcontractor (Camillo Concrete Structures Pty Ltd) that was engaged to perform building work on a residential apartment project engaged a company, Abseal Pty Ltd ("Abseal") to undertake rope access caulking work. Such work is "high risk construction work" within the meaning of the Victorian Occupational Health and Safety Regulations 2007 and so the company was required to produce a Safe Work Method Statement ("SWM Statement") pursuant to reg 299 of the Work Health and Safety Regulations 2011 (Cth) for its intended work. Abseal never completed the induction and never carried out the work as planned. The precise reasons for this became the subject of disagreement between the parties.

The ABCC alleged that the CFMEU and Mr Karamitos (a labourer employed by the head contractor) (together, the "respondents") prevented the Abseal workers from carrying out the work because Abseal was behind in their union dues and had not entered into a CFMEU-approved rope access enterprise agreement. The CFMEU claimed that the real reason was that Abseal had not produced the necessary paperwork, in particular the SWM Statement. As part of its investigation, the ABCC issued an examination notice under section 45 of the Fair Work (Building Industry) Act 2012 (Cth) (now dealt with in Part 2 of the recently enacted Building and Construction Industry (Improving Productivity) Act 2016) to require the Camillo supervisor to appear before the ABCC. Further, one of the Abseal workers had to be arrested in order to be compelled to give evidence on behalf of the ABCC.

The ABCC based its claim on a number of grounds, including that the respondents had taken adverse action against the Abseal workers in contravention of sections 346(b), 346(c) and 347(e) of the FWA because the Abseal workers had either: (i) engaged in industrial activity, in refusing to comply with the CFMEU's requirement (namely, to have a CFMEU approved enterprise agreement) or refusing to pay a fee to the CFMEU; or (ii) not engaged in industrial activity, in not complying with an unlawful request made by the CFMEU (to have a CFMEU approved enterprise agreement or pay a fee to the CFMEU). The ABCC further alleged that Mr Karamitos' conduct constituted discrimination contrary to section 354 of the FWA. It was claimed that the discriminatory action was taken because the Abseal workers were covered by an Abseal agreement (and not a CFMEU approved enterprise agreement).

Legal Background. Section 340(1) of the FWA states that "[a] person must not take adverse action against another person (a) because the other person (i) has a workplace right; or (ii) has, or has not, exercised a workplace right…". Section 341 of the FWA defines "workplace right" broadly to include an entitlement to a benefit under a workplace law or workplace instrument.

According to section 342(1) of the FWA (item 7), an industrial association (or officer or member thereof) takes adverse action against an employee if the industrial association takes action that has the effect, directly or indirectly, of prejudicing the employee in his or her employment. Adverse action that relates to industrial activities is also protected under section 346 of the FWA, which provides that "[a] person must not take adverse action against another person because the other person … (b) engages, or has … proposed to engage, in industrial activity or (c) does not engage, or has … proposed to not engage, in industrial activity". Section 347 defines "industrial activity" broadly to include complying with a lawful request made by an industrial association or paying a fee (however described) to an industrial association. It also includes complying with an unlawful request made by an industrial association.

In relation to discrimination, section 354(1)(a) of the FWA provides that a person must not discriminate against an employer because its employees are covered, or not covered, by a particular type of workplace instrument (such as an enterprise agreement).

Decision. The Federal Court accepted that Mr Karamitos had taken adverse action against Abseal in failing to induct the Abseal workers, as this had prejudiced Abseal in relation to its contract for services. However, it did not accept that Abseal had engaged in any "industrial activity" within the meaning of the FWA, and therefore the adverse action claim failed. The Federal Court found no evidence on the facts that the CFMEU had imposed a requirement that Abseal make good their arrears of union dues before they could commence work or a requirement about the kind of enterprise agreement Abseal was required to have.

In relation to the discrimination claim, the Court held that the fact the Abseal workers were not covered by a specialised rope access enterprise agreement was not the operative reason for the failure to induct the workers. Instead, it accepted that the real reason the respondents did not induct the Abseal workers was that they did not provide the proper SWM Statement. In rejecting the case against Mr Karamitos, the Court was also bound to reject the case against the CFMEU (as it was wholly derivative). The entire claim was therefore unsuccessful.

Lessons for Employers. Although this case did not involve any of the ABCC's new investigative powers, it demonstrates the type of conduct that is likely to be targeted by the ABCC, since its reestablishment late last year with the enactment of the Building and Construction Industry (Improving Productivity) Act 2016 ("ABCC Act"). While the ABCC was ultimately unsuccessful due to weaknesses in its evidence, it is likely that the broader powers contained in the ABCC Act will facilitate investigations into similar union conduct and will lead to successful actions against unions and union officials well into the future.

We thank associates Claire Goulding and Joshua Kang for their assistance in the preparation of this Update.

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