- In a recent Australian Industrial Relations Commission decision1, a Coles employee who was terminated for calling his co-worker a ‘camel ******’ and a ‘wog’ was unsuccessful in his unfair dismissal claim.
- This decision is of interest to employers because it shows that an employer is justified in terminating an employee who insults another employee, and provided that the investigation process is fair, an unfair dismissal claim is unlikely to succeed.
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Background
The relevant employees—Mr Fatialofa, Mr Brown and Mr Zuhair—worked in the warehouse at the Coles’ Eastern Creek Distribution Centre in Western Sydney.
Mr Zuhair alleged that Mr Fatialofa regularly called him names such as 'wog', 'hairy arms', 'hairy man', 'camel ******' and 'donkey ******'. He also said to him on one occasion, ‘You Muslims are bomb makers and trouble makers; you’re from the desert you camel ******.’
Mr Zuhair also alleged that Mr Fatialofa told him that he was like ‘Saddam Hussein’ and that he poked him in the stomach on three separate occasions.
Mr Fatialofa said he understood these exchanges to be friendly banter. He expressed remorse during the investigation and thought that he and Mr Zuhair ‘shared a camaraderie of a friendly and mutually respectful nature’.
Mr Fatialofa summarily was dismissed by Coles, following an investigation into these allegations.
Mr Brown was also terminated without notice for laughing at Mr Fatialofa’s comments to Mr Zuhair and for not reporting the comments to management. Mr Brown submitted that he considered it to be workplace humour and that other employees had also overheard the comments.
Unfair dismissal application
Both Mr Fatialofa and Mr Brown brought unfair dismissal applications under the Workplace Relations Act 1996 (Cth). The cases were heard together by Commissioner Cargill in Sydney.
Decision
The Commissioner found that termination of Mr Fatialofa’s employment was not harsh, unjust or unreasonable. In making this decision the Commission took into account the fact that the conduct had ceased and Mr Fatialofa was contrite. The Commission also noted that Mr Fatialofa had a relatively unblemished record.
Nevertheless, the Commissioner found that Mr Fatialofa’s comments were insulting on the grounds of race and religion and would be inappropriate in any workplace. The Commissioner noted that the conduct was more than a one-off event. Further the Commissioner did not accept Mr Fatialofa’s argument that it was merely friendly banter—rather she commented that Mr Zuhair did not seem to be the type to willingly engage in such banter and he was instead a serious and reserved individual. Weighing all this up, the Commissioner was satisfied that Mr Fatialofa’s conduct amounted to a valid reason for termination of his employment.
In relation to Mr Brown, who was dismissed for laughing at Mr Fatialofa’s remarks to Mr Zuhair, the Commission found that he was entitled to compensation of five weeks pay, because summary termination was disproportionate to the gravity of his misconduct.
Implications for employers
- This case shows that in some circumstances, employers will be justified in dismissing an employee who insults another employee—especially where racist and highly offensive comments are made.
- Employers should follow a formal process of investigation and document all the steps in the process. Also, employers should ensure that all warnings are formalised, and that the penalties imposed for other employees involved are proportionate in the circumstances.
Clients with any queries should contact one of the Employee Relations Partners.
This article was written by Rebecca Mason, Articled Clerk, of the Melbourne Employee Relations team.
- A Supreme Court of New South Wales decision2 indicates that an employer is not entitled to suspend an employee indefinitely—especially where the employee is senior or highly skilled.
- A suspension or other direction by the employer must not be so inconsistent with the terms and circumstances of the employee’s employment that it amounts to undermining or destroying of the basis of the contract of employment.
- The decision recognises that the suspension of employee to permit an investigation into allegations of misconduct and the like is almost always likely to be valid. However, the continuation of a suspension beyond a reasonable investigatory period could open the way for claims for an injunction and/or damages.
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Background
Dr Downe was head-hunted for employment with the Sydney West Area Health Service (employer). She accepted the role of Director of the Neonatal Intensive Care Unit at Nepean Hospital.
No performance issues were raised with her prior to her taking a period of long service leave.
While she was on long service leave, Dr Downe received a letter from her employers, stating that she was to be suspended pending an investigation into allegations of her ‘bullying and intimidation’ of hospital staff.
Dr Downe protested. She had no choice but to comply, however, as her access to the hospital was suspended.
The results of an investigation showed that no serious complaints against Dr Downe were substantiated.
Nevertheless, the employer continued Dr Downe’s suspension. They also suggested that she work at Westmead Hospital instead of at the Nepean Hospital.
Dr Downe brought a claim in the Supreme Court of New South Wales under the Industrial Relations Act 1996 (NSW) (IR Act) claiming that the employer had breached her contract of employment.
Decision
The court concluded that the indefinite suspension of Dr Downe was a breach of the contract of employment.
The employer’s arguments
The employer argued that it had the right to suspend Dr Downe due to:
- the employer’s disciplinary policy which empowered the employer to suspend the employee or transfer her to work in another hospital. The employer argued that this policy was incorporated into her contract of employment
- the provision under clause 14 of the award governing Dr Downe’s employment which provided that she ‘may be required by the Employer to work at any of the hospitals, institutions or other health services’
- Dr Downe acquiescing in the suspension which prevented her from challenging it, and
- the employer's common law right to give reasonable and lawful directions, including a direction to an employee not to perform work.
The employee’s arguments
Dr Downe argued that the existence of implied terms of good faith and mutual trust and confidence in the contract of employment meant that any power the employer may have to direct her not to work or to work at another hospital could not be exercised to undermine or destroy the basis of her contract of employment.
Implied terms of good faith and mutual trust and confidence
The court reiterated the acceptance of the implied terms of good faith and mutual trust and confidence in Australia. The court upheld Dr Downe’s argument that the employer’s directions were so inconsistent with the terms and circumstances of her employment that they amounted to undermining or destroying the basis of her contract of employment.
Disciplinary policy and clause 14 of the award
The court also held that the policy was not incorporated into the contract of employment merely because the employee was aware of it and did not object to it.
However, despite not being a term of the contract of employment, it was still binding on the employer and the employee.
Nevertheless, the policy only allowed suspension for ‘the time necessary to review or investigate the facts of the particular matter and arrive at an appropriate decision’.
Similarly, although clause 14 of the award allows the employer to direct an employee to work at other institutions, this entitlement had to be read down in accordance with the rest of the contract of employment. The employer did not have the capacity to direct the employee in a manner inconsistent with the fulfilment of her duties as the Director of the Neonatal unit.
Acquiescence
The court held that Dr Downe had no choice but to comply with the suspension. Further there was no inducement or unconscionability on her part as to prevent her from bringing her claim.
Common law right to perform work
The court acknowledged that there was a right to direct an employee not to perform work for a period during the course of an investigation into allegations of misconduct. It also noted that there may be other circumstances in which such a direction may be appropriate.
The court distinguished, however, between a duty to provide work and a direction not to perform work that is otherwise available. It held that especially where the employee is senior and highly skilled, there is less likely to be an entitlement of the employer to require the employee not to perform work.
Implications for employers
- Employers should decide whether to reinstate an employee or terminate (or take other disciplinary action) as soon as any investigation into an employee’s alleged misconduct has been completed.
- Failure to do so may be regarded as a suspension for an indefinite period. The employee may then seek an injunction and/or declaration against the suspension as well as possible damages against the employer.
- Even where an agreement or award allows an employer to give the employee reasonable directions as to the type of work they do, this entitlement must be exercised in accordance with the context of the agreement or award. Otherwise, the direction might be seen as a breach of the implied term of good faith and/or mutual trust and confidence.
Clients with any queries should contact one of the Employee Relations Partners.
This article was written Yee Ching Rainbow Cheung (Articled Clerk) of the Melbourne Employee Relations group.
- A recent appeal decision3 of the Federal Court of Australia has found that an employee collective agreement was not void even though the employer made misleading statements to its employees about the agreement.
- This decision turned on the lack of evidence that the misleading statements influenced the employees’ decision to approve the agreement.
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Background
In 2007, Karellas Investments Pty Ltd (Karellas) sought to persuade its employees to enter into a new employee collective agreement that would supersede their 2003 union agreement. As part of its campaign, Karellas placed two publications where employees would see them and also handed the publications to some employees.
The publications contained false and misleading representations regarding the terms of the 2007 agreement. For example, they falsely represented that the 2007 agreement provided for a 5 per cent pay increase and the same penalty rates as the 2003 agreement.
The employees approved the agreement. The SDA applied to the Federal Court for an order that the 2007 agreement be declared void, on the basis that it was not approved by employees in accordance with section 340(2) of the Workplace Relations Act 1996 (Cth) (Act).
Relevantly, section 340(2) of the Act provides that an employee collective agreement is approved if the employer has given all persons employed at the time whose employment will be subject to the agreement a reasonable opportunity decide whether they want to approve it.
The SDA argued that by publishing the false and misleading statements, Karellas had not given the employees a reasonable opportunity to decide whether they wanted to approve the 2007 agreement.
Decision
The Federal Court held at first instance that Karellas had made false and misleading statements and, by doing so, had denied the employees a reasonable opportunity to decide whether to approve the agreement or not, in breach of the Act.
Nevertheless, the court did not declare the 2007 agreement void because there was no evidence the statements caused the employees to approve the agreement. Further, the court held that even if the 2007 agreement was declared void, that would not ‘reinvigorate’ the 2003 agreement because once an employee collective agreement is approved, it comes into operation and the previous collective agreement ceases to operate.
Appeal
The Full Court of the Federal Court upheld the decision that the 2007 agreement came into operation even though the employees were not given a reasonable opportunity to decide whether or not to approve it. The Full Court also upheld the decision that once the 2007 agreement was made, the 2003 agreement ceased to operate.
Implications for employers
- Karellas escaped a penalty and a finding that the 2007 agreement was void because there was insufficient evidence before the court about the effect of the misleading statements on the employees’ approval of the agreement.
- Employers must ensure accurate information is given to employees about workplace agreements. Providing misleading information exposes the employer to civil penalties and the agreement may be declared void.
- Had the SDA provided evidence that employees relied upon the misleading information about the non union agreement, the outcome may well have been different.
Clients with any queries should contact one of the Employee Relations Partners.
This article was written by Simon Dewberry, Senior Associate, Brisbane Employee Relations group.
- In a decision4 handed down by the Federal Magistrates Court on 28 July 2008, an employee was required to pay a penalty of $500 for failing to give the requisite period of notice specified in the relevant workplace agreement.
- This is the first case to test whether an employer is entitled to seek a penalty against an employee where the employee has not given sufficient notice before resigning.
- The magistrate also noted that civil proceedings for damages would have been more appropriate in this case. This also suggests claims are not limited to employees covered by workplace agreements.
- The penalty was calculated on the basis of eliminating any profit the employee received from the breach (rather than the loss to the employer). However, given the finding that the employer actually made a financial gain from the breach in this case, the court’s method of calculation of the penalty might differ in different circumstances.
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The facts
- The collective agreement between the employer and the employee required the employee to give six months notice of resignation. This period could be reduced at the discretion of the employer on request by the employee.
- The employee accepted employment at a competitor employer. This required her to start with the new employer in around six weeks time, clearly short of the six months notice required under the collective agreement.
- The employer and the employee attempted to negotiate a compromise. The employee offered to pay the employer $500 to settle the matter, but no compromise was achieved. It was clear that the employer required the employee to work out the six month notice period.
- The employer began a prosecution in the Federal Magistrates Court for breach of a collective agreement.
The decision
The magistrate found that the employer was clearly entitled to apply for a penalty to a maximum of $6,600 (as specified in the Workplace Relations Act 1996 (Cth)) against an individual employee where the employee had breached a provision in a collective agreement requiring notice of resignation.
The magistrate noted that the following non-exhaustive list of factors were relevant to whether a penalty should be imposed and the amount of the penalty.
Nature of conduct (reasonableness of obligation)
The employer was entitled to prosecute for a penalty whether or not the term of the agreement in issue was reasonable.
However, the reasonableness of the requirement (including in comparison with industry standards) would be relevant in considering the penalty to be imposed.
Circumstances of the conduct
Although the employee had not been fully aware of the import of the obligation to give six months notice of resignation when she entered the agreement, she was well aware of it when she actually breached it.
Further, at the time of breach, the employee was not bound to any arrangement with the competitor employer.
This suggests that where the employee only becomes aware of the notice requirement when it is too late (for example, where they have already entered into a contradictory contract with another employer), this may be a mitigating circumstance tending towards a lighter penalty.
Nature and extent of any loss or damage
The employer’s relevant losses included:
- the cost of increasing the workload for existing employees and the engagement of casual employees to cover the gap left by the employee
- administrative costs
- non-pecuniary costs of academic contributions from journal articles the employee was to have published that would have reflected positively on the employer’s reputation
- other damage to the employer’s reputation
- disruption to other employees, and
- disadvantage to customers.
These losses were offset against the wages foregone by the employee that the employer would have had to pay her if she had worked out her notice period. It was found that the employer actually benefitted financially from the breach.
The significance of this analysis is unclear given that the amount of the penalty was calculated on the basis of the employee’s gain from the breach. It is possible that if the employer had suffered a greater pecuniary loss, the magistrate would have been more willing to impose a greater penalty to compensate.
Similar previous misconduct
It is, in most cases, unlikely that an employee would have previously breached a collective agreement. However, it is likely that if the magistrate had found previous breaches by the employee, they would be more willing to impose a penalty or to impose a larger penalty.
Deliberateness of breach
The magistrate implied that a deliberate breach of the collective agreement did not automatically translate into a large penalty. In this case, the employee’s breach was deliberate. However, this was mitigated by the fact that her conduct was informed by inaccurate advice from her representative industrial organisation. Further, she had informed the employer of her intention to breach the agreement without delay and set about seeking to ensure appropriate transitional arrangements were in place. These actions served to mitigate the deliberateness of the breach.
Employee’s contrition
The magistrate drew a distinction between the fact that the employee’s breach was motivated by self-interest and the idea that her actions were ‘opportunistic’ or ‘cynical or malicious’.
The magistrate did not appear to hold the employee’s lack of contrition against her.
Ensuring compliance
The magistrate considered that a civil claim for damages would have been more appropriate than a prosecution for a penalty under section 719 of the Workplace Relations Act 1996 (Cth).
The magistrate stated that penalties imposed in order to ensure compliance with industrial instruments were more directed to breaches with a ‘broader economic impact’ and cases where the employer was in breach and had abused their financial power.
Deterrence
The magistrate noted that in most cases, general deterrence was the main concern as distinct from specific deterrence. Usually, this will involve considerations of morality relating to behaviour that extends beyond the immediate parties.
It was held that here, as it was the less powerful of the parties to the transaction who breached the agreement, there was no pressing moral imperative that required address by the magistrate.
The amount of the penalty
The magistrate calculated the profit the employee made through breach of the agreement. This was the gain from pursuing her new employment with the competitor employer minus the loss of leave entitlements forfeited as a result of failing to serve out the notice period. The net gain was approximately $71.
The magistrate added an amount as a sanction for the employee’s wilful breach to bring the full amount of the penalty to $500.
The magistrate did not specify that any of the amount was to compensate for the employer’s non-pecuniary loss.
Implications for employers
- An employer can prosecute an employee for failing to serve out their notice period, under a workplace agreement.
- The decision also suggests that a civil presentation could be available as a more appropriate remedy in these circumstances. This suggests that employees who breach the notice obligations of their common law contracts could be liable for damages.
- The ability to do this creates a disincentive on employees to breach their notice periods because any profit they would have made from the breach will be forfeited in the penalty ordered by the court.
- One limitation is that the maximum penalty an eligible court can order against an individual is $6,600. However, if civil proceedings were commenced, there is no limit to the damages available for such a breach of contract.
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Clients with any queries should contact one of the Employee Relations Partners.
This article was written by Rainbow Cheung, Articled Clerk, Melbourne Employee Relations team.
From 1 September 2008, the Occupational Health and Safety Amendment (Application to Mining Workplaces and Coal Workplaces) Regulations 2008 (NSW) has extended the Occupational Health and Safety Regulations 2001 (NSW) (regulations) to coal workplaces and mining workplaces in New South Wales. From this date, mining and coal workplaces will be required to comply with the detailed provisions of the regulations. The regulations require that employers:
- adopt a risk management approach to managing workplace health and safety
- identify hazards, and
- assess and control the risks associated with these hazards.
The regulations prescribe specific obligations for employers in the areas of:
- workplace consultation
- work premises and working environment
- plant
- hazardous substances
- hazardous processes
- construction work
- certification of workers
- licensing of certain businesses
- permits for certain work, and
- notification of accidents.
Mining and coal workplaces will still be subject to the Mine Health and Safety Act 2004 (NSW) and the Coal Mine Health and Safety Act 2002 (NSW) respectively. Recognising this, mining and coal workplaces will be exempt from some regulations due to their existing obligations under other Acts. Regulations regarding plant and equipment will commence application to mining and coal workplaces at different times, depending on the type of workplace and when the plant or equipment was first designed or used. Underground parts of mining and coal workplaces may also be exempt from some regulations regarding ventilation, working in confined spaces and powered mobile plant.
Implications for employers
These changes may have a significant impact upon how mining and coal workplaces currently operate.
Clients with any queries should contact one of the
Employee Relations Partners.
This article was written by Miles Bastick, Partner, and Alysa Debowski, Graduate, of the Sydney Employee Relations team.
In August 2007 the Victorian Government commissioned a review of key provisions of the Victorian Equal Opportunity Act 1995 (VIC) (Act).
The Act is the principal piece of equal opportunity legislation in Victoria. It prohibits discrimination and victimisation on certain grounds in areas including employment, recruitment and the provision of goods and services, and sets out the process for resolving discrimination and victimisation complaints.
On 31 July 2008, following an extensive review and public consultation process, Attorney General Rob Hulls launched ‘An Equality Act for a Fairer Victoria’ (report), a report which recommends significant changes to the Act, to make it more effective and user friendly.
The report highlights a number of key shortcomings of the current Act, including that it:
- relies on individuals making complaints to remedy unlawful conduct and does not address systemic discrimination
- provides for a complaint process which can be complex and does not promote early resolution of complaints, and
- gives limited power to the Victorian Equal Opportunity and Human Rights Commission (commission) to enforce discrimination laws.
Of the 93 recommendations made in the report, key recommendations include that:
- the Act be re-named the Equality Act and the Commission be re-named Human Rights Victoria
- a new complaint system be introduced, which does away with ‘slow-moving paper-based complaints’ and instead allows the commission to intervene early and use flexible alternative dispute resolution to resolve complaints
- complainants be given the option of taking their discrimination and victimisation complaints directly to the Victorian Civil and Administrative Tribunal (VCAT) for determination (rather than, as is currently the case, being required to commence their complaint in the commission before proceeding to VCAT)
- the commission be granted new powers to conduct its own inquiries in order to combat systemic discrimination
- the commission be granted new powers to issue a compliance notice where an investigation or inquiry reveals a breach of the Act and, where that notice is not complied with, have the right to apply to VCAT for an order requiring compliance
- existing laws be extended to offer protection from discrimination to volunteers, individuals with an irrelevant criminal record and the homeless
- the Act introduce an express requirement to make reasonable adjustments for individuals with a disability in all areas protected by the Act (including employment and recruitment) and in public spaces, and
- the definition of indirect discrimination be amended to remove the proportionality test; introduce a new criteria requiring complainants to demonstrate that their inability to comply with the relevant requirement/condition/practice causes them detriment or disadvantage; and shift the onus of proof, so that the respondent (rather than the complainant) must establish that a requirement/condition/practice found to be discriminatory is reasonable in the circumstances.
The Victorian Government is now reviewing the report, to determine which recommendations it will accept.
The government has not given any indication of how long its determination process will take or when any recommendations which it does accept will be implemented.
Implications for employers
The report does not change the law, but employers should be aware that the Victorian Government has foreshadowed important changes in this area.
If the government does accept key changes recommended by the report there may be a significant change to the process in which Victorian employers must participate when defending discrimination and victimisation complaints. The complaints process may become more informal and the Commission may have greater power to determine how complaints will be resolved.
The test for indirect discrimination in Victoria could become more onerous for employers and, where employers breach the Act, they may be subject to enforceable compliance notices.
For employers with staff in states across Australia, the process for responding to and resolving discrimination complaints in Victoria may differ to that in other states. HR and managers will need to be brought up to speed on any future changes to the law and the complaints process.
Employer equal opportunity or diversity policies and procedures will need to be reviewed and amended to reflect any future changes to the law.
We will keep you informed of any developments in this area and will provide you with updates on any changes to the law which do flow from the report.
The report can be downloaded from the Victorian Department of Justice website.5
This article was written by Trish Low, Senior Associate of the Melbourne Employee Relations team.
Endnotes
1. Australian Industrial Relations Commission
decision 2. Supreme Court of New South Wales
decision 3. Federal Court of Australia appeal
decision 4. Federal Magistrates Court
decision 5. Victorian Department of Justice
website
More information
Clients with any queries should contact one of the Employee Relations Partners.