Labour and employment law manual [3rd Edition.] 9781922347480, 1922347485

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Product Information Disclaimer No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publication is sold on the terms and understanding that (1) the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, professional or other advice or services. The publisher, and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. Without limiting the generality of the above, no author, consultant or editor shall have any responsibility for any act or omission of any other author, consultant or editor. About Wolters Kluwer Wolters Kluwer is a leading provider of accurate, authoritative and timely information services for professionals across the globe. We create value by combining information, deep expertise, and technology to provide our customers with solutions that contribute to the quality and effectiveness of their services. Professionals turn to us when they need actionable information to better serve their clients. With the integrity and accuracy of over 45 years’ experience in Australia and New Zealand, and over 175 years internationally, Wolters Kluwer is lifting the standard in software, knowledge, tools and education. Wolters Kluwer — When you have to be right. Enquiries are welcome on 1300 300 224. Cataloguing-in-Publication Data available through the National Library of Australia First edition....................................2016 Second edition....................................2017 Third edition....................................2020 ISBN 978-1-922347-48-0 © 2020 CCH Australia Limited All rights reserved. No part of this work covered by copyright may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, recording taping, or information retrieval systems) without the written permission of the publisher. Preface The Labour and Employment Law Manual is a unique book that deals with the complexity of Australian HR legal issues in a highly practical way. Through the use of case examples, flowcharts and checklists, in addition to a comprehensive legal commentary, the Manual provides anyone dealing with people- related issues with the means to do so in a strategic and legally compliant manner. The Manual addresses people-related issues throughout the employment lifecycle including: • recruitment and selection • employment entitlements • performance management • conduct issues • complaints and grievances

• ill and injured employees • termination of employment • dealing with third parties • work, health and safety • post-employment issues, and • information, collection and management. This third edition of the Manual has been updated to include some of the significant decisions and legislation passed since the last edition. While 2020 has been dominated by the COVID-19 pandemic, and the consequent introduction of legislation to assist employers to deal with it, that has not been the only area of significant development in people management. Some of the more pertinent areas in which employers will have to keep abreast of future developments as gleaned from previous years include: • the gig economy and the status of workers • how causal employment is regulated • working from home and its prevalence and pitfalls, and • freedom of speech, particularly through social media. I trust the Manual will provide its readers with a critical resource for dealing with people-related issues at a complex and evolving time. Joydeep Hor October 2020 Wolters Kluwer Acknowledgments Wolters Kluwer wishes to thank the following who contributed to and supported this publication: Director, General Manger, Research & Learning, Wolters Kluwer Asia Pacific: Lauren Ma Head of Legal Content, Wolters Kluwer Australia: Carol Louw Books Coordinator, Wolters Kluwer Asia Pacific: Alexandra Gonzalez Marketing Executive, Wolters Kluwer Australia: Matt Davies About the Author Joydeep Hor is the Founder & Managing Principal of People + Culture Strategies. Joydeep is a Graduate of Harvard Business School’s Owner-President Management Program and one of Australia’s most high-profile lawyers and legal entrepreneurs. He is a Fellow of the Australian Human Resources Institute and a Chartered Fellow of the UK’s CIPD. The highly regarded “Who’s Who Legal: Labour, Employment & Benefits 2020 Edition” recognised Joydeep as a Global Elite Thought Leader in this area of the law, one of only two lawyers in Australia and six in the entire Asia-Pacific region. It says: “People + Culture Strategies’ ‘amazingly good lawyer’ Joydeep Hor is enthusiastically recommended by peers who describe him as ‘incredibly strategic: a lateral thinker who is entrepreneurial in his approach, which clients appreciate’.” Having completed his undergraduate studies at the University of Sydney where he majored in English literature together with his Bachelor of Laws (with Honours) degree, Joydeep went on to complete a Master of Laws at the same institution, focusing on labour and employment law. Joydeep has been ranked as a leading lawyer in Chambers every year since 2010. Joydeep started his career at one of Australia’s largest commercial law firms, before moving to a specialist workplace relations firm where he was made an equity partner at the early age of 28. He was a

Managing Partner of that firm from 2005 to 2010. Joydeep’s first book Inside Employee Screening was published in 1999 and he has authored several books since that time, including Managing Workplace Behaviour, Managing Termination of Employment and Finders Keepers: A Guide to Attracting and Retaining Great Employees. He has been a keynote speaker at countless conventions, conferences and industry events and for many years has been appearing on television programs for Channel 7, the ABC, Sky News and most recently on ausbiz.tv as a thought leader and commentator in his areas of expertise (most videos are available in this site’s “Resources” section). Since 2016, Joydeep has represented Australia at the prestigious International Forum on Employment Law and he regularly presents at International Bar Association conferences. He is the only Australian lawyer to be invited to be on the American Employment Law Council. In July 2010, Joydeep founded PCS as a groundbreaking practice in the legal industry. PCS was established to be unlike any other legal firm given its emphasis on working with its clients to prevent disputation and legal problems arising within their organisations, as opposed to a mere “reactive” provider. PCS now services hundreds of employers (with a strong reputation particularly in handling sensitive employee separation issues, matters of workplace bullying and harassment and developing strategic solutions to organisation’s people management challenges). Glossary AEC

Australian Electoral Commission

ADAQ

Anti-Discrimination Act 1991 (Qld)

ADCQ

Anti-Discrimination Commission Queensland

AHRC

Australian Human Rights Commission

APPs

Australian Privacy Principles

CEPU

Communications, Electrical, Plumbing Union

CFMEU

Construction, Forestry, Maritime, Mining and Energy Union

FW Act

Fair Work Act 2009 (Cth)

FW Regulations Fair Work Regulations 2009 (Cth) FWA

Fair Work Australia

FWC

Fair Work Commission

FWO

Fair Work Ombudsman

IFA

Individual Flexibility Arrangement

NES

National Employment Standards

QCAT

Queensland Civil and Administrative Tribunal

VCAT

Victorian Civil and Administrative Tribunal

WHS

Work Health and Safety

Recruitment and Selection Introduction Getting the recruitment and selection process right is crucial to building a strong team and culture within any business. This Chapter highlights the legal issues and risks that an employer must consider in recruiting and selecting employees including those relating to: (a) designing a role (b) drafting advertisements (c) shortlisting applicants (d) conducting interviews (e) selecting successful applicants, and (f) formulating appropriate employment contracts. In focusing on the legal issues and risks in the recruitment and selection process, we do not intend to detract from other issues and risks to which an employer may be exposed in connection with recruitment and selection, including financial, commercial and reputational risks. The legal risks referred to in this Chapter therefore should not be considered in a vacuum. This Chapter also addresses the important distinction between engaging an employee or an independent contractor to perform a particular role. The decision as to whether an employer engages a successful candidate for a role as an employee or an independent contractor is one that should be made early in the recruitment and selection process. There may be significant ramifications for a business if the intention is to engage an independent contractor and that relationship is not established effectively.

Legal risks in recruitment and selection There are a number of significant legal risks attaching to the recruitment and selection process that an employer should be aware of and seek to manage at each stage of that process. These risks include, but are not limited to: (a) discrimination claims under the relevant discrimination legislation (b) misleading representation claims under the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act), and (c) general protections (adverse action) claims under the FW Act. These risks, how they may arise in each step of the recruitment and selection process and how they may be managed, are discussed in further detail below. Discrimination claims Federal, State and Territory anti-discrimination laws prohibit an employer from engaging in discriminatory conduct when advertising for positions, determining who should be offered employment and the terms and conditions on which any offer of employment is made. The grounds on which it is unlawful to discriminate against a person vary from state to state, but generally

include: In addition, employers should be aware that there are a range of “other” prohibited grounds of discrimination under Federal, State and Territory anti-discrimination laws. These grounds are set out in the table below.

Also relevant to the recruitment and selection of employees is that some anti-discrimination legislation provides that it is not unlawful to discriminate against a person who cannot perform the inherent requirements of a particular position, subject to the obligation to make “reasonable adjustments” to enable a person to perform the inherent requirements in certain circumstances. The “inherent requirements” of a position are the essential activities of that position and the core duties that must be performed to fulfil the position successfully. A successful discrimination claim may result in damages being awarded against the employer. Historically, the damages awarded in discrimination matters have, with notable exceptions, been relatively low. However, decisions such as Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 and more recently, Hill v Hughes [2019] FCCA 1267 which both related to sexual harassment claims are evidence that the courts and tribunals may be willing to award higher levels of damages as a deterrent to this kind of conduct than they have previously. Claims under the Competition and Consumer Act In the context of recruitment and selection, the Competition and Consumer Act specifically provides that it is unlawful for an employer to engage in conduct that is likely to mislead job applicants about the availability, nature, terms or conditions of, or any other matter relating to, the employment. The legislation also broadly prohibits any misleading or deceptive conduct or representation in connection with offers of employment. Breaches of these provisions may result in the employer being ordered to pay the relevant individual damages for any loss arising from that conduct or representation. Case example Competition and Consumer Act claims Rakic v Johns Lyng Insurance Building Solutions (Vic) Pty Ltd (2016) FCA 430 Background The employee was employed by Johns Lyng as a General Manager. During pre-employment negotiations, the employee was offered a significantly reduced base salary in exchange for a 2.5% share of the business’ profits. The employee alleged that she left her previous job, in which she was earning close to $100,000 more than the base rate offered by Johns Lyng, in reliance upon the representations made by the business concerning its profitability. The employee alleged that Johns Lyng had engaged in misleading and deceptive conduct in breach of s 18 and 31 of the Competition and Consumer Act. Findings The Supreme Court found that the business had engaged in misleading and deceptive conduct. Johns Lyng had made representations that it was likely to “meet or exceed its profit or sales” from the previous two financial years. The court rejected the submission that the business would escape liability if it demonstrated that employees acted reasonably in passing on information they believed to be correct to the employee. Johns Lyng was ordered to pay $333,422 in damages in respect of the representations it made to induce the employee’s entry into the contract. Additional damages of $16,529 were ordered in respect of the net profit clause.

General protections claims

Under the FW Act, prospective employees may lodge a general protections claim if they feel that the prospective employer has taken some form of adverse action against them (eg by refusing to employ them or discriminating against them in the terms and conditions of employment that they are offered), contrary to the protections that are afforded to them under that legislation. The protections under the FW Act include protections in relation to: (a) workplace rights (b) discrimination, and (c) participation in industrial activity. The courts have broad discretion in relation to the orders they may make in successful general protections claims, including but not limited to orders for reinstatement or compensation (including compensation for hurt and humiliation). Breaches of the general protections provisions of the FW Act may also result in monetary penalties being ordered against the party responsible for the breach. As at the date of publication, the maximum penalties for a breach of the relevant provisions of the FW Act are $66,600 for a body corporate, and $13,320 for an individual.

Managing legal risks The legal risks in relation to recruitment and selection identified above have the potential to arise at each step of the process. Some of the key aspects of the recruitment and selection process that may give rise to legal risks, together with strategies that employers may adopt in managing those risks, are discussed below. Role design Role design is a crucial, and sometimes overlooked, aspect of the recruitment and selection process when considering legal risks and how to manage those risks. Once an employer has identified a need for a new role with their business, the role should then be designed consistent with the business’ operational requirements. That process includes consideration of the purpose and scope of the new role, and the inherent requirements of that role. It also involves consideration of whether the role will be filled on a permanent, casual or contract basis. These considerations will then typically form the basis for the position description and selection criteria for the role. More often than not, employers find themselves exposed to legal claims in respect of a recruitment and selection process because the role and, in particular, the purpose and inherent requirements of that role, have not been adequately defined from the outset. Consequently, these requirements may not be communicated effectively to the relevant stakeholders, including the prospective employee, throughout the process. If an employer is able to identify and articulate the purpose of the role and develop a position description and selection criteria that clearly distinguish the attributes, a successful applicant is required to have (the “must-haves”) from those that the employer would merely prefer them to have (the “nice-to-haves”), this will then assist in maintaining consistency in how the role is advertised, in how interviews are conducted and in how successful candidates are selected. The role design stage of the recruitment and selection process is also the appropriate time to consider whether the role would be more appropriately performed by an employee or an independent contractor. The distinction between employees and independent contractors, and the risks and benefits attaching to each of those arrangements, is discussed in further detail later in this Chapter. The nature of the legal relationship that the employer intends to create with the person who is engaged to perform the new role, is a relevant consideration in the role design stage as, for example, the extent of the control that the employer wishes to maintain over how and when the work is performed, may directly

impact on how that role is designed. Tips for developing selection criteria • To the extent possible, base selection criteria on objective facts, such as an applicant’s work experience and qualifications for the role. • Ensure the selection criteria and the position description created in respect of the role are consistent. • Be clear on the purpose of the role, including how it is intended to fit within the organisational structure and what strategic objectives attach to it. • Be clear on the inherent or essential requirements of the role. Only the inherent requirements of a role should be considered in determining an applicant’s ability to do the job, subject to “reasonable adjustments” being made where relevant. • Consider whether application of, or reliance on, the selection criteria will or may result in discriminatory outcomes. If there is likely to be a discriminatory outcome, is the criterion an inherent requirement of the role or, alternatively, are there exceptions under anti-discrimination legislation that would apply? • Ensure that the qualifications and experience attaching to the role can be justified with reference to the inherent requirements of the role.

Advertising Once the scope of the new role has been defined through the role design process, the next step is to attract an appropriate candidate to fill that role. This is typically achieved through job advertisements — either internal advertisements seeking candidates from within the business, external advertisements (when the employer may be seeking to widen the pool of potential candidates), or a combination of both. In order to manage the legal risks associated with this aspect of the recruitment and selection process, it is recommended that the content of the job advertisement be guided by the selection criteria developed in the role design process, with the inherent requirements of the role featuring prominently. Particular care should be taken when developing the job advertisement to: • avoid the use of discriminatory language which may be in breach of anti-discrimination legislation and/or legislation that otherwise prohibits discriminatory advertising, and • avoid making statements about the role or the nature or benefits of employment with the employer which could give rise to misleading representation claims under the Competition and Consumer Act if the benefits do not actually crystallise. Case example Job advertisement Gardener v Norcott [2004] QADT 39 Background An advertisement appeared in a local newspaper for a chef, “CHEF [sic] REQ for day work, classy restaurant/coffee, young team.” The complainant called the telephone number in the advertisement and spoke with the first respondent’s director, Ms Norcott. She asked the complainant how old he was and he replied he was over 21. Ms Norcott said the complainant could drop off his resume at the cafe, which he duly did. While there, Ms Norcott once again asked the complainant his age. He told her he was 46 years old. The complaint’s application was unsuccessful, and he brought a complaint of unfair discrimination based on his age. Findings The Tribunal found that the wording of the advertisement together with Ms Norcott’s repeated enquiry of the complainant’s age was evidence of the first respondent’s interest in his age to decide whether he would be offered the job. The Tribunal concluded that the first respondent did treat the complainant less favourably in that process than if he had been a younger person in exactly the same circumstances. Recruitment process Willmott v Woolworths [2014] QCAT 601 Background While applying for a position in a local petrol station, Mr Willmott noticed that Woolworths required applicants to provide their gender, date of birth and upload proof of their right to work in Australia.

Mr Willmott, offended by these questions, did not complete the application. Mr Willmott later lodged a complaint with the ADCQ who referred the complaint to the QCAT. Woolworths argued that this information was necessary for several reasons: • it was a requirement for employees to be over the age of 18 to sell cigarettes and alcohol • the employee’s date of birth was needed to determine their rate of pay • the employee’s gender was required to fulfil obligations under a government initiative to gather statistics on the gender of applicants, and • it required right-to-work documentation in order to comply with migration legislation. Findings Woolworths’ arguments were rejected by the Tribunal, which held that knowledge of an applicant’s gender or specific age was not reasonably required. The Tribunal stated that Woolworths could have inferred the applicant’s gender based on their name and could have simply asked whether the applicant was over 18, if this information was relevant to the role.

Tips for job advertisements • Use gender neutral terms to describe an occupation where available (“mailperson” not “mailman”). • Use the selection criteria in the job advertisement, clearly distinguishing between inherent requirements of the role and preferred attributes of the applicants. • Do not request photographs or other information that does not directly relate to the position, cannot reasonably be inferred or otherwise be asked in a non-specific way. • Avoid references to the age of an applicant unless it is an inherent requirement of the position and, even then, care should be taken to ask non-specific questions that relate to the role (eg whether the applicant falls within a particular age bracket). • Consider how and where the position should be advertised to reach the broadest range of target applicants, including but not limited to the medium or platform to be used.

Shortlisting applicants Once the closing date for applications for the role has passed, an employer must then assess the applications and, where necessary, make a decision as to which applicants to shortlist for interview, if interviews form part of the assessment process. To avoid discrimination, or a perception of discriminatory behaviour in connection with that shortlisting process, an employer should assess the applicant’s skills and qualifications objectively against the selection criteria published in the job advertisement and reflected in any position description. Where there is a need to consider subjective criteria in the shortlisting process, it is important that those undertaking the assessment are clear as to why these criteria are relevant and why the employer has chosen to apply those criteria in the manner that they have, in selecting candidates for the shortlist (including the weight they give to these criteria in their decision-making). Assessing applicants for a role The process of assessing applicants for a role is another aspect of the recruitment and selection process that is inherently risky for an employer, and which requires awareness and acknowledgement of the risks, and careful and deliberate planning to ensure the risks are appropriately managed. Areas of particular risk for an employer in relation to the assessment process are: (a) the assessment process itself, and whether that process may result in discriminatory outcomes (b) if interviews form part of the assessment process, the questions that are asked of applicants, and (c) statements made by those conducting the assessment process on behalf of the employer in explaining the role, or in response to queries from applicants about the role and the terms and conditions attaching to that role and/or employment with the employer more generally. The assessment process

In determining the process for assessing potential applicants for a role (whether it be by way of interviews or a more comprehensive assessment process), an employer must consider whether that process may result in discriminatory outcomes amongst the potential applicant base. This is particularly the case if the assessment process is likely to involve assessment of applicants against subjective selection criteria (eg an applicant’s “cultural fit” with the employer). The following case provides a useful example of the risks to an employer in not appropriately considering the impact of the assessment process. Case example Assessment processes Virgin Blue Airlines Pty Ltd v Hopper & Ors [2007] QSC 75 Background Eight female applicants aged between 36 and 56 unsuccessfully applied for cabin crew positions with Virgin. They argued before the Queensland Anti-Discrimination Tribunal that Virgin had used a subjective assessment process that had the impact of discriminating against applicants aged over 35. The selection process included a behavioural competency test known as “Virgin flair” which tested the applicants’ skills to make the flying experience fun for the customer. It required applicants to prepare and perform a dramatic routine in front of the assessors. The applicants argued the interview process caused the assessors unconsciously to prefer younger applicants to older applicants. The statistics indicated that out of more than 750 people aged over 35 who had applied for the cabin crew position during the survey period, only one applicant (aged 36) was successful. Findings The Tribunal concluded the assessment process had the effect of discriminating on the basis of age. The employees involved in the selection process tended to be young and lacked sufficient training, and appeared to identify people in their own age group as more likely to have “Virgin flair”. Virgin did not cross check whether older applicants with the behavioural competencies it was seeking were being rejected. Therefore, it could not demonstrate that the process worked as it was intended to. On appeal to the Queensland Supreme Court, the Tribunal decision was upheld and the airline’s appeal dismissed. The behavioural competency test was not inherently discriminatory; however, it had the effect of indirectly discriminating against the applicants on the basis of age.

Interview questions To manage this potential area of risk, an employer must take care to ensure that questions asked of applicants during interviews conducted as part of an assessment process are relevant and appropriate to the nature and requirements of the role. In particular, any question that relates to a protected ground can give rise to a complaint of discrimination and should be avoided unless it relates to an inherent requirement of the job. If the process has been designed correctly, then these matters would likely have been ascertained in the earlier stages of the recruitment and selection process including, but not limited to, any advertising. Examples of interview questions that may be asked of applicants, together with examples of questions that should be avoided, are set out in the “Tips” below. As a matter of best practice, it is recommended that the same questions are asked of all applicants for the same role, and that an employer keeps a written record of the responses provided by each applicant to those questions. If additional questions are asked during the interview, they too should be noted on the written record for completeness. Employers should carefully plan interview questions to ensure that they do not discriminate unintentionally against applicants. Tips for interview questions

Questions should not be directed towards a prohibited ground, eg:

Questions should instead be directed towards the specific requirements of the position, eg:

✕

How old are you?

✕

What sex are you?

✕

Are you married? Are you single?

✕

Do you have any children?

This role will from time-to-time require late nights and weekend work (or refer to other more relevant inherent requirements of the ✓ position). Would you have any difficulty in meeting these requirements?

✕

Do you suffer from any health problems?

✕

Have you ever brought a workers’ compensation claim?

This position involves some heavy lifting ✓ work. Would you have any difficulty performing such work?

Is that an Irish (or any other) accent I can hear? What country are you from? What nationality are you?

Because of legal requirements, this role may only be performed by someone who is at ✓ least 18 years old. Are you at least 18 years old?

✕

Case example Interview questions Bair v Goldpath Pty Ltd & Callinan [2010] QCAT 483 Background Barry Bair lodged a complaint with the ADCQ under the ADAQ after being unsuccessful in a job application for the position of warehouse store person. His complaint arose from an interview that he participated in during which the respondents asked Mr Bair about his age, parental status and general health. The ADCQ referred the matter to QCAT. Findings The Tribunal agreed with Mr Bair that the respondents’ questions relating to his age and parental status contravened s 124 of the ADAQ. The Tribunal found that there was no justifiable basis upon which these questions could reasonably be required. The respondents admitted that the reason they asked the questions was due to a lack of awareness of the ADAQ. However, the evidence did not show that Mr Bair was in fact treated less favourably than a younger person would have been treated in the recruitment process. Accordingly, he was not entitled to compensation. The ADCQ did, however, order that the respondent serve a written apology on Mr Bair.

Explaining the role or responding to questions As noted above, the Competition and Consumer Act provides that it is unlawful for an employer to engage in conduct that is likely to mislead job applicants about the availability or nature of the work that is being offered, the terms and conditions on which the employment is being offered, or any other matters relating to the employment. The legislation also broadly prohibits misleading or deceptive conduct or representations. The risk of breaching the Competition and Consumer Act more readily presents itself during the assessment process and, in particular, during interviews. As such, employers must take care when explaining to an applicant the nature of and terms attaching to a role, or in responding to an applicant’s queries, to ensure that promises or representations about the nature of the work, or the terms and conditions attaching to the role, are not made in circumstances where it is not guaranteed that those promises or representations will eventuate (eg where the promises or representations may be subject to further internal approvals and the person making those promises or representations is not authorised to give those approvals). If promises or representations are made in relation to the role and the applicant relies on those promises and representations in making the decision to accept the role, the employer may be exposed to liability if those promises or representations do not eventuate. Tips for explaining the role • Give an accurate description of the role, the nature and availability of the work attaching to the role, and the terms and conditions of employment being offered. • Only discuss features of and terms attaching to the role that have been approved by the employer. If terms are proposed or discussed at any time during pre-employment discussions that are subject to further approval, ensure the need for approval is clear. • Make sure any promises and representations made can or will be followed through or are otherwise managed through the employment contract.

Selecting the successful candidate(s) The process of selecting a successful prospective employee for a role is not without legal risk. An employer may ultimately adopt a number of measures in selecting prospective employees including preemployment medical assessments or background and reference checks (see below for further details). Failure to adopt the most appropriate measures in selecting the successful candidate for the particular role can give rise to legal risks. To mitigate these risks: (a) the procedures used for determining applications should be applied in the same manner for all applicants (b) appropriate weightings should be applied to each of the selection criteria, depending on whether they are considered inherent requirements or desirable attributes of the role in question (c) if greater weighting is given to particular selection criteria such as the qualifications and experience required for the role in the selection process, the employer should ensure that this weighting can be justified in light of the duties and responsibilities of the role, and (d) the employer should, to the extent possible, disregard any personal circumstances or characteristics of an applicant that are not relevant to the performance of the inherent requirements of the role. Ultimately, the aim of the employer should be to select the best person for the role. This may mean that the employer needs to accommodate for applicants’ personal circumstances (eg flexible working hours) if they are to be able to perform the role. Similarly, where a person has a disability, there is a positive obligation on the employer to make reasonable adjustments to the role. Making an offer of employment After the successful applicant has been selected, an employer will then need to make the applicant an offer of employment in order to secure their services. Best practice suggests that an offer of employment to a prospective employee should be in the form of a written contract of employment with the content of that employment contract designed to take account of the nature and seniority of the role. This section considers the legal risks attaching to making offers of employment, including the risks in negotiating terms of employment with a prospective employee. As with the other aspects of the recruitment and selection process, discrimination and adverse action claims are risks associated with making an offer of employment. However, one of the most significant risks in making an offer of employment is the potential for misleading or deceptive statements to be made in breach of the Competition and Consumer Act. The case example below emphasises the importance of ensuring that the content of discussions with prospective employees accurately reflects the position of the employer, and confirms that an employer may be exposed if it does not follow through with promises or representations made during the recruitment and selection process. The risk of breach of the Competition and Consumer Act is one that is likely to arise more frequently when employing individuals in senior positions. It is often the case that there are numerous discussions with prospective employees for senior roles. These discussions may explore a wide range of issues that may never be documented in records of those discussions or signed employment contracts, and which may give rise to a claim of misleading or deceptive conduct or representations. Employers can best manage the risks attaching to making offers of employment by clarifying the authority of the employees who speak on behalf of the business, keeping accurate records of discussions and contractual negotiations, and properly documenting the terms and conditions of employment that are finally agreed between the parties. Those terms and conditions of employment should include an “entire agreement” clause which states that the employment contract constitutes the entire agreement of the parties in respect of the matters dealt with and supersedes all prior agreements, understandings, arrangements and negotiations in respect of

the employment. This clause can be relied on by the employer in defence of any claims relating to alleged pre-contractual statements or promises. Case example Misleading and deceptive conduct in pre-employment discussions Walker v Salomon Smith Barney Securities Pty Ltd & Anor [2003] FCA 1099 Background Mr Walker’s employer was going through a restructure and Mr Walker was offered a similar position with another employer, NatWest. Mr Walker signed an employment contract with Natwest, who was soon after acquired by Salomons. Salomons made representations to Mr Walker to the effect that it would employ him in accordance with the terms and conditions he had secured with Natwest. Subsequent to making these representations, Salomons revoked its offer to Mr Walker, who had already accepted a voluntary redundancy with his previous employer. Findings The Federal Court found that Salomons engaged in misleading and deceptive conduct by representing that it would employ Mr Walker on the same terms and conditions as agreed with NatWest. Had Mr Walker not relied upon Salomons’ misrepresentations, he would have taken immediate steps to seek a position with his former employer and would not have pursued voluntary redundancy.

Preparing the employment contract The section considers the legal basics of employment contract administration, including: (a) the employment status of individuals (b) the terms and conditions to be included in an employment contract (c) entering into an employment contract, and (d) withdrawing an offer of employment. For further details on employee entitlements see Chapter 2: Employment Entitlements. Employment status Where an employer decides to engage an employee rather than an independent contractor, the employer must also consider what the employee’s employment status will be, whether it be permanent (full-time or part-time) and whether on a fixed or maximum term or casual basis. Typically, an individual’s employment status and the role that they are being employed to perform will determine the substance of their employment contract and, in particular, their hours of work, minimum remuneration and leave entitlements. An employee’s employment status is most often determined by reference to the operational requirements of the employer and, to a lesser extent, the individual needs of the prospective employee. The distinguishing features of permanent (full-time and part-time), fixed-term, casual and executive employment are outlined below.

Significant judgment for casual employees In the matter of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, the Full Federal Court handed down a decision on casual employment rights which could have far-reaching implications for Australia’s casual workforce. It found that despite an employee being engaged as a casual, the character and nature of his engagement was not a casual one. Employment of indefinite duration, which is stable, regular and predictable led to the conclusion that the employee should be entitled to paid leave entitlements and payment for public holidays. Further, the employer was not entitled to “set off” the casual loading already paid to the employee against those permanent employee entitlements owing. The decision has been appealed to the High Court. Terms and conditions of employment The terms and conditions of employment in an employment contract govern the rights and obligations of the employer and the employee in respect of the employment relationship. It is therefore important that, to the extent possible, the employment contract is comprehensive and the language used is clear and unambiguous, to minimise the risk of misunderstanding or confusion between the parties. The terms and conditions of employment which may be included in an employment contract are outlined in the table below. Separate legal advice should be obtained when drafting a specific contract of employment. Once drafted, each employment contract offered to a prospective employee should be reviewed to ensure that it meets the needs of the employer and the employee. It is also important to ensure that an employment contract is consistent with any relevant legislation, Modern Award or enterprise agreement (see Chapter 2: Employment Entitlements for further information). The content of an employment contract has important legal consequences for the employer and the employee. For this reason, the employer should have its employment contracts reviewed regularly to ensure the contracts are compliant with the employer’s legal obligations and that they reflect prevailing legislative entitlements and best practice. TERMS AND CONDITIONS OF EMPLOYMENT

* Only certain types of unpaid leave.

Entering into the employment contract Once the employment contract has been prepared, it can be provided to the prospective employee for review and acceptance. In providing the employment contract to the prospective employee for their review, it is important to emphasise to the prospective employee that the content of that contract reflects the actual offer of employment. This is to avoid any possible conflict with statements made at an earlier stage of the recruitment and selection process (eg in the job advertisement or during a recruitment interview). This statement, together with the “entire agreement” clause, will minimise the risk of a claim under the Competition and Consumer Law. It is also advisable to provide prospective employees with an opportunity to seek legal advice in relation to the content of the employment contract before they sign the employment contract. Where practicable, it is recommended that the prospective employee sign and return the employment contract as acceptance of the terms and conditions of their employment prior to commencing in the role, or shortly thereafter if this cannot be achieved. The signed employment contract should be kept on an employee’s employment file, and a copy provided to the employee for their personal records. Withdrawing an offer of employment The legal consequences of making an offer of employment (verbal or written) and that offer being accepted or relied on by the prospective employee, are potentially significant. Therefore, employers should take great care in deciding whether to proceed with making an offer of employment to a prospective employee. Employers should, at the time of making an offer of employment, take the opportunity to reflect on whether that role is still required and, if so, whether it continues to be required in the form that it was advertised or is being offered. This is particularly so if the recruitment process has been protracted, as some time may have passed and the operational requirements of the employer may have changed. If an employer wishes to withdraw an offer of employment after that offer has been made to the prospective employee but before the prospective employee commences in the role: (a) then irrespective of whether the prospective employee has signed and returned an employment contract, the employer may expose itself to legal claims including breach of the Competition and Consumer Law and breach of contract if the prospective employee has relied on the promises and representations made by or on behalf of the employer to their detriment, and

(b) depending on the personal circumstances of the prospective employee and the extent to which those circumstances have, or appear to have informed the decision to withdraw an offer of employment, the employer may also be exposed to claims such as discrimination or adverse action claims. These risks can be mitigated to the extent possible, by ensuring that all pre-contractual statements and representations are accurate (including any verbal offers of employment) and through carefully drafted employment contracts.

Other recruitment and selection issues This section considers other miscellaneous issues relating to the recruitment and selection of employees, including: • pre-employment medical assessments and requests for disclosure of pre-existing injuries or conditions and the use of any information arising from those processes in the recruitment and selection of prospective employees • IFAs under Modern Awards and enterprise agreements • the Fair Work Information Statement, which must be provided to all new employees on commencing employment • conducting reference and background checks, and • ensuring that prospective employees have a legal right to work in Australia. Pre-employment medical assessments Depending on the nature of the role being offered, medical testing may form an appropriate part of the recruitment and selection process. For example, pre-employment medical assessments may be appropriate if it is essential that a person meet certain physical requirements in order to perform the job, subject to any reasonable adjustments that may be made. Depending on the nature of the work to be performed, it may also be open to an employer to require disclosure of pre-existing injuries and medical conditions that a prospective employee believes or suspects would be aggravated by the duties of the position they have applied for, or to request access to a prospective employee’s claims history or medical records for pre-employment purposes. An employer should proceed with caution and carefully consider the benefits of making such requests or requiring prospective employees to undertake pre-employment medical assessments. The employer having knowledge of any injury or condition of a prospective employee may give rise to an inference that the outcome of the pre-employment medical assessment (or whatever information might be gleaned as part of that pre-employment medical assessment) has impacted on the employer’s decision as to whether to proceed with making an offer of employment to a particular applicant, whether or not this is actually the case. All such disclosure requests or pre-employment medical assessments and the information obtained from these processes will continue to be subject to anti-discrimination laws. Any personal information that is made available to the employer in connection with the recruitment and selection process will also likely be required to be released to the candidate if they request it under relevant privacy laws. If a pre-employment medical assessment or disclosure by a prospective employee reveals an injury or condition that is irrelevant to the ability of the applicant to perform the inherent requirements of the role, an employer should disregard this information in deciding whether or not to employ that applicant. Even if an injury or illness that is disclosed to an employer by a prospective employee or through a preemployment medical assessment is relevant to the ability of the prospective employee to perform the inherent requirements of the role, the employer must consider whether reasonable adjustments can be made to the role to ensure the injury or illness is not further aggravated, before relying on the injury or

illness in determining whether to employ the prospective employee. In order to minimise the risk of discriminatory conduct, or a perception of discriminatory conduct being formed, it is recommended that pre-employment medical assessment processes or disclosure requests be adapted so that they are suitable and applicable to each role. While this may create an additional administrative burden for an employer, it also reduces the risk of an employer being exposed to information that is not relevant to the performance of the role for which the prospective employee has applied, and which may be relied on by that employee subsequently in bringing a legal claim. If a pre-employment medical assessment is considered by the employer to be warranted in relation to a particular role, it is recommended that the assessment be conducted and the results be considered prior to any offers of employment being made. If this cannot occur, then as a matter of best practice, any offers of employment should be made subject to the outcome of the pre-employment medical assessment. That way, if the pre-employment medical assessment discloses anything that would be a barrier to the prospective employee being employed, the offer of employment will automatically be rescinded. Case example Pre-employment medical assessments Duncan v Kembla Watertech Pty Ltd [2011] NSWADT 176 Background Ms Duncan was offered a job at Kembla Watertech Pty Ltd (Kembla) by Mr Pleasance, the Central Division Manager of Kembla. She accepted the job offer and was given a starting date over the telephone and then a draft unsigned employment contract followed by email. Ms Duncan alleged that Mr Pleasance then withdrew the job offer prior to her starting in the role because of a “perceived disability”, being a disability that a person is thought to have. Kembla argued that the offer of employment it made to Ms Duncan was conditional upon her satisfactorily completing a preemployment medical examination, which she was unable to do. As such, the condition to which the offer of employment was subject had not been fulfilled and the offer did not proceed. Kembla also argued that Ms Duncan had an actual disability, not a “perceived disability” and that any discrimination was not unlawful as Ms Duncan was unable to carry out the inherent requirements of the particular employment. Findings The Anti-Discrimination Tribunal (ADT) found that had it not been for Ms Duncan’s disabilities disclosed in the medical examination, Kembla would not have acted as it did (by withdrawing the offer). Therefore, Ms Duncan was treated less favourably because of her medical condition, and as a result was discriminated against on the ground of disability. However, on the basis of the doctor’s evidence (which was contrary to Ms Duncan’s self-assessment of her fitness for duty), the ADT found that there was a very high risk of injury to Ms Duncan, including aggravation of her existing conditions, a high risk of a workers’ compensation injury and a very high risk that she would have problems coping with the physical demands of the site work. As such, Ms Duncan was unable to perform the inherent requirements of the role with reasonable safety to herself and the complaint was dismissed.

Individual Flexibility Arrangements The FW Act requires Modern Awards and enterprise agreements to include a flexibility term enabling the employer and individual employees to agree to IFAs . Under such arrangements, the effect of a Modern Award or enterprise agreement can be varied in order to meet the genuine needs of the employer and the relevant employee. There are many benefits attaching to IFAs for employers and employees, including greater flexibility in the workplace, which in turn contributes to improved retention rates, job satisfaction and morale, as employees are able to better balance their personal and professional commitments and needs. The FW Act sets out stringent requirements in relation to the content of an IFA, including the obligations of the employer in respect of that IFA. IFAs may be made in respect of the following provisions of a Modern Award: (a) arrangements for when work is performed (eg ordinary hours of work) (b) overtime rates (c) penalty rates

(d) allowances, and (e) leave loading. IFAs in relation to the provisions of an enterprise agreement will be determined by the terms of the enterprise agreement (ie what the flexibility term in the enterprise agreement allows). An IFA must be in writing and signed by both the employer and the employee. If the employee is under 18 years of age, the IFA must be signed by a parent or guardian. A copy of the IFA must also be provided to the employee within 14 days after it is agreed to. Some Modern Awards also require that the IFA can only be made after the employee has commenced employment. Both parties must genuinely agree to entering into an IFA. Where an employee refuses to enter into an IFA, they are protected under the FW Act from adverse action as a consequence of that decision. The FW Act also ensures that IFAs do not undermine the minimum entitlements of an employee by requiring the employer to ensure an employee covered by an IFA is “better off overall” when compared to the Modern Award or enterprise agreement the IFA varies. IFAs cannot be used to reduce or remove employee entitlements. IFAs may be terminated in writing by agreement of the parties at any time. In circumstances where there is no agreement between the employer and employee with respect to the termination of an IFA, IFAs may be terminated by either party: (a) where the IFA relates to a Modern Award — with 13 weeks’ notice (except where the IFA was made prior to 4 December 2013, in which case four weeks’ notice must be provided), and (b) where the IFA relates to an enterprise agreement — the lesser of the notice period provided for termination of the IFA under the enterprise agreement or 28 days’ notice. IFAs do not need to be registered with or approved by the FWC or the FWO. Even if the IFA is not made properly, the IFA and the obligations contained within it, will still apply to the employee. Entering into an IFA also does not vary the application of the balance of the Modern Award or enterprise agreement, and as such, entering into an IFA may have unintended consequences for both the employer and the employee. Care should also be taken to ensure that an IFA is not inconsistent with the employee’s employment contract or other statutory minima such as those provided in the NES. Given the risks attaching to IFAs, it is recommended that employers seek legal advice before entering into an IFA with an employee, as failure to comply with any obligations in respect of an IFA may result in the employer being deemed to have contravened the IFA and/or the FW Act and may be exposed to a pecuniary penalty. Fair Work Information Statement Under the NES, the employer has an obligation to give each new employee a Fair Work Information Statement before, or as soon as possible after, the employee starts employment. Failure to do so may amount to a contravention of the NES and expose the employer to significant penalties for breaching the NES. See Chapter 2: Employment Entitlements for more information on the NES. It is recommended that employers provide prospective employees with the Information Statement as part of any package of materials accompanying an offer of employment or in any induction materials provided to the prospective employee on commencing employment. It is also recommended that employers have the prospective employee provide written acknowledgement of receipt of a copy of the Fair Work Information Statement at or about the time that they commence employment. This will enable the employer to demonstrate that it complied with this requirement should that be challenged. Reference and background checks Reference and background checks have the potential to provide employers with information that can be useful in informing their decisions about recruitment and selection, including confirming prospective employee’s statements about matters relevant to the role for which they are being considered, their

employment history, qualifications and experience. Vigilance of employers in respect of undertaking reference and background checks is particularly important where the prospective employee is required by law to complete certain checks successfully before they can perform the duties and responsibilities attaching to the role being offered (eg Working with Children checks or criminal record checks). In conducting background and reference checks, it is important that an employer be clear about what information it is seeking about the prospective employee and why it is relevant to determining a prospective employee’s suitability for a particular role. Background and reference checks for the purposes of employment are not and should not be used as a means of investigating every aspect of a prospective employee’s life, if the information is not relevant to the employment relationship. It is also important that the employer obtain the consent of the prospective employee to undertake reference and background checks, where practicable. Before relying on the findings from any reference and background checks, an employer should consider the nature and veracity of the information that has been obtained, whether it is relevant to a decision about the prospective employee’s employment and whether it is appropriate to rely on that information. There are endless resources by way of which an employer may conduct background checks for a prospective employee, including increasingly through that prospective employee’s personal and professional social media accounts. Further, former employers are becoming reticent to provide references and they will often limit their comments to confirming that the prospective employee was employed by their business, the duration of their employment and the role or roles that they performed. The reticence of the former employer to provide any further commentary on the prospective employee’s employment with their business may be acknowledged, but should not be relied on to the detriment of the prospective employee. Unless specified in the employment contract, a prospective employee’s employment is not contingent on the successful completion of reference or background checks. As such, there is a risk that employers may find themselves in a position where they have employed an employee who ultimately is unable to perform some or all of the duties and responsibilities of their role. In those circumstances, an employer will be reliant on any remedies that it may have under the employment contract or at law, in order to bring the employment relationship to an end. Employers are therefore encouraged to ensure that their employment contracts provide that the employment of the prospective employee is and will remain conditional on successful reference and background checks being undertaken at or around the time of the prospective employee commencing employment and periodically throughout the prospective employee’s employment. Because of the risks attaching to conducting and relying on reference and background checks for prospective employees, it is recommended that employers provide guidance to staff who are conducting those checks. Right to legally work in Australia With employment mobility increasing on a global scale, employers are looking not just locally but also internationally to recruit and select appropriate talent. It is therefore important that employers ensure that prospective employees have a legal right to work in Australia, whether that is because of their status as a citizen or permanent resident of Australia, or because they have sought and obtained the relevant visas permitting them to work in Australia. Further, significant penalties may apply to employers who employ individuals who do not have a right to work in Australia legally (including financial penalties and withdrawal of sponsorship status). Because of the potential ramifications of employing individuals who do not have a right to work in Australia legally, employers are encouraged to ensure that their employment contracts provide that the employment of the prospective employee is and will remain conditional on the prospective employee having and maintaining the right to work in Australia legally, and providing satisfactory evidence of that right to work when requested by the employer. That way, if the prospective employee no longer has the right to work in Australia legally, their employment can be more readily brought to an end.

Probationary and minimum employment periods An employment contract may provide that the employment of new employees will be subject to the employee successfully completing a probationary period. This period is generally between three and six months from the time the employee commences employment with the employer. The purpose of the probationary period is to allow both the employer and the employee the opportunity to explore whether the employee is the “right fit” for the role for which they have been selected. If either party determines that this is not the case for any reason, then they can terminate the employee’s employment on one week’s notice (or if the employee’s employment is terminated by the employer, on payment in lieu of notice) or as otherwise provided in the employment contract. The rationale for the use of probationary periods is supported in the terms of the FW Act, in particular the reference to “minimum employment period” adopted in the FW Act. This concept is discussed in further detail below. However, it is important to note that while a “minimum employment period” can effectively create a de facto probationary period, the two concepts should not be conflated or used interchangeably: one is contractual, the other is statutory. The FW Act provides that if an employee has not served the relevant “minimum employment period” with an employer (being 12 months’ continuous service for employees of small business employers and six months’ continuous service for other employees), then that employee is ineligible to make an unfair dismissal claim. However, the exclusion from eligibility to make an unfair dismissal claim does not apply to other claims that a new employee may make under the FW Act, such as general protections claims. It is important that employers take advantage of the opportunities afforded to them by having either a contractual probationary period and/or the minimum employment period under the FW Act for new employees. An employer should take steps to monitor the conduct and performance of an employee adequately during the probationary or minimum employment period and, if necessary, address any concerns with the employee or terminate the employee’s employment before that probationary or minimum employment period comes to an end. This may mean providing the employee with clear feedback about the areas of concern with their conduct or performance, and an opportunity to improve on those areas. Best practice would suggest that the employer schedule, at the very least, a mid-probationary/minimum employment period review of the employee’s conduct and performance for this purpose. Taking such steps would at the very least provide the employee with an understanding of the reasons for the termination of their employment should that occur, and reduce the risk of the employee assigning another (prohibited) reason to that action. However, it is not necessary for an employer to wait until a formal review is conducted to address any concerns that they may have about an employee’s conduct or performance. Given the limited timeframes for an employer to take advantage of the contractual probationary period or the minimum employment period under the FW Act (and, if necessary, terminate the employee’s employment without risk of an unfair dismissal claim), the employer should take steps to address concerns at the earliest opportunity. Each step taken during the probationary period and/or minimum employment period in relation to the employee’s conduct and performance should be documented, including any concerns about the employee’s conduct or performance, any measures that were put in place to address those concerns and the timing and nature of the discussions with the employee about these matters. It is also important that an employer be aware that it retains the right to dismiss a new employee summarily during the probationary period or minimum employment period. Tips for employers employing new employees • Enter into written employment contracts appropriate to the role and avoid oral contracts of employment. • Ensure all essential terms are agreed between the parties and confirmed in writing in the employment contract. If there are any further negotiations about the terms and conditions of the employee’s employment, or the terms and conditions change, ensure that a new version of the employment contract is created and signed by the parties reflecting the amended agreement. • Ensure the employment contracts comply with legislation and industrial instruments (eg Modern Awards and enterprise

agreements). • Where appropriate, draft clauses to provide flexibility for the employer (eg to enable the employer to require the employee to work at any reasonable location). • Provide the prospective employee with a copy of the employment contract and the Fair Work Information Statement. • Ensure that a signed copy of the employment contract is placed on the employee’s employment file and, where practicable, has been received prior to the employee commencing employment. • Ensure that pre-employment medical assessments and reference checks (where required) have been completed and where necessary, any reasonable adjustments have been made in accordance with the medical advice. • Monitor the employee’s conduct and performance throughout the minimum employment period before making a decision about the employee’s ongoing employment.

Varying the employment contract From time to time, an employer may need to vary an employee’s employment contract to accommodate changes in the employee’s circumstances (eg promotions, demotions, changes in working hours or geographical relocations) or the employer’s needs (eg restructure or redundancy). Contract variations, if not managed properly, carry legal risks ranging from unfair dismissal claims and discrimination claims to claims for breach of contract. Where necessary and appropriate, an employer should seek to vary the employment contract formally or enter into a new employment contract to minimise these risks. In any event, any variation in the terms of an employee’s employment contract should be appropriately documented. This section identifies the types of variations that an employer will typically seek to make to an employee’s employment contract and the key considerations for the employer in seeking to effect that variation. This section also sets out the steps for effecting formal variation of an employment contract. Change in an employee’s role When proposing changes to an employee’s role, it is important to ensure that the changes are within the scope of the employee’s employment contract. Whether changes to an employee’s role require variation of an existing employment contract or entering into a new employment contract, will depend on the terms of the employment contract. In some cases, an employee’s employment contract will allow flexible work allocation or some changes in the employee’s role. Case law suggests that where an employment contract provides that an employee may be required to undertake other responsibilities and perform other duties and projects from time to time, some degree of change to the employee’s role may be allowed. If the changes do not fall within the scope of the employee’s existing employment contract and the employer seeks unilaterally to enforce the changes without those changes being agreed to in writing, the employer may expose itself to a claim that it has repudiated the employee’s employment contract (ie engaged in a fundamental breach of the employment contract). It is also important to look beyond objective factors, such as remuneration and title, and consider the potential impact on the employee’s employment as a whole, including work satisfaction, client value and organisational structure. Change in performance targets From time to time, changes in a business may increase or decrease employee’s performance targets consistent with the prevailing operational requirements. When changing an employee’s performance targets, and in particular where the change involves an increase in those targets, the employer should consider whether the new targets are realistic in the context of the employee’s role, skills and working arrangements, and whether those changes are reasonable. The employer should also discuss the proposed changes to the performance targets with the employee and consider any feedback that the employee provides, with a view to obtaining the employee’s agreement to the change.

As a general rule, if an employer intends on changing an employee’s performance targets and the change involves more than a 20% increase in the time spent by an employee in performing their duties, and the employee does not agree to these changes, the employer should consider whether making the changes unilaterally may amount to repudiation of the employment contract. In addition to the risk of repudiation of the employment contract, if the changes to the performance targets are unreasonable and the employer seeks to rely on an employee’s failure to meet those targets to terminate the employee’s employment on performance grounds, then the employee may successfully make an unfair dismissal claim. Further, the following case example demonstrates that setting of unrealistic performance targets for an employee may amount to constructive dismissal. Case example Increased performance targets Linkstaff International v Roberts (1996) 67 IR 381 Background The employer offered one of its employees a new employment contract which sought to increase the employee’s billing target from $3,000 to $7,000 per month. Knowing that she would not be able to arrive at the figure demanded, the employee sent a letter of resignation stating that the new structure was a “drastic change from [her] original terms of employment”. The employee then brought unfair dismissal proceedings. Findings The Australian Industrial Relations Commission (as it then was) found that the employer constructively dismissed the employee by requiring her to agree to responsibilities with which she was unable to comply. The employer’s conduct was a significant breach going to the root of the employment contract and it was likely to destroy or seriously damage the relationship of trust between the employer and the employee. The employer was ordered to pay $18,000 in damages.

Geographical relocation From time to time, employers may relocate their business operations and, in doing so, relocate an employee’s place of employment. If an employer seeks unilaterally to effect a relocation without a reasonable basis for doing so (including but not limited to relying on a contractual right to relocate an employee), it is arguable that the employer has repudiated the employment contract and/or that the employee’s role has been made redundant. Recent court and tribunal decisions (such as the case examples below) have confirmed that whether or not the relocation of an employee’s employment gives rise to a breach of the employment contract and/or redundancy pay entitlements, will depend on the circumstances of the relocation, the impact of the relocation on the employee (including any increased travel time or distances) and the circumstances of the relationship between the employer and the employee at the relevant time. The risks attaching to relocation of an employee’s place of employment will be minimised if an employment contract provides, in addition to the location where the role will be based, that an employee may be required to perform duties elsewhere. If this flexibility has not been incorporated into the employment contract, then it is recommended that, as a first step, the employer discuss the relocation and possible modifications to their working arrangements with the employee in order to facilitate the relocation. Case examples Claim for redundancy after geographical relocation Spotless Services Australia Limited [2013] FWC 4484 Background Spotless Services Pty Ltd applied to the FWC to vary the redundancy pay of two of its employees. The employees were advised of alternative employment in the same roles and on the same hours and rates of pay at a different site. The employees’ contracts of employment provided for relocation of employment. The employees rejected the offer as the additional travel time and distance was about 33.7 km (or 25–30 minutes) travel each way. Findings

The FWC found that the additional travel did not take away from the roles being acceptable alternative employment, and noted that the contract catering industry was “notorious for the winning and losing of contracts” such that the employees could not expect longterm employment at the same site. Geographical relocation Kweifio-Okai v RMIT [1999] FCA 1686 Background The employment contract of a lecturer included a condition that he would be based at the Bundoora campus, but that he may be required to work at other campuses. After a breakdown of the employee’s relationship with his colleagues, the employer directed him to relocate to the city campus. When the employee refused, the employer terminated his employment. The employee made a breach of contract claim, alleging that he had a contractual right to be “based” at the Bundoora campus. Findings The Full Federal Court found that it was reasonable to relocate the employee to the city campus to resolve the breakdown in the working relationship between the employee and the rest of the staff members. His failure to follow the reasonable direction was a valid reason for dismissal.

Effecting a contract variation When an employer makes changes to an employee’s terms and conditions of employment, it is important to make sure that, where possible, the employee formally accepts the changes before those changes are effected. If the employee does not accept the changes to the employment contract, the changes may amount to repudiation, enabling the employee to seek a remedy for wrongful termination or argue that the original contract remains on foot. Obtaining formal acceptance of a contract variation is an important step. It should not be assumed that because an employee continues to show up to work, they have accepted the variations to their employment contract. Case law suggests that even if an employee continues to take advantage of their entitlements (eg taking sick leave payments or using the company car), the employee still may not have accepted the contract variation and therefore, may be entitled to remedies for the employer’s breach of contract. When presenting a variation in the form of a new employment contract, a time limit should be specified for the employee to consider and sign the new employment contract and the employee should be encouraged to communicate any concerns during this period. Further tips on formal variation of an employment contract are set out in the “Tips” below. Tips for contract variations • Enter into written employment contracts appropriate to the role and avoid oral contracts of employment, where possible. • Check the validity of, and flexibility afforded by, the employment contract. Even where template employment contracts have been developed, there is no guarantee that all employees’ employment contracts have been entered into on the same terms. • Provide consideration for the contract variation (eg a new employment contract is sought in conjunction with a pay increase awarded to the employee). • Engage stakeholders (eg unions) where necessary. • Provide the employee with reasonable notice of the proposed variation to their employment contract. • Leave a paper trail by appropriately documenting any variation to the terms and conditions of employment of an employee. • Confirm the status of the remaining terms and conditions of employment of the employee whenever significant changes affect less than the whole of those terms and conditions.

Engaging independent contractors There may be times when a role for which an employer has commenced a recruitment and selection process is one that could more properly be performed by an independent contractor instead of an employee. Outlined below are the key distinctions between the two types of relationships, the risks of incorrectly

classifying someone who should be an employee as an independent contractor (intentionally or inadvertently) and the practical aspects of engaging independent contractors. Employers should be conscious that each circumstance needs to be assessed on its own merits, and it is recommended that legal advice be sought before proceeding if it appears that there is a risk that the independent contractor should, in fact, be classified as an employee. Contractor/employee distinction The distinction between employees and independent contractors is a significant one from a legal and risk management perspective, as the employer will have different obligations to those engaged as employees and those engaged as independent contractors. Independent contractors are engaged under a contract for services to provide services to the employer for a particular purpose. However, they are not employees (who are engaged under a contract of service) and typically are not entitled to the range of benefits which are extended to employees such as annual leave, personal/carer’s leave, long service leave and other entitlements under the NES and industrial instruments which might otherwise apply. An individual will not be an independent contractor or employee simply because they are designated as such. In determining whether an individual is an independent contractor or an employee, the relevant courts and tribunals will examine the totality of the relationship on a case-by-case basis. The case law indicates that no one factor will be determinative and it is the manner in which the relationship operates in practice which ultimately determines whether an individual is an independent contractor or an employee. One of the most significant factors that courts and tribunals will look at is the level and degree of control the party receiving the services exercises, or has the authority to exercise, over the work that the individual does and how they do it. Generally, the greater the level and/or degree of control exercised, or able to be exercised, by the recipient of the services, the more likely the individual is an employee, rather than an independent contractor. Other factors that a court or tribunal will consider when determining whether an individual is an independent contractor or an employee include, but are not limited to: (a) the mode of remuneration (b) whether the recipient of the services remits taxation on behalf of the individual (c) whether the individual can delegate or sub-contract their work, and (d) whether the individual is serving the recipient of the services in the recipient’s enterprise or whether they are carrying on a trade or business of their own. Case examples Independent contractor found to be an employee Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 Background The applicant, Joshua Klooger, was engaged as a food delivery rider under an independent contractor agreement. The company provided Mr Klooger with a Foodora-branded insulation box and other Foodora-branded attire and equipment. Foodora would instruct him which area to go to on his bicycle. Mr Klooger would then use the Foodora app to decide which food deliveries he would make. Foodora would pay him an hourly rate and a payment per delivery completed. He was soon promoted to delivery captain and his duties involved organising the other delivery drivers according to a schedule. As the delivery captain, he could choose his shifts. Mr Klooger then started to sub-contract his shifts and at one point he had, with Foodora’s knowledge, four people working for him. Following a dispute around a social media group chat which he administered, Foodora terminated Mr Klooger’s contract. Mr Klooger made a claim for unfair dismissal in the FWC. Findings The FWC confirmed that it is a multifactorial test to determine whether the applicant was an employee or an independent contractor. The factors considered included the nature of the work, the terms of the contract, which party had most control of how the work was performed, whether sub-contracting could occur and the level of the worker’s capital expenditure. Most factors pointed towards an employment relationship. However, Foodora argued that because Mr Klooger could sub-contract his duties, he was an independent contractor. The Commissioner found that because sub-contracting work was contrary to the terms of the contract, it was not a determinative factor. Mr Klooger was required to work his designated shift times, Foodora exercised control over where and how he worked and he did not have a contractual right to sub-contract his work. On this basis, the FWC found that Mr Klooger was a Foodora employee and ultimately, that his dismissal was unfair.

Uber Eats delivery driver found to not be an employee Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd T/A Uber Eats [2020] FWCFB 1698 Background The applicant brought an unfair dismissal claim against Portier Pacific Pty Ltd and Uber Eats. The applicant alleged that she was an employee of Uber Eats. The contract between the applicant and the respondents actually stated that she was neither an employee nor an independent contractor. The respondents argued that the applicant entered into a contract directly with the relevant restaurant for a delivery and the restaurant was responsible for payment to the applicant. The respondents were merely the applicant’s “limited payment collection agent.” Findings The respondents’ characterisation of Ms Gupta’s work as a delivery driver was rejected by the FWC. The Full Bench was satisfied that the applicant was engaged by Portier Pacific to provide delivery services. In finding that the applicant was not an employee, the FWC determined that the respondents exercised no control over the timing and duration of her work performed as a delivery driver. Ms Gupta also had control over which orders she would accept for delivery. The applicant was free to provide services to other companies (including a competitor delivery app) while she was performing work for Uber Eats. The applicant was not required to wear a uniform or have any signage on her car. Accordingly, the applicant was not entitled to pursue an unfair dismissal claim.

Risks attaching to an incorrect characterisation A business has different legal obligations to employees and independent contractors. The risk to a business in incorrectly characterising the nature of the relationship is that it may fail to meet its legal obligations and in doing so would be potentially exposed to a number of penalties and claims, including the following: (a) claims for payment of minimum entitlements under applicable legislation, Modern Awards or enterprise agreements (b) penalties for breach of a Modern Award or minimum entitlements, or of the sham contracting provisions of the FW Act (c) claims for payment of superannuation contributions (d) liability for failing to withhold PAYG tax on behalf of the employee (e) liability for workers’ compensation payments, and (f) termination payments (including redundancy pay) should the business terminate the arrangement. The implications of a business failing to correctly characterise the relationship as either a principal/independent contractor relationship or employer/employee relationship are highlighted in the case example below. Further, even where a contractor has been correctly classified, the business should be aware that just as employees and prospective employees are protected under the general protections provisions of the FW Act, independent contractors and prospective contractors are also protected from adverse action engaged in by the business for a prohibited reason, where such adverse action may include, but is not limited to: (a) terminating the contract (b) injuring or discriminating against the contractor or prospective contractor in relation to the terms and conditions of the contract (c) altering the position of the contractor to their prejudice, or (d) refusing to engage or make use of services offered by the contractor or prospective contractor. In the following case, a full Federal Court dismissed an appeal against the finding that a young British traveller engaged by a labour hire company to work on construction sites in WA was an independent contractor. Case example

Construction worker found to be an independent contractor Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122 Background The second applicant, Daniel McCourt, worked for some months in 2016 and 2017 as a general labourer on two construction sites in Perth under the supervision and control of workers of a builder, Hanssen Pty Ltd through a labour hire company Personnel Contracting Pty Ltd (trading as Construct) (Personnel). Personnel paid Mr McCourt for his services. The issue was whether Mr McCourt was an employee of Personnel or an independent contractor retained by the labour broker, Personnel and supplied as such to the client, Hanssen. If Mr McCourt was found to be an employee, his status was a casual employee. Findings The Federal Court found that, “[a] worker must be placed (or perhaps shoehorned) into either the employee or the independent contractor classification.” In finding that the unskilled labourer was not an employee, Chief Justice Allsop commented that if the court had not been constrained by authority, he would have favoured an approach which viewed the construction worker as a casual employee of Personnel. This is an area which will continue to receive attention from the courts as employment relationships continue to evolve.

Case example Sham Contracting The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 9) [2014] FCCA 1124 The respondent represented to 10 workers during the period 2007–2010 that they were independent contractors engaged under contracts for services and not employees. The court found that the respondent had engaged in sham contracting in order to avoid the provision of minimum entitlements to their employees. The respondent had committed 139 contraventions of the FW Act and its predecessor, the Workplace Relations Act 1996 (Cth) and other industrial instruments. The penalties totalled $313,500 which included 10 penalties of $23,100 each for 10 breaches of s 357(1) of the FW Act. The respondent appealed this decision; however, the Federal Court dismissed the appeal.

The engagement process In seeking to engage an independent contractor, it will not be enough to protect the business from the risks identified to enter into a contracting relationship with an individual who has an ABN. Putative employers are typically criticised for not complying with their obligations as an employer (eg in relation to obligations under Modern Awards and enterprise agreements). It is helpful, if not essential, to be able to demonstrate that there is an entity that carries the legal responsibility for complying with obligations as an employer. The mere existence of an ABN does not change the legal status of an individual into an employer. The requirement to have an ABN was introduced as part of the GST legislation and is only relevant for GST purposes. As such, when engaging an independent contractor, the engaging entity or principal should, where possible, seek to enter into a “tripartite” independent contractor agreement. This is an agreement between the principal, a separate contracting entity, and an individual employed by the contracting entity who will perform the services. The case law in this area also indicates that if the contractor is a corporate entity, this may reduce the potential for the individual to be considered an employee of the principal; but again, it is only one of a number of indicia that a relevant court or tribunal will consider in determining the true nature of the relationship. Further, in order to manage the risk of the characterisation of a contracting relationship as an employment relationship, a genuine contractor should, where practicable, only be engaged for short periods that are not consecutive. Wherever possible, the relationship should also not be expressed to be exclusive (ie the contractor should, at the same time as providing any services to one company, also be able to provide services to other businesses and/or individuals). Managing contractor relationships The importance of a business managing its relationships with its contractors stringently and effectively cannot be understated. There have been a number of recent examples where long-term contractors engaged by a company (whether engaged through their own corporate entity or those who are employees of another corporate entity with which the company has a contracting relationship) have commenced legal proceedings against the business when their contracting relationship comes to an end, arguing that they are in fact employees of the company and therefore various employment entitlements have accrued. That these contractors consider that they have a basis for a legal claim has derived largely from the

actions of businesses in blurring the distinction between employees and contractors by, for example, applying policies and procedures that more properly should only be applied to employees, such as investigation and disciplinary procedures. There are advantages to a business treating contractors in a similar way to employees for purposes such as building engagement and cohesion and to minimise the risk of contractors feeling ostracised in the workplace and consequently making bullying or harassment claims. However, these benefits must be weighed against the potential consequences of not maintaining strictly a separation between employees and contractors.

Employment Entitlements Introduction This Chapter examines the various entitlements of employees arising out of the employment relationship, the sources of those entitlements, and the potential risks for employers if they fail to provide employees with their correct entitlements.

Sources of employment entitlements The diagram below sets out the main sources of the employment entitlements for employees in Australia. Those sources include: (a) the employee’s contract of employment (b) a variety of statutes, including the FW Act (c) industrial instruments, including Modern Awards and enterprise agreements, and (d) the employer’s policies.

Sources of employment entitlements The various sources of employee entitlements create a complex matrix from which the obligations that an employer is required to comply, derive. It is therefore important that an employer understands how the sources of employee entitlements interact and the specific obligations that it owes to its employees, so as to prevent non-compliance with those obligations.

The employment contract An employee’s employment relationship with an employer is underpinned by the contract of employment, which, as reflected in the diagram below, comprises both express and implied terms.

Elements of the contract of employment Express terms The express terms of a contract of employment may be verbal or written, or a combination of both, and may derive from a number of sources, including but not limited to: (a) the employment contract or a letter of appointment (b) oral negotiations at the time of recruitment, and/or (c) the conduct between the employer and an employee, pre and post the commencement of the employment relationship. Best practice suggests that, to the extent possible, the terms and conditions of an employee’s employment should be confirmed in writing at the commencement of the employment relationship to ensure that the rights and obligations of the parties are clear and unambiguous. For further information about preparing an employee’s employment contract, including the terms and conditions that may be included in that contract and the risks attaching to the contract formation process, see Chapter 1: Recruitment and Selection. Further, an employer must at all times ensure that the terms and conditions of employment that it provides to its employees comply with the minimum terms and conditions of employment applying to the employment of the employee at law, that are in force from time to time (see “Minimum terms and conditions of employment” further below). Implied terms Terms may be implied into an employment contract as a matter of law or fact. The diagram below sets out some of the implied duties of the employer and employees at law. Implied terms in the employment contract

The implication of a term as a matter of law into an employment contract does not rely upon the parties’ actual intention or the circumstances surrounding the formation of the contract. A term will be implied as a matter of fact into an employment contract if it seems that the parties agreed on the term being part of their contract, if the term is necessary for employer efficacy or as a result of

custom and practice. A term can be implied on the grounds of “custom and practice”, but only where there is evidence that the custom “is so well known and acquiesced that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract”. It is not necessary for the employer or the employee to even be aware of the relevant custom or practice when negotiating the employment contract. In practice, it is very rare for a term to be implied into an employment contract on this basis. As illustrated in the following case example, one term that the courts have resisted implying into contracts of employment in Australia is the implied duty of mutual trust and confidence in the employment relationship. Case example Implied term of mutual trust and confidence? Commonwealth Bank of Australia v Barker [2014] HCA 32 Background This case involved a senior executive of the Commonwealth Bank of Australia who was made redundant after 27 years of employment. The Bank advised the employee that his position was made redundant and on the same day withdrew the employee’s access to the Bank’s intranet and email and asked him to leave the Bank, although his employment was not terminated until a month later. The Bank maintained minimal contact with the employee and did not take any meaningful steps to explore redeployment opportunities. All information about potential redeployment opportunities was sent to his defunct work email address, so he had no chance to act upon this information. Findings The Full Bench of the Federal Court found initially that the Bank’s failure to follow its own redeployment policy amounted to a breach of the implied term of mutual trust and confidence and awarded the employee damages of $317,000. The decision of the Full Bench of the Federal Court was reversed on appeal, with the High Court holding that there is no implied term of mutual trust and confidence in the employment contract in Australian law. The term was held not to exist for reasons including: • the obligation it entails is too indeterminate • the term is not “necessary” to make contracts of employment work, and • the term was derived from the English legal system and developed within that system in line with its peculiarities. Because Mr Barker’s employment contract (as a whole) made it clear that the policies did not form part of that contract, the Bank had not breached the employment contract and the award of damages was reversed.

However, it is possible that a term of mutual trust and confidence is implied into a contract by fact, that is the parties have contracted in such a way so as to create an implied duty of trust and confidence. Parties may also include this duty as an express term in the contract of employment.

Minimum terms and conditions of employment The minimum terms and conditions of employment of employees in Australia are, for the most part, regulated by the FW Act. This section examines the various sources of the minimum terms and conditions of employment under the FW Act, being: • the NES • Modern Awards, and • enterprise agreements. For the avoidance of doubt, these sources of minimum terms and conditions of employment interact as follows: • the NES provides the minimum entitlements or “safety net” for all employees, irrespective of their role or remuneration • if a Modern Award applies to an employee’s employment, the Modern Award may supplement the minimum terms and conditions of employment provided by the NES. In those circumstances, an

employer is required to apply the enhanced terms in the Modern Award, and • if an enterprise agreement applies to the employment of an employee, then any relevant Modern Award will cease to apply to the employee’s employment (but will continue to cover that employment) for the period the enterprise agreement applies. The enterprise agreement may also supplement the minimum terms and conditions of employment provided by the NES, and employers are required to apply the enhanced terms in the enterprise agreement. National Employment Standards Entitlements for full and part-time employees The NES provides the minimum entitlements that apply to all full-time and part-time employees who are covered by the FW Act, irrespective of their role or remuneration. The NES set out the minimum entitlements for employees in relation to the following:

The minimum terms and conditions of employment provided by the NES may be supplemented in other instruments, for example an employment contract or, as noted above, a relevant Modern Award or enterprise agreement. However, where these instruments provide minimum entitlements less than those in the NES, the NES will operate to override those entitlements. Further details of the entitlements for full-time employees under the NES in each of the areas identified above are set out at Appendix 1 to this Chapter. Part-time employees’ entitlements are generally calculated on a pro-rata basis consistent with the hours they work. In Mondelez Australia Pty Ltd v AMWU & Ors [2020] HCA 29, the High Court had to decide on how a day is calculated for personal/carer’s leave. Organisations now have certainty in relation to the application of personal/carer’s leave under the FW Act, with the High Court declaring that, “[a] “day” for the purposes of s 96(1) of the FW Act refers to a “notional day”, consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period. On this basis, all employees who work the same fortnightly average of ordinary hours of work are entitled to receive the same number of hours of personal/carer's leave per year. Case example Do lunch breaks form part of calculation of maximum weekly hours? Gorval v Employsure and Lynch v Employsure and Mahoney v Employsure [2016] FCCA 231 Background Two employees of Employsure were employed pursuant to employment contracts which contained a clause with respect of work hours stating that “your hours of work are those that are reasonably necessary to fulfil the requirements of your role, or such hours as are required by the company” and “In addition, you may be requested to work rostered overtime or on-call periods from time-totime by the company”. The employees claimed that they worked 45 hours per week (including a one-hour lunch break) and because their contracts were silent on the number of hours they were to work, the FW Act should apply such that the ordinary hours of work for a full-time employee are deemed to be 38 hours per week, and any additional hours beyond 38 hours can only be justified and reasonable where the additional hours are ascertainable and paid. They also argued that they were entitled to payment for the full 45 hours worked, because their lunch breaks constituted service in the sense of performing the obligations imposed by the terms of the employment contract, which included taking an authorised meal break. Findings The Federal Circuit Court found that it would be an “unacceptable extrapolation” to conclude that an employment contract that is silent on payment for lunch breaks should be read as obliging the employer to pay an employee on their lunch break and the time sheets submitted as evidence created a prima facie inference that each of the lawyers took a one-hour lunch break, each day, whether it was at the time stipulated, or at some other time. In support of this position the court noted that the employees did not adduce evidence that they were required to work during this time. Therefore, because they were not working during their lunch

break, the most the employees could have claimed to be working was 40 hours per week, and two additional hours were not considered to be unreasonable.

Casual employees and the NES The NES has limited application to casual employees. The minimum entitlements of casual employees under the NES are: • maximum weekly hours • two days’ unpaid carer’s leave and compassionate leave per occasion • unpaid family and domestic violence leave • community service leave (except paid jury service) • a day off on a public holiday unless reasonably requested to work by the employer, and • provision of a Fair Work Information Statement. Casual employees who have been employed by the employer for at least 12 months on a regular and systematic basis with an expectation of ongoing employment are entitled to make requests for flexible work arrangements and to parental leave. Failure to comply with the NES Failure to comply with the NES may expose an employer to the risk of an investigation and/or prosecution by the FWO, civil penalties and/or orders to back-pay or compensate employees for any loss of entitlements. Modern Awards The FW Act streamlined the award system by replacing (for those employers and employees covered by that FW Act) the complex intersection of State and Federal awards with Modern Awards that are industrybased (eg the Food, Beverage and Tobacco Manufacturing Award 2010) or occupation-based (eg the Clerks — Private Sector Award 2020). In 2020, existing Modern Awards were subject to extensive variations to their terms, such as changes to the annualised wage arrangements. Content of Modern Awards

Modern Awards provide for matters such as: Modern Awards may supplement the minimum entitlements provided under the NES for employees who are covered by that Award. In those circumstances the employer must comply with the terms of the Modern Award. Modern Award application The application of a Modern Award to an employee’s employment is largely determined by the nature of the work the employee performs. Only one Modern Award (if any) will apply to the employment of an employee. If an employee performs “mixed functions” so that the employee does not fit clearly under a classification contained in a Modern Award, award application will be determined by examining the employee’s “major and substantial employment”, “principal purpose” or “primary function”.

The types of matters considered by the courts and tribunals in determining what, if any, Modern Award applies to an employee’s employment is illustrated in the case example below. Case example Modern Award application Foulsham v JJ Corbett Plumbing & Gasfitting Pty Ltd [2015] FCCA 1290 Background An employee claimed that his employer had contravened the Plumbing Trades (Southern States) Construction Award 1999 (the “1999 Award”), by failing to pay him annual leave, personal leave and redundancy entitlements in accordance with that Award. He claimed his classification under the 1999 Award was “Class 3” by virtue of his duties, which included plumbing, drainage, roofing and gas fitting, as well as stock ordering and control, bill quoting, accounts, data entry and payroll. Findings The court found that the 1999 Award did not apply to the employee because the “major, substantial or principal aspect” of his work had become clerical work, not plumbing work (which was performed “in conjunction” with his primary clerical duties). It held that the employee’s employment was instead covered by the Clerks — Private Sector Award 2010, because he was employed “substantially or principally” in clerical work.

Typically, Modern Awards do not apply to employees who historically have not been award-covered, such as those in managerial roles or in professional roles such as accounting, finance, marketing, human resources and public relations. However, it is important to consider carefully the terms of the Modern Awards that cover employees employed by the employer, to determine whether they do cover a particular employee or class of employees in roles that are traditionally award-free. For example, the Professional Employees Award 2020 may cover certain employees who work in the IT sector and those who hold managerial responsibilities who were not covered by an award prior to the introduction of the Modern Award system in 2010. If an employer and an employee whose employment is covered by a Modern Award and who earns over the high income threshold ($153,600 in FY20/21) enter into a Guarantee of Annual Earnings, then for the period the Guarantee of Annual Earnings is in place, the Modern Award will not apply to the employee’s employment. However, entering into a Guarantee of Annual Earnings will not render the employee ineligible from making an unfair dismissal claim if their employment is terminated. Individual Flexibility Arrangements Modern Awards also include flexibility terms, which allow for IFAs to be made at the workplace level to meet the individual needs of employers and employees in respect of specific issues (eg arrangements for when work is performed, overtime rates, penalty rates, allowances and leave loadings). For more information on IFAs, see Chapter 1: Recruitment and Selection. Breach of a Modern Award If an employer is prosecuted successfully for a breach of a Modern Award, the employer may be ordered to pay pecuniary penalties and/or make good any underpayment arising from the breach. The employer may also be the subject of an investigation by the FWO as a precursor to any prosecution. Enterprise agreements Enterprise agreements are workplace instruments that contain terms tailored to meet the specific needs of the employer and which have been endorsed by the majority of employees covered by the terms of that enterprise agreement. An enterprise agreement typically provides more generous terms and conditions than a Modern Award or the NES. This is because for an enterprise agreement to be approved by the FWC, employees covered by the enterprise agreement must be “better off overall” when compared to what their position would be under the Modern Award. For further information about enterprise agreements, including the process for making enterprise agreements and the rules relating to their content, see Chapter 8: Third Parties. Breach of an enterprise agreement may also lead to investigation by the FWO and prosecution under the FW Act, which could lead to the imposition of civil penalties and/or the employer being held liable for

underpayment claims. Case examples Breach of a term of an enterprise agreement CEPU v Thyssenkrupp Elevator Australia Pty Ltd [2014] FCCA 1615 Background The CEPU alleged that Thyssenkrupp Elevator Australia Pty Ltd (Thyssenkrupp) failed to comply with the consultation clause in its Thyssenkrupp Elevator Australia Pty Ltd Enterprise Agreement 2011. The CEPU argued that Thyssenkrupp failed to consult with the CEPU and with an employee, David McDonagh (who was a member of the CEPU), over its decision to downsize and restructure its repairs department. In doing so, Mr McDonagh’s employment was terminated on the basis of redundancy. Mr McDonagh was called into a meeting and informed that his position had been made redundant and that he had been chosen for redundancy by reason of a performance matrix. Mr McDonagh was not provided with a copy of the performance matrix or given any further explanation. He was then handed a letter terminating his employment. Findings The Federal Circuit Court found Thyssenkrupp breached its consultation obligations in the Agreement by failing to consult with Mr McDonagh (or the CEPU) prior to his termination. The court highlighted that the consultation obligations were designed to assist employers (not just employees and unions) by allowing employers to gain access to ideas, suggestions and alternatives proposed by employees and their unions. The court held that if proper consultation had taken place, the sharing of ideas may have meant that the decision to make certain positions redundant could have been avoided, and ordered a penalty of $15,300 against Thyssenkrupp for the breach. Australian Federation of Air Pilots v HNZ Australia Pty Ltd [2015] FCA 755 Background The employees were helicopter pilots employed by HNZ Australia Pty Ltd (HNZ). The applicant sought declaratory relief and penalties to be imposed on HNZ in respect of breaches of the FW Act. HNZ wanted to, as a cost-cutting measure, move its touring pilots to different roster cycles and move its live-on-site pilots to rosters that ensured they had four days off in 14 days. None of the pilots agreed to the changes. The employees fell under the HNZ Australia Pty Ltd (Helicopter Pilots — Australian Operations) Enterprise Agreement 2013 (the 2013 Agreement). HNZ failed to engage with the applicant about its proposed roster changes as contemplated by the 2013 Agreement. Findings The Federal Court found that HNZ had contravened s 50 of the FW Act by contravening the 2013 Agreement. HNZ had failed to consult with the employees in respect of the proposed change to the regular roster or ordinary hours of work. A penalty of $9,000 was imposed on HNZ recognising that while its actions had been deliberate, the employer had acted responsibly and not proceeded with the unlawful proposed change to the employees’ hours of work.

Policies and procedures This section examines the practical issues in respect of an employer’s policies and procedures, including the development, implementation, monitoring and review of those policies and procedures. It also explores the risks of incorporating the employer’s policies and procedures into an employee’s contract of employment and steps the employer can take to minimise those risks. Purpose of policies and procedures The employer may seek to use policies in conjunction with employment contracts and industrial instruments to regulate various aspects of the employment relationship, including the employment conditions and conduct of employees. One advantage of policies and procedures is that they can typically be varied more easily than employment contracts and industrial instruments. Similarly, policies and procedures can be used by the employer to set out the processes employees are expected to follow when undertaking specific activities, and amended as those processes evolve over time. If the interaction between policies and procedures and other sources of employment obligations such as employment contracts and industrial instruments is managed appropriately (see “Importation of policies into contracts” below), policies and procedures can be used by the employer to manage the employment relationship flexibly. To achieve this, employment contracts and industrial instruments should expressly state that the policies and procedures do not form part of the terms of the contract or industrial instrument and retain the discretion to vary the policies and procedures from time to time. This means that it is not necessary to obtain each employee’s consent to vary policies and procedures.

Care should be taken to ensure that the correct policies and procedures are applied in respect of individual incidents. An enterprise agreement can provide that it will be read in conjunction with the policies that were in force on a particular date (eg the date on which the enterprise agreement was approved by the FWC). Failure to apply the correct policies and procedures in these circumstances could result in allegations of breach of the enterprise agreement and/or industrial disputes. Developing policies and procedures Matters that the employer should have regard to in developing its employment-related policies and procedures, include: (a) the employer’s existing employment framework (including employment contracts, industrial instruments and existing policies and procedures) (b) the subject matter of the proposed policies and procedures (noting that there may be issues that are more appropriately regulated through the employment contract rather than policies and procedures, and vice-versa) (c) how prescriptive the employer wants or requires the policies and procedures to be (sometimes less can be more — see the case examples below) (d) the intended coverage and application of the particular policies or procedures among the employee body (including the eligibility requirements where a policy or procedure confers a benefit or entitlement on an employee) (e) the employer’s legal obligations and best practice, and (f) the employer’s custom and practice. To the extent possible, any duplication within the employment framework in terms of the regulation of an employee’s employment should be kept to a minimum, in order to reduce the risk of disputes about benefits or entitlements. The employer must also avoid representing its policies and procedures as providing any legally binding entitlements to employees or obligations on the employer in developing those policies and procedures. Implementing policies and procedures Having written policies and procedures is not sufficient for the purposes of regulating employees’ behaviour. To have any practical effect or consequence, an employer’s expectations with respect to employee conduct and performance reflected in those policies and procedures must be effectively promulgated within the employer’s business. This includes communicating the existence of the policies and procedures (and any changes) to employees and, where appropriate, providing training and other assistance and support to enable employees to understand and meet the employer’s expectations. This is particularly important when an employer is seeking to enforce policies and procedures in a disciplinary context (eg where an employee has engaged in misconduct or an employer is considering terminating an employee’s employment on the basis of ongoing poor performance). In those situations, it will be necessary for the employer to be able to establish that the employee was aware of the employer’s expectations and of the consequences of their non-compliance, before taking any action against an employee. An expectation that is imposed frequently on employees by an employer is that employees will take steps to maintain currency of their knowledge of the policies and procedures that apply to their employment. The corollary of this expectation is that the employer must have the structures in place to support and assist employees in meeting this expectation, including ensuring the policies and procedures are accessible to employees. The ways in which accessibility of policies and procedures can be achieved can be many and varied, and may include company intranets, noticeboards, emailing policies to employees or even sending hard copies by mail. Employers are encouraged to adopt the most practical and most effective method of

providing access to their policies and procedures having regard to the nature of the workforce. Another aspect of effectively implementing policies and procedures is ensuring that the employer maintains adequate records of having communicated the policies and procedures to employees. This too can be achieved in a number of ways, including retaining copies of notices posted on site noticeboards, compiling training records, or by way of employees signing acknowledgements that they have read and understood the terms of a policy or procedure. Reviewing and updating policies and procedures To maintain their effectiveness, an employer’s policies and procedures should be monitored, reviewed and updated by the employer regularly. Policies and procedures should also be reviewed and, where necessary, updated on an ad hoc basis if there are, for example, significant legal developments or changes to “best practice” or organisational procedures. Where appropriate, employers are encouraged to provide employees with the opportunity to participate in the process of reviewing the employer’s policies and procedures. Providing employees with an opportunity to participate in the review process is more likely to result in relevant and dynamic policies and procedures, as well as creating a sense of ownership and awareness by employees. This in turn may lead to greater compliance with the policies and procedures by employees. Employers should also take care to ensure that all amendments to policies and procedures are communicated to employees. This is not only to ensure that employees are aware of their responsibilities, but to guard against challenges from any employee who is subject to disciplinary action arising from a policy or procedure of which they claim not to be aware. Communicating policy changes also provides an employer with an opportunity to reinforce what constitutes acceptable workplace conduct. These issues can be managed to a degree in the contract of employment by way of a clause in which the employee agrees to familiarise themselves with the employer’s policies and procedures as amended from time to time. However, best practice would suggest that the employer also takes a proactive approach to making employees aware of the policies and procedures at regular intervals. Incorporation of policies and procedures into the employment contract In drafting employment contracts, employers should take care to ensure that their policies and procedures are not, either expressly or impliedly, incorporated into those contracts, unless it is the employer’s intention for this to occur. Failure to take such care may result in employees having a contractual entitlement to the benefits and entitlements provided under the employer’s policies and procedures, which the employer did not intend and which may create a right to bring a legal claim against the employer if it breaches those policies or procedures. An employer’s employment contract should state that the policies and procedures of the employer apply to the employee’s employment and that the employer reserves the right to amend or replace the policy or procedure from time to time. However, for the avoidance of any doubt, there should also be an express statement that the employer’s policies and procedures are not intended to form part of the employment contract or give rise to any contractual entitlements. Any express term or terms that purport to exclude the incorporation of policies and procedures into an employment contract must be clear and not contradicted by, or potentially in conflict with, other express terms of the employment contract. The following case examples demonstrate the potential risks of incorporating a policy or procedure into an employment contract and, even where the policies and procedures are not found to have been incorporated into the employment contract, the care that employers must take when applying their policies and procedures in order to ensure that they are not liable for benefits in favour of employees where it was not their intention to provide such benefits. Case examples Incorporation of policy in contracts Goldman Sachs v Nikolich [2007] FCAFC 120

Background Goldman Sachs’ policy included a commitment to “provide and maintain, as far as practicable, a working environment that is safe and without risk to health”. The employee developed depression after a dispute with Goldman Sachs and then brought a claim that the company breached his employment contract by not fulfilling the commitment outlined in the HR policy. Findings The Full Bench of the Federal Court found that the policies formed part of the employment contract as the statements in the policy document were promissory in nature and a reasonable person would have believed that the terms formed part of the employment contract. The company breached its contractual obligation by failing to provide a safe and healthy workplace and, as such, the employee was awarded damages for past loss of income of almost two years’ pay as well as $130,000 for loss of future income. Aitken v Virgin Blue Airlines [2013] FCCA 981 Background Two employees employed in Virgin Blue’s public affairs team were made redundant. The two employees, one of whom was on maternity leave and the other pregnant, lodged general protections claims alleging that they had been discriminated against in Virgin’s redundancy selection process. Findings The court accepted Virgin’s position that the redundancies were genuine but found that Virgin had breached a condition of the employees’ contracts of employment by failing to consult with them prior to effecting the redundancies. Specifically, Virgin’s policy required the airline to speak to employees “prior to making a decision” and that the purpose of the consultation process was to allow the airline to have the opportunity to “explain to (the employees) the background of the potential redundancy, the reasons for it and to get (the employees’) input prior to a decision being made”. Virgin Blue’s failure to “even spend a few days” to allow for exchanges between the parties and “escalation in the organs” of the employer meant that this had been a clear breach of a policy which Virgin accepted formed part of its employees’ contracts. Accordingly, Virgin Blue was found to have contravened a general protections provision and was liable to pay compensation in addition to a civil penalty for the contravention. McKeith v Royal Bank of Scotland Group PLC; Royal Bank of Scotland Group PLC v James (No 2) [2016] NSWCA 260 Background Mr James, the outgoing CEO, and Mr Keith, the outgoing Head of Global Markets, were made redundant after their employer, AMRO Australia Holdings (“Amro”) merged with the Royal Bank of Scotland (RBS). The relevant issue was whether Amro’s redundancy policy formed part of the employment contracts of Mr James and Mr Keith. Relevantly, Amro’s redundancy policy was “closed” and provided “a severance payment, based on the number of years of service”, in addition to a discretionary ex-gratia payment based upon bonus entitlements which may become payable for the calendar year in which redundancy occurred. Mr James’ written contract provided that he agreed to be bound by Amro’s policies “as may exist from time to time”. Amro calculated Mr James’ severance and ex-gratia payments at $2.5m but Mr James did not receive the payment on account of refusing to sign a broadly-framed deed of release. Mr Keith’s employment contract made no reference to the redundancy policies. Findings The NSW Court of Appeal found that the employment contract did not incorporate the redundancy policy. However, RBS had made promissory statements through words such as “guarantee” and “commitment” that the redundancy policy would apply if any employees were retrenched following the takeover of Amro. It was found that the statements were made to induce the employees to remain with the bank post the merger. RBS was, accordingly, contractually bound to make the severance payments to both employees but could exercise discretion in regard to the ex gratia payments. Mr James’ award was reduced from $2.9m to $432,692.31 and Mr McKeith was awarded the severance payment of $375,961.54 plus interest.

The following case example demonstrates the potential consequences of contradictory express terms of an employment contract in relation to policies. Case example Contradictory terms about policies in employment contracts Russo v Westpac Banking Corporation [2015] FCCA 1086 Background Mr Russo was a Senior Manager with Westpac. He participated in a discretionary bonus scheme in which the payment of bonuses was tied to a performance appraisal scheme. In 2008/09 and 2009/10, he was awarded a bonus. In September 2011, his position was made redundant and he was not paid a bonus. Mr Russo argued that Westpac had breached express and/or implied terms of his employment contract by failing to pay the bonus. Westpac argued Mr Russo was not entitled to a bonus on his retrenchment because in the preceding year his performance had been downgraded to “needs improvement”. This was despite Mr Russo’s ranking as “effective” for 70% of his overall performance indicators up to his review. Findings Although the court accepted that policies did not generally form part of the plaintiff’s contract due to a term excluding them, the redundancy term was expressed otherwise, reading:

“If your employment with Westpac is terminated on the basis of redundancy, your entitlements will be determined in accordance with the more favourable to you of any applicable industrial instrument or a relevant Westpac policy or procedure in accordance with the terms and conditions of that industrial instrument or policy.” This term had to be given effect and Mr Russo was held to be entitled to a bonus in accordance with the policy. Evidence showed that Mr Russo’s manager had “confidently, and in some respects arrogantly” departed from the objectives of, and policy behind, the bonus plan. He had taken irrelevant considerations into account and failed to work with Mr Russo through a development plan to improve aspects of his performance. The court held that Mr Russo’s bonus could not be withheld capriciously, arbitrarily or unreasonably.

Other entitlements This section examines other benefits or entitlements that an employer may provide to employees from time to time. Tools of trade An employer may provide tools of trade such as company cars or equipment for eligible employees from time to time. The employer should check the terms of the relevant Modern Award or enterprise agreement to determine whether it has additional obligations in providing tools of trade. Where employment contracts provide for tools of trade and the employer decides to remove the tools of trade or otherwise alter the terms on which they are offered, the employer may wish to consider formally varying the affected employees’ employment contracts or enter into new employment contracts with those employees to give effect to that decision. The employer implementing that decision unilaterally may result in the affected employees arguing that the removal of or changes to the benefit represent a fundamental alteration to their terms and conditions of employment, which may amount to a repudiation of their employment contracts. Superannuation An employer has an obligation to pay superannuation to eligible employees under the applicable superannuation legislation. Employees are entitled to superannuation regardless of their employment status if they are over 18 years old and earn at least $450 a month before tax, or under 18 and work more than 30 hours per week and earn at least $450 a month before tax. In addition, an employer has to pay superannuation to individual contractors, if the contract is wholly or principally for their labour. Generally, a contract is principally for labour if more than 50% of the value of the contract is for a person’s labour. An employer must contribute a minimum of 9.50% of an employee’s ordinary time earnings up to the maximum contribution base. Currently, this rate is frozen until 1 July 2021, when it will increase to 10.00%, followed by 0.5% increases each year to 12.00% by 1 July 2025. APPENDIX 1: ENTITLEMENTS UNDER THE NES The entitlements under the NES set out in the table below are for full-time employees. The entitlements for part-time employees are generally calculated on a pro-rata basis consistent with the hours they work.

* For the purposes of flexible work requests and parental leave extensions, the legislation defines “reasonable business grounds” as including, but not being limited to: (a) the new working arrangements requested by the employee being too costly for the employer (b) no capacity for the employer to change the working arrangements of other employees to accommodate the new working arrangements requested by the employee (c) it being impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested by the employee (d) the new working arrangements requested by the employee being likely to result in a significant loss in efficiency or productivity, and/or

(e) the new working arrangements requested by the employee being likely to have a significant negative impact on customer service.

Performance Management Introduction Performance management is a crucial aspect of any effective employment framework, but it also poses significant risks to an employer if not undertaken appropriately. Best practice dictates that an employee’s performance be “managed” throughout the life of the employment relationship to best ensure that the employer and the employee are deriving the most from that relationship. However, “performance management” is often seen in a negative light, and equated with “management of poor performance”. This perception often means that there is no “ownership” of the performance management process among employees and their managers, which in turn impacts on the overall effectiveness of the performance management process. As such, employers should take steps to encourage all employees and their managers to view performance management as a continuous and ongoing process throughout the employment relationship. It should also be viewed as a potentially mutually beneficial relationship — one of assisting employees to achieve their potential and to progress within the organisation, and enabling the employer to harness that potential to achieve its organisational and strategic goals. Performance management can be a difficult and potentially uncomfortable process for a variety of reasons, including personality conflicts or one or more of the participants having an aversion to confrontation. However, failure to deal with performance issues and to respond to poor performance promptly and appropriately can create a perception that poor performance is acceptable, or create significant legal risks for an organisation. If performance is managed properly, there should be “no surprises” for either the employee or the employer when an employee’s performance is formally reviewed. This Chapter examines: (a) the elements of an effective performance management system, including formal and informal performance management, developing performance criteria, and implementation and review of the performance management system (b) managing concerns about an employee’s performance (c) conducting performance reviews, and (d) the legal risks attaching to the performance management process and how to manage those risks.

Elements of a performance management system Formal v informal performance management An effective performance management system comprises both formal and informal elements. Formal performance management may be viewed as the overarching framework for managing an employee’s performance that is supported by ongoing informal processes. Formal performance management is not limited to the annual performance review that is commonly undertaken with an employee; that is just one element of the overall performance management system. A formal performance management system may also include: (a) systems for developing the infrastructure to facilitate performance management (including job descriptions and performance criteria) (b) processes for managing an employee’s performance where they may not meet the standards required by the employer for the role, and

(c) processes for assisting employees with their learning and professional development to enable progression through the organisation. Informal performance management can be described as the day-to-day feedback, coaching or counselling that is provided to employees by their direct supervisors/managers and other managers with whom they may have dealings. Informal performance management can be a more effective way of dealing with isolated incidents of unsatisfactory performance. The informal nature of such processes does not mean, however, that these discussions should not be documented. On the contrary, these discussions should be documented as they may later be required to support a formal performance management process. Developing performance criteria In order to assess an employee’s performance in their role properly (and to provide for comparison between the employee’s performance and that of other employees), an employer must ensure that there is a clear, transparent and objective basis upon which to conduct that assessment. This is generally in the form of measurement benchmarks such as performance criteria. Performance criteria should be based on the duties and responsibilities attaching to the role (as may be reflected in the employee’s job description) and the employer’s expectations in respect of the performance of those duties and responsibilities. However, performance criteria may also reflect a wider range of skill sets, including technical skills, teamwork, communication skills and the employee’s overall contribution to the organisation. Care must be taken when developing performance criteria to ensure that, when applied, the criteria will not have a discriminatory impact on individual employees or a group of employees (eg criteria relating to the taking of personal/carer’s leave may discriminate against those with health problems or carer’s responsibilities). The risks and potential consequences of relying on discriminatory selection criteria are discussed further below. The following two case examples illustrate how teamwork, the ability to communicate effectively, and the requirement to maintain a certain level of proficiency can properly form part of performance criteria, and be relied on by an employer in order to manage an employee’s employment effectively. They also demonstrate the importance of ensuring parity of treatment, and the appearance of parity of treatment, in a performance management context. The third case example illustrates that employers should be cautious when relying solely on customer feedback to measure performance. Case examples Performance criteria Stevenson v Airservices Australia [2012] FMCA 55 Background A former employee of Airservices Australia brought a general protections claim after his employment was terminated, alleging that his employment had been terminated because he had made complaints about bullying and harassment by management. Findings The then Federal Magistrates Court found that the employee was validly dismissed for performance reasons and the allegations that his employment had been terminated because of his complaint about harassment and bullying were not made out. It was found that termination on the basis of performance was valid based on the employee’s failure “to build and sustain relationships with internal and external service providers”, skills which were critical in the context of forthcoming enterprise agreement negotiations (the employee was employed as the Workplace Relations Manager). Among the evidence adduced by Airservices Australia was the employee’s position description, which showed that close to 80% of his performance targets related to his ability to establish and maintain relationships with other operating groups. Airservices Australia also adduced email evidence where the employee’s managers had expressed concerns — both to the employee himself and also to the CEO of Airservices — about the employee’s ability to establish and maintain these working relationships and that there had been no improvement despite performance counselling. All this evidence was relied on in support of Airservices Australia’s position that the employee was dismissed for performance reasons. Andruszko v Virgin Australia [2013] FWC 1075 Background The employee was employed as a flight attendant with Virgin Australia. It was a requirement of Virgin that all cabin crew undertake a number of proficiency exams annually. However, if a member of the cabin crew failed (less than 80%) their proficiency exams three times within a 12-month period, they would be subject to disciplinary action, up to and including termination of their employment.

Five months prior to her termination, the employee failed two proficiency exams (scores of 75% and 78%). A performance review was scheduled and arrangements were made for the employee to resit the exam. The employee was also provided with assistance in preparing for the exam. The employee was put on notice that if she failed again, disciplinary action would result. The employee passed this exam. The employee was invited within the 12-month period to train on a different kind of aircraft and was informed that she would be required to take a proficiency exam. She was asked whether she had any concerns about this. She indicated she did not. The employee failed the exam (78%). She was asked to show cause as to why her employment should not be terminated. In response, the employee complained of headaches and the stress of training. However, Virgin did not accept these reasons and they proceeded to terminate her employment. The employee made an unfair dismissal claim to the FWC, alleging that Virgin’s treatment of her in her employment had differed from its treatment of other employees and that the treatment she had received was “heavy handed”. The employee also alleged that she had been “singled out” and “set up to fail”. Findings The FWC rejected the employee’s claims that she had been “singled out” and “set up to fail”. The FWC found that Virgin had a valid reason for dismissing the employee as she had failed three exams within a 12-month period, and was entitled to require that its cabin crew undertake examinations and assessments to ensure that it met the safety standards set out by the Civil Aviation Safety Authority. The FWC also noted the extra assistance offered to the employee to help her to pass her exams and the opportunity provided to her to opt out of the further training if she did not feel that she could undertake this exam, and pass, in the short period after completing the training. Accordingly, the FWC found that there was no evidence that there was a campaign to target her or single her out. K Brennan v ASG Brisbane Pty Ltd T/A Audi Indooroopilly [2019] FWC 7630 Background The former employee was a service advisor at Audi Indooroopilly and his duties included greeting customers, providing quotes, liaising with technicians and taking payments. Audi Australia conducted regular customer surveys to gather feedback on their overall customer experience at Audi dealerships. The dealership then used this data to measure the performance of its service advisors. The survey covered five questions and the customers could rate from one (as the worst) to five (as the best score). The applicant received a first and final warning letter for his survey results on the basis that they were below the national benchmark. Following his eventual dismissal for poor performance, the applicant lodged a claim with the FWC. The employee alleged it was unfair to measure his performance on a survey which related to the entire service experience at the dealership. Findings The FWC found that the employee had been unfairly dismissed. It found that it was inherently unfair to attribute the entire customer experience survey to the service advisor. In fact, many of the low scores were in relation to customer issues with the technicians. The FWC noted that just because a service advisor slips into the bottom half rating of the Audi Australia service advisors does not automatically mean that they are not performing their job satisfactorily. The employee was also not provided with the opportunity to respond to the reason for the termination. The Commissioner ordered compensation to be paid to the employee.

Implementing the performance management system A performance management system is only beneficial if it is implemented effectively. Part of implementing a performance management system effectively is ensuring that all participants understand how that system operates, and their roles and responsibilities within that system. Best practice suggests that a performance management system be documented in a policy or procedure by the employer. Any such policy or procedure should be readily accessible to participants in the performance management system at all times for their reference. Employees should receive information and/or training prior to or at the beginning of each performance cycle, about the expectations in relation to their performance for that cycle. This may be provided by way of group training or as part of the employee’s performance discussions, and where practicable, the standards to be applied should be confirmed in writing for future reference (see further below). In this way, the employee will be clear about the standards that they are required to achieve and against which they will be assessed over the performance cycle. Those who will be undertaking the performance reviews on behalf of the employer (eg line managers) (the reviewer) should also be provided with training and support to ensure that they are familiar with how to conduct performance reviews — particularly in circumstances where the reviewer has recently been appointed. It is also recommended that employers develop an administrative process to support the performance management process and to best ensure that adequate records of the performance management process are maintained by the employer (eg by providing relevant forms for employees and managers to complete). Monitoring and reviewing the performance management system

Any performance management system should remain subject to ongoing monitoring and review in order to best ensure that the system reflects best practice at all times. Any changes to the performance management system arising from a review that may materially impact on employees (and in particular, changes relating to performance criteria or the manner in which their performance will be assessed) should be communicated to employees at the earliest opportunity and preferably before the commencement of the next performance cycle.

Managing concerns about performance How an employer responds to and manages concerns about an employee’s performance will differ in each circumstance, depending on the nature and extent of the concerns. There are a variety of responses that an employer can adopt depending on the degree of seriousness. Those responses, including implementing a performance improvement plan or taking disciplinary action in the event that the employee’s performance does not improve to the standard required, are explored in this section. Managing performance concerns at first instance The following table outlines some common performance-related issues, potential causes of those issues, and what may be an appropriate response from an employer to these issues at first instance. However, employers are encouraged to consider carefully how they respond to performance issues in each particular situation. EXAMPLES OF COMMON PERFORMANCE-RELATED ISSUES •

Employee is not following lawful and reasonable directions

•

Employee is not performing tasks or role to the required standards

•

Employee demonstrating signs of apathy or laziness

•

Employee is cynical of work environment or expressing negative opinions.

Potential causes •

Job requirements and/or performance standards have not been adequately explained

•

Employee lacks the requisite skills to perform to the required standards

•

Insufficient resources available to allow employee to perform to the required standards

•

Interpersonal conflict between employee and manager

•

Poor job design

•

Inappropriate job fit

•

Personal or external issues.

Potential responses •

Identifying to the employee where their performance is falling short of the expected standards

•

Clarifying job requirements and performance standards with the employee

•

Asking the employee whether there are any personal or external factors affecting their performance

•

Providing the employee with an opportunity to improve their performance

•

Reviewing recruitment and onboarding processes regularly to ensure that they are appropriate

•

Assessing resource allocation and, where appropriate, reallocating resources

•

Assessing culture within the organisation and taking steps to realign culture where necessary

•

Identifying training and development opportunities for the employee

•

Reassigning the employee to another role

•

If remedial measures are unsuccessful, commencing a formal performance management process

•

Disciplinary action in respect of any failure to comply with lawful and reasonable directions or ongoing unsatisfactory performance.

It is unnecessary for an employee to acknowledge or agree that there is any issue with their performance in order for an employer to implement formal or informal performance management processes or to take disciplinary action. Any challenge to the initiation of a performance management process and/or any disciplinary action taken on performance grounds will be determined on objective facts — including contemporaneous records of performance management discussions, performance management plans and/or other related documentation. Performance Improvement Plans If an employer’s informal attempts to manage an employee’s performance issues do not result in improvement to the employee’s performance to the required standard, then the employer may consider taking more formal steps to manage the employee’s performance. This may include, but is not limited to, commencing formal performance management through a Performance Improvement Plan. Any Performance Improvement Plan should document the concerns of the employer and set out clear and achievable performance goals for the employee, and a structured process for a further review(s) of the employee’s progress against those goals. The review period that is applied under a Performance Improvement Plan will vary depending on the circumstances. The employee must be provided with a reasonable time in which to improve their performance to the required standard — this will depend on factors such as the nature and extent of the performance concerns. However, it is also important that an employer, where possible, is consistent in the review period applied to employees in cases where there are similar performance issues so as to minimise the risk of a perception that an employee may be receiving favourable treatment. To the extent possible, an employer should ensure that the structures implemented by way of the Performance Improvement Plan are adhered to (in particular the review process). If there are changes to those structures (eg because of illness or because of a change in circumstances that may otherwise impact on the employee’s ability to meet the required goal), the employee should be advised of these changes at the earliest opportunity and these changes confirmed in writing. Disciplinary action In circumstances where an employer continues to have concerns about an employee’s performance despite its attempts to rectify those concerns (eg through a Performance Improvement Plan), then the employer may wish to consider taking disciplinary action, up to and including termination of the employee’s employment. Any disciplinary action taken against an employee for poor performance should be proportionate to the performance concerns and the circumstances. For example, a performance issue that impacts on only a

minor component of an employee’s job description would not generally justify dismissal. Where dismissal is not justified, a range of other disciplinary measures may be appropriate including counselling, training, warnings or, if the employee’s employment contract permits, demotion. The possibility of disciplinary action, up to and including dismissal, should be raised in all discussions relating to an employee’s poor performance. This will ensure that the employee is on notice of the potential consequences of continuing to fail to meet the relevant performance standards and to protect the employer from a claim that the employee was not afforded procedural fairness if the disciplinary action is challenged.

Conducting performance reviews This section sets out tips for managers and other reviewers in conducting performance reviews, from providing feedback (formal and informal) in the course of an employee’s employment to preparing for and conducting performance review meetings. Providing feedback on performance Providing appropriate feedback to employees throughout their employment about their performance, irrespective of whether it is during a formal performance process or in their day to day work, is essential if the performance management system is to have a significant impact on work performance. Set out below are tips for providing feedback to employees in relation to their employment generally. Tips for providing feedback • Be specific: The feedback should address the particular problem identified. Where possible, use particular at-work examples and indicate the corrective action required where that is necessary. • Be timely: Feedback should be given soon after the problem occurs, and in time for improvements to be made, should improvement be required. • Provide regular feedback: Feedback can be provided to an employee at any time, whether it is to reinforce behaviours that comply with expectations or to attempt to rectify those that do not. • Be succinct: Make the important aspects stand out and avoid inundating employees with information. • Be factual: Adopt a factual tone, and do not rely on opinion or hearsay. • Do not generalise: Concentrate on examples which are observable and verifiable, rather than generalisations. • Be constructive rather than negative: Emphasise what to do instead of what not to do. • Concentrate on tasks/behaviours over which an employee can exercise some control. • It’s about performance, it’s not personal: Refer to how the individual is performing the role or task by reference to the relevant performance standards, not attributes of the individual. • Avoid emotive or derogatory terms. • Deal with any emotional or defensive reactions rather than trying to persuade or convince through the provision of additional information.

Pre-review assessments Some formal performance review systems include a component that requires employees to complete a self-assessment prior to a formal performance review. This requires the employee to reflect on their achievements over the performance cycle, and to consider their short and long-term career goals which may, in turn, inform a performance development plan for that employee. The information derived from the self-assessment can also give the reviewer an insight into areas that employees consider need development or improvement over the coming performance cycle. The employee should provide any self-assessment in sufficient time to allow the reviewer to review and consider the self-assessment before the performance review meeting. Preparing for performance review meetings

Even in circumstances where an employee is performing at or above the expected standards, performance review meetings can be difficult for both the employee and the reviewer. One of the main issues faced by reviewers is managing the personal or emotional aspects of a performance review meeting. As such, careful preparation before the performance review meeting will increase the chances of the meeting being constructive for both the employer and the employee, and all of the issues that require discussions being addressed. When preparing for performance review meetings, it is critical that the reviewer: (a) review and understand the applicable performance management policies; including any requirements that may be imposed under applicable industrial instruments (b) review any pre-review self-assessment completed by the employee for the review period (c) review any job descriptions and other documents that may reflect the performance standards against which the employee is to be assessed and their effectiveness (d) consider any current Performance Improvement Plans or other performance management arrangements in place or that were in place during the period under review (e) consider appropriate performance goals and objectives for the employee for the next 12 months (including career progression opportunities), and (f) consult with other employees who are in a position to comment fairly on the employee’s performance to gain an insight into how others perceive the employee’s performance. Tips for preparing for performance review meetings • Be prepared: Reviewers are encouraged to seek information about an employee’s performance from a range of sources, including the employee, in order to prepare for performance review meetings. The reviewer should complete all relevant forms, including preparing a draft Performance Improvement Plan if that is a potential outcome of the review meeting. • Plan the meeting: Carefully plan the meeting. Use the assessment criteria or any assessment form as an outline to guide the meeting. Try to anticipate the employee’s reaction to the performance ratings. Consider how to respond to the employee’s reaction. • Notify the employee in advance: Notify the employee well in advance of the meeting and provide any self-assessment form for completion, allowing plenty of time for the employee to complete that assessment and the reviewer to review it. • Avoid interruption: Pick a meeting time and place where interruptions will be minimised or avoided. A private room should be arranged so that the participants can speak freely without the concern that other employees might overhear. • Allow adequate time: Allow sufficient time to discuss the employee’s performance during the review period and what, if any, strategies will be implemented to improve performance and/or further develop the employee, as appropriate. • Consider the potential outcomes: Have a clear idea as to what the potential outcomes of the meeting may be, including commencement of any formal performance management processes or disciplinary processes, and how they are to be effected.

Conducting performance review meetings As noted above, a difficult issue for reviewers in the performance review process is managing the personal or emotional aspects of that process. The following table sets out some useful tips for reviewers conducting performance review meetings to assist with managing these issues, and to again better ensure that all relevant matters are addressed during that meeting. It is also important for the reviewer to ensure that there is no pre-determination, or perception of predetermination, of the outcome of the performance review before the meeting has taken place and that the employee has a fair and reasonable opportunity to respond to any concerns about their performance. Tips for conducting performance review meetings

• Concentrate on one point at a time: This ensures that all relevant issues are properly addressed. • Criticise constructively: Focus on the steps to be taken to improve an employee’s performance if it does not meet expectations, rather than historical issues. Also note that personal criticisms may result in defensive reactions and the goal of the performance review may be undermined. • Give the employee an opportunity to respond: If there may be an adverse outcome of the meeting (eg the employee is to be placed on a Performance Improvement Plan), then the opportunity to respond is critical to ensuring procedural fairness. • Avoid direct comparisons with other employees: Every employee is different, and comparisons are likely to be unfair and difficult to defend. • Follow up: Ensure that any necessary follow up meetings are scheduled.

Legal risks of performance management The performance management process can present a number of legal risks for an employer, including but not limited to: (a) unfair dismissal claims (b) discrimination and harassment claims (c) bullying claims (d) general protections claims, and (e) claims for damages or compensation and/or potential prosecution and orders for pecuniary penalties if the employer fails to comply with the provisions relating to performance management in a Modern Award, enterprise agreement or employment contract. Each of these risks is discussed below. Discrimination and harassment claims There are a range of discrimination and harassment claims that an employee may make in connection with a performance management process. These claims include that a performance management process was initiated, or disciplinary action taken, on performance grounds because of a specific protected attribute of the employee (such as their age, gender, race, disability or family responsibilities). Other claims may be based on employees arguing that the performance criteria are discriminatory in the way that they are framed or in their application. Discrimination and harassment claims in a performance management context may be pursued under a variety of legislative provisions, including but not limited to anti-discrimination legislation, the general protections provisions in the FW Act and, if the employee’s employment has been terminated, under the unfair dismissal or unlawful termination provisions in the FW Act. The key to avoiding discrimination and harassment claims in a performance management context is to ensure that, to the extent possible, the focus remains on the employee’s ability to perform the inherent requirements of the role and what, if any, reasonable adjustments have or should be made by the employer to assist the employee to meet those requirements. However, in managing the risk of a discrimination claim in conjunction with a performance management process, employers should also be conscious of their obligations to others in the workplace. This is particularly so if the employee’s performance issues relate to their conduct in the workplace which may be the result of an employee’s disability or illness and the employee’s conduct poses a risk to health and safety in the workplace. Bullying claims Claims of bullying in connection with performance management processes have become more prevalent in Australian workplaces in recent years. As explained further in Chapter 4: Conduct Issues, “bullying” is the repeated unreasonable behaviour of

an individual or group of individuals towards a worker that creates a risk to health and safety. However, it is also recognised that employers have a right to direct and control the way that work is carried out on a day-to-day basis; therefore, an employer’s actions will not be considered bullying where performance management is carried out in a “reasonable manner”. There are a variety of actions an employee may take if they believe that they are being bullied in connection with a performance management process, including making a complaint to their employer. Since 1 January 2014, employees have been eligible to apply to the FWC for an order to stop bullying in circumstances where, for example, they reasonably believe that a course of performance management in which they are involved constitutes workplace bullying. It is also open to employees to make complaints to WHS regulators if the alleged behaviour could be said to constitute a risk to health and safety in the workplace. The FWC is also empowered to refer the subject matter of an application for an order to stop bullying to a WHS regulator if it considers such a referral necessary and appropriate. The following case examples provide clarity around circumstances where management action has been found to be “reasonable” and demonstrates how an employer can rely on its processes (where followed correctly) to defend an application for an order to stop bullying successfully. Case examples Reasonable management action Application by Ms SB [2014] FWC 2104 Background In this case, a Delivery Support Team Leader made an application to the FWC for an order to stop bullying. The application was made in respect of the conduct of two of the employee’s subordinates (referred to as “DSO’s”) who separately lodged bullying complaints with HR against the Leader. The employee alleged the complaints were made vexatiously. The employee filed the application in response to learning of the second bullying complaint from the employer’s HR department. The employer subsequently engaged a third party to conduct an independent investigation into the bullying allegations. The employee alleged that the bullying conduct included: • the two separate complaints being made against her • the employer’s decision to investigate the complaints • the employer’s failure to prevent the second complaint occurring • ongoing malicious rumours being spread about her in the workplace, which were perpetuated by her employer failing to notify employees of the outcome of the complaints, and • daily harassment and badgering by the second DSO. Findings The FWC found there was no bullying conduct and clarified the meaning of “reasonable management action” by providing the following guidance: • reasonableness should be determined objectively and with reference to the context in which the management action was taken and the knowledge of those involved at the time • the relevant test is whether management action was reasonable as opposed to whether it could have been undertaken in a “more reasonable” or “more acceptable” way • the emotional and psychological health of the person alleging the bullying conduct should be considered • management action does not need to be perfect or ideal to be reasonable and may still be reasonable even if particular steps in an overall course of action taken are not • reasonableness must be lawful and not irrational, absurd or ridiculous, and • the reasonableness of management action should not be based on the employee’s perception of the action, but must arise from the actual management action in question. Application by Mohamed Aly [2015] FWC 4419 Background In this case, a Customer Assist Officer employed by Commsec made an application to the FWC to stop bullying, alleging that Commsec unjustifiably placed him on a performance management plan, that he was unnecessarily micro-managed and that false and unjust claims were made about his conduct in an effort to force him to resign from his employment. Commsec argued that it

undertook reasonable management action in respect of the employee’s performance deficiencies. The employee was subject to KPIs that required him to, among other things, comply with strict legislative obligations and adhere to average handling times for customer calls. Initially, informal discussions were held with the employee when his performance began to decline and a series of action plans were put into place to improve his performance over a year. When the employee’s performance remained sub-par over a year later, a formal performance management process was commenced. The employee worked three days per week and was required to meet with his supervisor for regular coaching and in relation to the performance review, two of those three days. The employee’s view was that this was excessive and that he was being held to a higher standard of performance than other employees in his position. Findings In dismissing the bullying application, the FWC found that: • Commsec’s actions in performance managing the employee constituted reasonable management action and as such, no orders to stop bullying could be made • Commsec had grounds to place the employee on a performance improvement plan. Commsec had well established KPIs for all Customer Assistant Officers and the employee was aware of them • there were also a range of standard procedures that Commsec had in place for dealing with underperformance and the employee’s consistent failure to meet the KPIs was managed in accordance with those procedures, and • there was no objective evidence to suggest the employee had been held to a higher standard than others in the same position. As such, the management action taken could not be considered bullying, even if the employee disagreed with the action taken. The employee made an application for leave to appeal the decision of the FWC at first instance. The Full Bench of the Commission declined to grant permission for the employee to appeal. MJ [2020] FWC 2572 Background The employee brought an application for an order for his team leader to stop bullying. He alleged that his manager’s comments were belittling and undermining, that he had threatened him by saying he could have lost his job and he ostracised him by instructing him not to contact a set of users. The employer argued that the alleged bullying conduct amounted to reasonable management action. Findings The FWC dismissed the claim as it found that the conduct complained of constituted reasonable management action carried out in a reasonable manner. The test for whether management action was reasonable is not whether it could have been undertaken in a manner that was “more reasonable” or “more acceptable”. Deputy President Kovacic stated that “[i]n general terms this is likely to mean that: • management actions do not need to be perfect or ideal to be considered reasonable; • a course of action may still be ‘reasonable action’ even if particular steps are not; • to be considered reasonable, the action must also be lawful and not be ‘irrational, absurd or ridiculous’; • any ‘unreasonableness’ must arise from the actual management action in question, rather than the applicant’s perception of it; and • consideration may be given as to whether the management action involved a significant departure from established policies or procedures, and, if so, whether the departure was reasonable in the circumstances.” Amie Mac v Bank of Queensland Limited [2015] FWC 774 Background Due to its concerns with an employee’s work performance, the employer put the employee on a Performance Improvement Plan (PIP). The employer explained to the employee that the PIP process may result in the termination of her employment after three warnings. The employer had a written performance management policy, but this policy made no reference to the PIP process. The employee’s performance still did not improve. When asked to attend a formal meeting to discuss her performance, the employee lodged a bullying application with the FWC. Findings The issue in this case was whether or not the management action undertaken by the employer was “reasonable” in the circumstances. The FWC found that, in order to be considered unreasonable, an act or decision would need to “lack an evident and intelligible justification”. The Commission went on to find that the actions of the employer were not unreasonable, given the problems with the employee’s performance. While the FWC observed that it was unsatisfactory that the PIP process was not referred to in the employer’s performance management policy, this did not make the management action unreasonable.

General protections claims

Employees may seek to make claims under the general protections provisions of the FW Act in relation to any performance management process initiated against them, seeking to characterise the performance management as “adverse action”. For example, an employee may believe that they are being performance managed because they have sought to exercise a workplace right (including but not limited to accessing various leave entitlements), made a complaint in relation to their employment, or because they have engaged in industrial activity. Such claims expose employers to the risk of prosecution, payment of compensation (including compensation for hurt, humiliation and distress) and the imposition of pecuniary penalties. Failure to comply with Modern Award, enterprise agreement or employment contract Modern Awards, enterprise agreements and/or employment contracts may contain provisions relating to performance management. This includes any performance management policies of an employer that are incorporated into these instruments under the terms of those instruments. If the terms of any of these instruments mandate that certain steps be taken in a performance management process for an employee, then those steps must be complied with or an employer may face claims for breach of those instruments and, potentially, payment of damages or compensation for any loss or damage suffered by the employee as a result of this failure. Breaches of an enterprise agreement or a Modern Award may also attract pecuniary penalties. Case example Enterprise agreement dispute Alan Champion v IGA Distribution (Vic) Pty Ltd [2012] FWAFB 9782 Background Mr Champion, a storeman with IGA, was issued with a written warning in relation to his poor performance and failure to meet the company’s benchmarks under an “engineered labour standard” work system (which identifies the time required for an employee to complete the assembly of an order). The employee’s union lodged an application on his behalf, claiming that the warning was invalid and that IGA was not entitled to issue the warning under the relevant enterprise agreement. They further claimed that by doing so, IGA had breached the terms of the enterprise agreement. Specifically, the union claimed that the relevant clauses limited IGA’s ability to discipline or otherwise sanction employees who failed to meet benchmarks, since performance against targets were only allowed to be included in performance assessments on an “indicative basis” and that employees could not have their employment terminated “merely” on the basis that they had not met their targets, under the provisions of the enterprise agreement. Findings The FWC at first instance and on appeal to the full bench held that the warning was valid and that the enterprise agreement permitted IGA to issue the warning to Mr Champion. In particular, the full bench found that on a proper reading of the warning, it was apparent that the warning had been provided because of Mr Champion’s unsatisfactory work performance. Examples of this included his persistent departure from IGA’s Standard Operating Procedures despite weekly support sessions with his supervisor, and not because he had failed to meet his targets. While the warning issued to Mr Champion did refer to his performance against targets, it was found that this inclusion was on an indicative basis only and therefore permitted under the enterprise agreement. Accordingly, Mr Champion’s appeal was dismissed.

Managing the legal risks To minimise the risk associated with performance management, there are a number of strategies that an employer can adopt, including but not limited to those outlined in the table below. Tips for managing legal risks • Developing a performance management system underpinned by clear and objective performance criteria (to the extent such objectivity is possible) consistent with the duties attaching to a role, any relevant employment contract, industrial instrument and/or policies and the custom and practice of the employer. • Ensuring that performance criteria do not have potentially discriminatory application to individual employees or groups of employees (eg criteria relating to the taking of personal/carer’s leave may discriminate against those with health problems or carer’s responsibilities). • Educating employees and their managers (who will typically be the reviewers) in the standards of performance expected, how the performance reviews will be conducted and what will constitute reasonable management action.

• Observe and apply established policies and procedures for performance management consistently among employees and avoid departing from policies and procedures unless exceptional circumstances arise. • Training managers in how to manage the performance of employees effectively, consistent with best practice. This includes reinforcing with managers the importance of ongoing performance management, and providing training in the practical aspects of performance management (including having “difficult discussions” with employees about performance where necessary and appropriate). All too frequently, managers avoid having difficult discussions with employees or committing their views about an employee’s performance to writing due to their discomfort and the risk of negative reactions from the employee. This in turn may prejudice the employer’s ability to manage an employee’s performance issues effectively and for the benefit of the employer’s business. • Addressing performance issues as they arise, in a timely manner as failure to do so may prejudice an employer’s ability to address those issues, and to justify any disciplinary action taken at a later date. The case example below demonstrates the importance of an employer responding to performance concerns in a timely manner. • Applying the performance management system consistently to all employees (including the performance criteria). Lack of consistency or parity in the application of the performance management system may increase the risk of legal claims and have implications in the work environment. • Providing employees with a reasonable opportunity to improve the aspects of their performance that are of concern, and establishing clear and achievable goals. • Documenting all performance management discussions: As contemporaneous records are typically considered as the best evidence of performance management discussions. • Maintaining complete and accurate documentation: To the extent possible, all records and documents must: • be accurate and properly reflect the employer’s position about the employee’s performance, including any concerns about their performance • reflect outcomes based on consideration of objective facts rather than subjective opinions, and • be countersigned by the employee as acknowledgement of the concerns raised and discussed.

Specific issues in performance management Managing long-term performance issues On occasion, there may be situations where an employer has not addressed longstanding performance concerns in relation to an employee, which in turn may be impacting on the employer’s ability to manage more immediate performance concerns held in relation to the employee. Irrespective of the reasons for it, failure to properly manage long-term performance issues may have significant implications for the employer, as inactivity on the employer’s part can be perceived by employees and by the courts or tribunals as acquiescing or tolerating performance deficiencies. Where this has occurred, the employer will need to make a decision about how to manage the employee’s employment moving forward. The options available to the employer include performance managing or disciplining the employee based on matters including the employee’s performance historically. Another option is to draw a line in the sand in relation to the employee’s historical performance issues and effectively start again. In doing so, care must be taken not to rely on or be perceived to have relied on any matters that are understood to be no longer relevant. The management strategy selected will ultimately be determined by the relative risk of that strategy for the employer. The best way of avoiding such a situation is to address performance issues as they arise. Interaction between performance management and managing ill/injured employees In some circumstances, an employer may need to adapt its approach to the performance management of an employee to accommodate an employee’s injury or illness. This may include but is not limited to the employer altering the performance criteria for the employee to take into account any reasonable adjustments that were required to the employee’s employment as a consequence of their illness or injury. Failure to do so may expose the employer to legal claims of, among other things, unlawful discrimination and/or adverse action. There may also be circumstances where the initiation of performance management action against an employee results in the employee being absent from the workplace and taking personal leave. The FW Act grants protections for employees who are absent from the workplace on account of injury or illness,

provided they comply with the notification requirements and can provide evidence of that injury or illness. For further guidance, see Chapter ¶6: Managing Ill and Injured Employees for more information. Support people and performance management From time to time, an employee may make a request to have a support person present at a performancerelated meeting. Whether or not an employer is required to accede to this request will typically be determined by the employer’s performance management policies (or the terms of an enterprise agreement, if applicable). There is no “legal” entitlement for an employee to be permitted to have a support person at a performance management meeting unless that meeting involves a discussion that relates to the termination of the employee’s employment (as this is a factor considered by the FWC in unfair dismissal matters) or this is otherwise provided for in the employee’s contract of employment. Absent any requirement imposed by legislation, policy or an employment contract, the approach that it is recommended employers adopt is that if a performance meeting will involve disciplinary action such as termination of employment being taken against the employee, then the employee should be notified of their right to have a support person present at the meeting. However, it is expected in all other circumstances that employees will conduct their performance meetings without a support person as their performance is essentially a matter between the employee and their employer. The role of a support person in a performance management context is just that — to provide support to the employee. It is not to act as an advocate for the employee (ie to speak on the employee’s behalf). This was confirmed in the following case example. Case example Role of a support person Victorian Association for the Teaching of English Inc v Debra de Laps [2014] FWCFB 613 Background An employer sought to put a number of allegations to an employee. The employee was sent a letter requesting her attendance at a meeting “to discuss her performance and conduct during her employment”. The letter stated: “You may bring a support person if you wish. Please note that the role of the support person is to provide you with emotional support. The support person is not to act as your advocate and should not speak on your behalf.” The meeting was scheduled for two days after the letter was sent. The employee replied with a letter which protested against the failure to provide particulars of the allegations, the refusal to permit an advocate and the short timeframe. The employer then sent another letter setting out 22 allegations against the employee and providing her with three days in which to respond. In response to the second letter, the employee gave notice of resignation. Following the termination of her employment, the employee brought an unfair dismissal claim. Findings The employer made a jurisdictional objection on the basis that the employee had resigned from her employment and therefore had not been “dismissed”. The employee argued that she had been constructively dismissed as a result of the employer’s failure to provide her with procedural fairness. The Full Bench of the FWC relevantly found that there is no right for employees to elect to be accompanied by an “advocate”. “Under the FW Act, in considering whether a dismissal was harsh, unjust or unreasonable, the Commission is required to take into account ‘any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal’. Given that legislative provision and in the absence of any other obligation to allow an advocate, we do not think a refusal by [the employer] to allow Ms de Laps an advocate at the meeting on 17 December 2012 can be regarded as constituting an element of procedural unfairness.”

Prior to permitting an employee to invite a support person to a performance meeting, it is recommended that the employer request the name of that support person to allow the employer the opportunity to assess and determine the appropriateness of the attendance of that support person at the meeting. Unexplained or ongoing absenteeism Unexplained or ongoing absenteeism from the workplace is an issue that confronts employers from time to time and one that must be managed appropriately so that the operational requirements of the employer are not adversely impacted by the employee’s absence.

The strategies adopted by employers in response to unexplained or ongoing absenteeism will likely be determined by the reasons for the employee’s absences. The employer should make enquiries with the employee about the reasons for the absences (a discussion which it is recommended be supported by factual evidence relating to the employee’s absences from work, such as their leave records) and then decide how best to manage the situation. This may include providing the employee with additional support and assistance (temporary or ongoing) or, where the reasons may include a medical condition, seeking additional information from the employee and/or their treating practitioners in order to understand the impact of that condition, if any, on the employee’s ability to perform the inherent requirements of their role and whether any reasonable adjustments are required to be made. If employees are absent without approval or without a reasonable excuse, they may need to be counselled or a performance management process commenced and, if the behaviour continues, the absenteeism may form a valid reason for termination of the employment relationship.

Conduct Issues Introduction This Chapter provides an overview of misconduct issues that arise within an employer’s organisation from time to time, such as workplace bullying, sexual harassment, assault, theft, alcohol and drug use and misuse of electronic communications. This Chapter also examines the risks of not appropriately managing and preventing misconduct when it arises, and the steps that employers can take to manage those risks.

Workplace bullying The term “workplace bullying” is an emotive term which attracts negative connotations. While the term is being used increasingly to describe poor behaviour in the workplace, it has a specific legal meaning and there are serious consequences attaching to a finding that workplace bullying has occurred. It is therefore critical that employers and employees appreciate that workplace bullying is a rapidly developing area of the law, and that what does and does not constitute “workplace bullying” may be viewed differently by individuals in a workplace. This section explores what is, and what is not, “workplace bullying” and the steps that an employer can take to manage and prevent workplace bullying. What is “workplace bullying”? There is no single universally accepted definition of “workplace bullying”. However, guidance for employers is provided in the definition of “workplace bullying” that has been adopted in the anti-bullying provisions of the FW Act. Under the anti-bullying provisions in the FW Act (which came into effect on 1 January 2014), “workplace bullying” is said to occur when an individual or group of individuals repeatedly behaves unreasonably towards a worker or a group of workers at work, and the behaviour creates a risk to health and safety. Specifically excluded from the definition of workplace bullying is “reasonable management action conducted in a reasonable manner”. The term “worker” is broadly defined under the anti-bullying provisions in the FW Act to include employees, contractors, subcontractors, outworkers, apprentices, trainees, work experience students and volunteers. The phrase “at work” has also been interpreted broadly. The following case example provides some guidance as to what may be considered to be workplace bullying occurring “at work”. Case example When is bullying considered to be “at work”? Bowker; Coombe; Zwarts v DP World Melbourne Limited [2014] FWCFB 9227 Background Three employees sought a “stop bullying” order from the FWC and a finding that bullying had occurred while at work. Some of the alleged incidents involved Facebook messages and phone calls when the employees were not physically on site. Findings The full bench determined that the term “at work” included phone calls outside of the normal working hours while an employee is at home. It also found that Facebook posts, which were accessed during work, could also be considered “at work” and that it did not matter if they were posted outside of work hours.

Examples of conduct that may amount to “workplace bullying” are: (a) aggressive and intimidating conduct

(b) belittling or humiliating comment (c) victimisation (d) spreading malicious rumours (e) practical jokes or initiation (f) exclusion from work-related events, and (g) unreasonable work expectations. The case law in relation to “workplace bullying” is continuing to evolve. Further information about what constitutes “workplace bullying” within the meaning of the FW Act can be found in the Anti-Bullying Benchbook published by the FWC (www.fwc.gov.au). It should also be remembered that even if an employee’s behaviour does not strictly meet the definition of “workplace bullying”, it may nevertheless amount to conduct that is inconsistent with an employer’s policies and may warrant investigation and/or disciplinary action. Employers have an obligation to make clear that the behaviours in question will not be tolerated or condoned, consistent with their obligation to provide a safe and healthy workplace. What is not “workplace bullying”? As noted above, “reasonable management action conducted in a reasonable manner” is specifically excluded from the definition of “workplace bullying” in the anti-bullying provisions of the FW Act. This exclusion reflects the basic premise that the employer has rights and obligations to take appropriate management action and make appropriate management decisions. Examples of “reasonable management action” may include: (a) responding to poor performance (b) directing and controlling the way work is carried out (c) allocating work (d) providing fair and constructive feedback on a worker’s performance, or (e) taking disciplinary action if necessary. These actions will not be considered to be workplace bullying if they are carried out on behalf of the employer in a reasonable manner that takes into account the circumstances of the case and does not leave the employee feeling victimised or humiliated. How do employers minimise workplace bullying risks? It is not enough for employers to have a policy stating that the employer does not tolerate workplace bullying in order to minimise that employer’s potential legal exposure. If a claim of workplace bullying is made against an employer, a court or tribunal will examine whether the employer took reasonable steps to prevent or manage the conduct. Examples of the steps that a court or tribunal may reasonably expect an employer to take are set out in the table below. Tips for minimising bullying risks

Sexual harassment Sexual harassment in the workplace is unlawful, and an employer may be vicariously liable for sexual harassment engaged in by employees in connection with their employment unless it takes steps to manage and prevent such behaviours. This section examines the concept of sexual harassment, the forms that sexual harassment may take and who is liable for sexual harassment in the workplace (including sexual harassment that may occur at offsite events or out of hours). It also examines the specific risks for employers attaching to workplace “romances.” As reflected in a number of the case examples set out below, it is important to remember that not only are there legal consequences attaching to sexual harassment, but that the same behaviours may also give rise to other separate legal claims, such as a sex discrimination claim. This once again highlights the importance of the employer eradicating these types of behaviours from the workplace to the extent that it is reasonably able. What is sexual harassment? While the precise requirements vary across jurisdictions, the term “sexual harassment” generally refers to any unwelcome sexual advances, unwelcome requests for sexual favours or other unwelcome conduct of a sexual nature towards a person in circumstances where a reasonable person would have anticipated the possibility that the person would be offended, humiliated or intimidated by that conduct. Each of the elements of the definition of “sexual harassment” is discussed further below.

Unlike workplace bullying, it is not necessary for conduct to be repeated for it to constitute sexual harassment. One-off incidents can still constitute sexual harassment. Further, while a large proportion of sexual harassment cases involve a person of one sex harassing a person of the opposite sex, the

protections also extend to sexual harassment of persons of the same sex as the perpetrator. Some conduct that amounts to sexual harassment may also amount to conduct of a criminal nature (eg sexual assault or indecent exposure). In circumstances where an employer becomes aware of conduct that may be criminal in nature, the employer must consider its obligations to report that conduct to the relevant authorities. Case examples When does a romantic interest become sexual harassment? Aleksovski v Australia Asia Aerospace Pty Ltd [2002] FMCA 81 Background An employee told a fellow employee he was in love with her, invited her to his home and, after she declined, verbally abused her and criticised her partner (who was also employed at the same company). The employee claimed she had been sexually harassed, and soon after she made a complaint, her position was made redundant. The employee’s colleague argued that while his conduct was unwanted, it was not “conduct of a sexual nature” and could not constitute sexual harassment. Findings The Federal Magistrates Court found the colleague’s conduct in declaring his love for the woman was “conduct of a sexual nature” and the woman had consequently been subjected to sexual harassment. Same sex harassment Thomas v Alexiou [2008] VCAT 2264 Background An apprentice successfully brought a sexual harassment claim against a male supervisor. The apprentice was employed for over three years and alleged that he was regularly harassed throughout his employment. This harassment included his supervisor asking him to join him in the shower, repeatedly grabbing him by the genitals, pretending to drag him into the shower, trapping him up against a water tank, and simulating sex while making pig noises. Findings The Tribunal accepted that the form of the harassment was not about the supervisor seeking a sexual relationship with the complainant or the supervisor obtaining sexual gratification from the events. Nevertheless, the occurrences were found to constitute sexual harassment under the applicable legislation as each amounted to unwelcome conduct and met the “reasonable person” test. The Tribunal awarded the complainant $35,000 in damages.

Types of sexual harassment In practice, most instances of sexual harassment in the workplace fall within one of two main types — “quid pro quo” and “hostile work environment”. Each of these is discussed further below. Quid pro quo sexual harassment In the context of sexual harassment, the term “quid pro quo” is used to describe situations in the workplace where an employee’s terms and conditions of employment are affected, either expressly or implicitly, by the employee’s acceptance or rejection of the sexual advances of the alleged perpetrator. “Quid pro quo” sexual harassment is most likely to arise where there is a power imbalance between the individuals involved, such as between a manager and a direct report. A manager using his/her ostensible authority to hire, promote or discipline an employee, or continue an employee’s employment, on condition that the employee accepts the sexual advances of, or participates in sexual conduct with that manager, is an example of “quid pro quo” sexual harassment. Case example “Quid pro quo” sexual harassment Elliott v Nanda & Commonwealth [2001] FCA 418 Background A female receptionist at a doctor’s surgery made various allegations of “quid pro quo” sexual harassment, such as being asked how much money it would take for her to perform sexual favours for her supervisor. The receptionist was subjected to comments about her appearance, and her supervisor attempted to kiss her, touched her on the breasts and bottom, and engaged in sexually explicit conversation and comments. Findings The sexual harassment and sex discrimination claims were successful. The employee was awarded approximately $20,000 in

damages.

Hostile work environment A workplace that is perceived as being sexually charged or “hostile” towards a particular sex may provide grounds for sexual harassment and/or sex discrimination claims, depending upon the circumstances. Factors that may lead to a hostile work environment include regular sexual banter or innuendo, offensive jokes being told or circulated via email, sexually explicit conversations, constant use of obscene or foul language and the display of pornography or other sexually inappropriate material. Case example Pornographic posters at a workplace Horne v Press Clough Joint Venture [1994] EOC 92-556 Background Two female employees worked in an area with pornographic posters on display. When the employees complained after a particularly explicit poster was put up, they were allegedly vilified as a result of making the complaint. The pornography on display became increasingly explicit and there was offensive graffiti about the women in workplace toilets. One woman was harassed at the annual Christmas party to the point where she had to lock herself in a storeroom for safety. Both women resigned. Findings The employer was found to be vicariously liable for the sexual harassment, and the union was found to be an accessory. The court awarded the employees $92,000 in damages.

Examples of sexual harassment While the outcome of each case will depend upon its facts and circumstances, the table below sets out the types of conduct (physical and non-physical), that Australian courts and tribunals have found may amount to sexual harassment.

Liability for sexual harassment Individual employees who are found to have engaged in sexual harassment are liable for their conduct, and may be exposed to an award of damages if a legal claim is made against them. Such conduct may also result in disciplinary action being taken against the employee, up to and including termination of their employment. In addition, employees who aid and abet other employees in engaging in sexual harassment, or are perceived to have aided or abetted other employees in engaging in sexual harassment, may also find themselves exposed to payment of damages and/or disciplinary action. This includes other employees, particularly those who have supervisory responsibilities, who turn a blind eye to the behaviour. Under anti-discrimination legislation, an employer will be vicariously liable for any sexual harassment engaged in by one of its employees in the workplace unless it can establish it has taken all reasonable steps to prevent the sexual harassment from occurring. Recent case law in this area demonstrates an increasing onus on employers in terms of the “reasonable” steps an employer must take in order to avoid being found be to be vicariously liable for the conduct of their employees. That same case law has also indicated that the courts are becoming increasingly willing to impose more significant penalties on employers who fail to meet their obligations in this regard.

Case example Vicarious liability for sexual harassment engaged in by employees Richardson v Oracle Corporation [2014] FCAFC 82 Background Ms Richardson made allegations of sexual harassment against one of her colleagues at Oracle. The colleague, Mr Tucker, was said to have over a period of some time, during meetings with other Oracle colleagues and external clients, made comments to Ms Richardson to the effect of: “Gosh, Rebecca, you and I fight so much … I think we must have been married in our last life” (during their first team meeting) and “we should go away for a dirty weekend sometime”. Ms Richardson complained about Mr Tucker’s behaviour, which Oracle investigated. Mr Tucker was issued with a first and final warning, and he and Ms Richardson were separated at work, with Ms Richardson assigned to work on special projects. She considered this a demotion, and not long after submitted her resignation as she considered that she had no future at Oracle. In her resignation, Ms Richardson alleged that she had been victimised and forced to resign. She also later claimed that she had suffered an “adjustment disorder” as a consequence of her experiences. In the Federal Court, Ms Richardson claimed Oracle was vicariously liable for the sexual harassment engaged in by Mr Tucker, and sought damages in the vicinity of $450,000. The court ultimately found that Mr Tucker had engaged in the sexual harassment of Ms Richardson, and was therefore required to consider whether Oracle was vicariously liable for that conduct. In defending the claim of vicarious liability, Oracle pointed towards its “Code of Ethics and Business Conduct” policy, which all employees received on commencing employment with Oracle, and its requirement that all employees undertake online sexual harassment training every two years, together with the apparent effectiveness of its investigation policies and the disciplinary action taken against Mr Tucker. However, Justice Buchanan found the policy — which had since been updated — was inadequate because it did not state that sexual harassment was against the law, nor did it identify the source of that legal standard (eg the relevant legislation). The judge stated: “In my view, advice in clear terms that sexual harassment is against the law, and identification of the source of the relevant legal standard, is a significant additional element to bring to the attention of employees in addition to a statement that sexual harassment is against company policy, no matter how firmly the consequences for breach of company policy might be stated.” His Honour continued that: “the omission of these important and easily included aspects from Oracle’s statements of its own policies is a sufficient indication that Oracle had not, before November 2008 at least, taken all reasonable steps to prevent sexual harassment. I do not need to decide if the new policy is now adequate. The previous training package was not. It follows that Oracle did not make out its defence under s 106 of the SD Act and is vicariously liable for Mr Tucker’s conduct”. The court ordered Oracle to pay Ms Richardson $18,000 in damages for pain and suffering, but rejected Ms Richardson’s claims in respect of non-economic loss. Ms Richardson appealed the award of damages. Decision On appeal, the Full Federal Court found community standards now demand higher compensation for non-economic loss in sexual harassment cases, and increased Ms Richardson’s overall damages award to $130,000.

Does “in connection with employment” mean only in the physical confines of the workplace? An employer’s potential liability in respect of sexual harassment that occurs within the physical confines of the workplace is clear. One of the key questions that the courts have considered recently is the extent of an employer’s potential liability for sexual harassment engaged in by employees outside work hours and/or the physical confines of the workplace (eg at off-site events). The short answer is that an employer’s liability for sexual harassment engaged in by the employees is not limited to what happens within the physical confines of the workplace. An employer may be vicariously liable for conduct engaged in by employees outside of the workplace or during “out of hours” events if it is deemed to occur “in connection with” their employment, unless it is able to establish that it has taken all reasonable steps to prevent that conduct from occurring. Employees may attend a variety of work-related events or activities outside of normal working hours and/or off-site. This can include post-work drinks, conferences and training seminars or functions organised by the employer, client networking functions and parties, team-building activities, travel for employer purposes and corporate sporting competitions. It can sometimes be unclear whether these activities are work-related or have occurred in the employee’s own private time. As illustrated by the case example below, it is important that an employer establishes clear boundaries between work and the private lives of its employees and sets clear expectations as to the conduct of employees at events “in connection with” their employment.

Case example Sexual harassment “in connection with” employment Lee v Smith & Ors [2007] FMCA 59 Background A female employee at the Australian Defence Force claimed that her co-worker (the “perpetrator”) had sexually harassed her. The alleged harassment included physical contact, requests for sex, pornographic messages and displays of pornography. A few weeks later, the employee attended an after-work dinner at the home of two of her co-workers, which the perpetrator also attended. The employee fell unconscious after drinking alcohol at her co-workers’ place and the perpetrator sexually assaulted her. Findings The court found that the sexual assault was the culmination of a series of incidents of sexual harassment in the workplace by the perpetrator. The court found that the employer was vicariously liable for the actions of its employees as it failed to take all reasonable steps to prevent sexual harassment from occurring, including failing to implement its comprehensive equity and diversity policies. The employee was awarded over $400,000 in damages.

Workplace romances One area that employers traditionally experience difficulty managing in the context of their responsibilities in relation to sexual harassment and sex discrimination is “romantic” relationships between work colleagues. The following table sets out tips for managing these types of relationships. Tips for managing romantic relationships between work colleagues

In March 2020, the Australian Human Rights Commission released its comprehensive report of the National Inquiry into Sexual Harassment in Australian Workplaces 2020. This report made a number of significant findings and recommendations relating to the regulation of sexual harassment in Australian workplaces and for changes to the current domestic legal and regulatory framework that exists in Australia. While the recommendations are yet to become law, it is likely that there may be some regulatory changes which will come about as a result of this report in relation to the area of sexual harassment in the workplace. #MeToo movement There have always been issues of sexual harassment in workplaces across the globe. The scale of the problem has been revealed in recent years through the work of the #MeToo movement. The #MeToo movement famously began when Hollywood actress Alyssa Milano tweeted, “If all the women who have ever been sexually harassed or assaulted wrote ‘Me too,’ as a status, we might give people a sense of the magnitude of the problem.” This movement has prompted women from around the world to come forward by posting the hashtag, raising awareness on the scale and impact of sexual harassment and creating a global dialogue around the issue. It has highlighted the fact that sexual harassment is one of the most significant global employment law issues.

Misuse of IT facilities and social media The email and IT facilities of an employer (which include but are not limited to its computer and telephone systems) present one of the biggest areas of potential risk for employers. The risks arising from the misuse of IT facilities and social media are significant, and will likely continue to increase as a result of: (a) increasing reliance on, and accessibility of, technology inside and outside the workplace (b) further blurring of the lines between employees’ work and private lives, and (c) the potential consequences for the employer of employees misusing this technology, including significant financial and/or reputational risks depending on the nature and extent of the misuse. Employers must therefore seek to manage the ongoing challenges presented by these issues in order to minimise their risk profile. This section looks at the key areas of email and use of IT facilities and the impact of social media, as well as the steps that the employer can take to minimise the risks in these areas. In short, to combat the risks presented by the increasing use of technology, an employer must establish and communicate clear guidelines around what it will and will not tolerate in the context of the use of its email and IT facilities and social media by employees, and apply and enforce those guidelines consistently. This will help to build a strong culture and awareness that the employer will not condone misuse of its email and IT facilities or the employer being put at risk by what employees are posting on social media. Use of email and IT facilities Developing technology allows employees with access to these facilities to communicate more readily than ever before. While this may facilitate the operation of the employer’s business, it also involves a greater risk that employees may engage in behaviour that could result in significant damage to the business from a legal, financial or reputational perspective. Such risks may include employees sending emails or text messages that may be inappropriate, including where the emails or text messages could form the basis of a bullying or harassment complaint, or the volume of emails or text messages being sent impacting on the employee’s capacity to perform their role. Inappropriate emails or text messages may also include explicit or pornographic imaging that has the potential to give rise to sexual harassment complaints. The prevalence of such material on an employer’s IT facilities and any failure by the employer to address the transmission of inappropriate content via email or text messages, may give rise to the perception that the employer condones such conduct and impact on the employer’s ability to address such matters, including via disciplinary action, in the future. The steps that an employer can take in respect of preventing or managing employee misuse of its email and IT facilities, including termination of an employee’s employment, will depend on the circumstances. The following case example demonstrates the importance of setting clear expectations about the use of email and IT facilities and communicating those expectations effectively to employees. Case examples Computer email misuse Australia Post v Rushiti [2012] FWAFB 7423 Background An employee was dismissed after sending six pornographic emails to an external party from his work email account. The employee was formerly employed as a driver and had only recently been given access to a work computer as part of a return to work program. The content of the emails were in clear breach of Australia Post’s policy on email use. The employee argued that he only forwarded the emails sent to him by other Australia Post employees after being shown how to do so by another workmate. The employee made an unfair dismissal claim. At first instance, the FWC found that the employee had been unfairly dismissed. Australia Post appealed that decision.

Findings On appeal, the full bench ruled that the dismissal was justified in the circumstances. The full bench noted that the employee did have an unblemished record of over 12 years of service and there was evidence of a workplace culture that tolerated sending inappropriate emails. However, Australia Post also had provided the employee with training and information on Australia Post’s policies on sending pornographic and sexually-related materials and arranged a pop-up box to appear every time employees turned on their computer, warning of the consequences of misusing the IT facilities. Clear IT usage policy If an employer fails to provide a clearly articulated policy on appropriate IT system use or to follow a fair procedure, the dismissal may be found to be harsh notwithstanding the serious misconduct. Croft v Smarter Insurance Brokers Pty Ltd [2016] FWC 6859 Background Croft was dismissed after having worked for the employer for just over one year as a General Insurance Manager. The employer had relied on a clause in his contract in terms of which it was entitled to terminate his employment on four weeks’ notice without having to provide a reason. Subsequent to his dismissal, the employer found evidence of the employee downloading pornographic material on his work computer. Findings The FWC found that the employer had relied on an invalid clause in the contract. An employer cannot contract out of its statutory duty to provide a fair reason for termination. Commissioner Cambridge made it clear that inappropriate use of an employer’s IT systems was serious misconduct “particularly if such conduct occurred in breach of the clearly stated and understood policy of the employer, an employee could expect to be disciplined or even dismissed for deliberately accessing, downloading and/or storing hard-core pornographic material on the employer's equipment, whether such conduct occurred within or outside of the ordinary hours of work”. This case reaffirms the established position that misconduct that comes to light after a termination can be relied on as a reason for termination. However, it was held that, in this instance, the employer was unable to justify the dismissal based on its discovery of pornographic material on the employee’s company laptop and phone. This was partly because there was no policy regulating employees’ use of company equipment, again reinforcing the value of properly implemented policy documentation.

Social media The increased use and accessibility of social media to employees in recent years poses a number of risks for employers. These include but are not limited to: • the need to discipline or terminate the employment of employees for comments or posts made by them on social media either in a personal or professional capacity • potential vicarious liability for bullying, sexual harassment or discrimination which occurs online • possible reputational risk and damage to corporate branding arising out of disparaging comments, photos, videos or blogs published by an employee, or disclosure of confidential information or trade secrets, and • use of social media during work hours impacting on productivity. One of the more significant questions that employers have grappled with in recent years is whether employees should be disciplined for “private” comments on social media platforms such as Facebook or Twitter, made in their own time and using their own resources. However, various decisions of the courts and tribunals have made it clear that employees may be accountable for these comments in the context of their employment. If there is a sufficient connection between the inappropriate conduct and an employee’s employment, disciplinary action up to and including termination of employment may be an appropriate step even if the conduct occurs outside of work hours using private resources. This is especially so if the comments refer directly to the employer, or where the employer may be held to be vicariously liable for offensive comments made by the employee. The following case examples illustrate some of the risks associated with social media use in a workplace context. Case examples Homophobic comments on Instagram Israel Folau This case involved a well-known rugby player, who was contracted to play for Rugby Australia and Rugby NSW. The applicant, a

self-proclaimed devout Christian, made posts on his Instagram account that were intolerant towards homosexuals, which breached the Rugby Australia code of conduct that applied to him. This conduct was also in contravention of a direction from one of his employers, Rugby Australia not to engage in such conduct following similar previous conduct. After a highly publicised tribunal process, Mr Folau was found to have committed a high-level breach of his contract and Rugby Australia terminated his employment. Mr Folau subsequently challenged his termination in the Federal Circuit Court suing both Rugby Australia and Rugby NSW on the grounds that he was terminated due to his religious beliefs and that this was in breach of the religious protections in the FW Act. The parties settled the dispute prior to the hearing and Folau was paid an undisclosed amount in terms of the settlement. Critical comments about employer on Twitter Comcare v Banerji [2019] HCA 23 Background Banerji, an Australian Public Service (APS) employee, was employed by the Department of Immigration and Citizenship (the Department). She posted more than 9,000 anonymous Tweets which were highly critical of the Department. She was dismissed for breaching the APS Code of Conduct which requires employees to uphold the APS values, including being apolitical, impartial and professional in the way it performs its functions. Findings The High Court upheld the dismissal. In doing so it reaffirmed that the implied freedom of political communication in the Australian Constitution was not a personal right of free speech. Critical comments about clients on TV Rumble v The Partnership t/a HWL Ebsworth Lawyers [2020] FCAFC 37 Background Rumble was a lawyer employed, on a consultant basis at HWL Ebsworth (the Firm). The Firm had introduced a policy that required its partners and staff not to engage in “criticisms of the firm’s clients” without the permission of the Managing Partner. Rumble wrote an opinion piece in the Sydney Morning Herald and the Canberra Times in which he criticised a client of the Firm. He also made several public remarks about the Firm’s clients. He was warned expressly to stop publicly criticising the Firm's clients. Notwithstanding this, Rumble continued to disparage them. Finding Rumble argued that he had been unlawfully dismissed and discriminated against based on his political opinion. The Federal Court found that Mr Rumble’s services were not terminated due to his political opinion, but because he had “ repeatedly disobeyed a reasonable direction to cease criticising the firm’s clients.” There was a three-month notice clause in the agreement with Rumble, and the Firm was entitled to give Rumble notice. Threatening comments on Facebook Damian O’Keefe v Williams Muir’s Pty Limited T/A Troy Williams The Good Guys [2011] FWA 5311 Background This case involved an unfair dismissal application in connection with threatening comments made about a co-worker on Facebook. The employer dismissed the employee from his employment with three weeks’ pay in lieu of notice following two incidents of serious misconduct involving Facebook comments. One comment on his Facebook webpage stated “Damien O’Keefe wonders how the f--work can be so f------ useless and mess up my pay again. C---- are going down tomorrow”. Findings The FWC found that the fact that the comments were made on the employee’s home computer, out of work hours, was not relevant and noted that the separation between home and work was less pronounced than it used to be. Even though the employer was not mentioned by name, and the employee’s Facebook page was set to maximum privacy, his group of 70 friends who could access his page (which included around 11 co-workers) may have seen his posting. As such, the termination of his employment for serious misconduct was not unfair. Inappropriate comments made on Facebook Starr v Department of Human Services [2016] FWC 1460 Background A Centrelink employee made several posts in an online forum in which he referred to Centrelink clients as “spastics and junkies” and “whinging junkies”. He also claimed, among other things, that Centrelink was “utterly disgraceful” and that many Centrelink clients were falsely claiming to have depression in order to avoid job search obligations. The employee made the posts from his own computer and outside of work hours. Following an investigation, the employee was found to have breached the employer’s social media policy, and was subsequently dismissed. The employee had been employed by Centrelink for 21 years and had expressed his remorse over his conduct. Findings The FWC found that, although the employee’s conduct occurred “out of hours”, the conduct was sufficient to constitute valid grounds for dismissal. However, the FWC found that Mr Starr’s dismissal was still “harsh” given: • the employee’s long service and unblemished record • the employee had shown remorse, and • the personal consequences of the dismissal for the employee. The FWC ordered that the employee be reinstated. His employer was also ordered to maintain his continuity of service from the date of termination to the date of reinstatement. However, in light of the employee’s “unacceptable conduct”, the Commission did not

make any order for compensation. Excessive use of social media O’Connor v Outdoor Creations Pty Ltd [2011] FWA 3081 Background The employee in this case was sacked a day before his resignation was due to take effect because the employer discovered that he had been “streaming online” instead of working. It was found that he recorded over 3,000 transactions on Google Chat during work time. The employer summarily dismissed him for “theft of paid time”. The employee denied the allegations, claiming that the 3,000 transactions had accumulated in the last five years and his social media usage was not excessive. The Small Business Fair Dismissal Code applied to the employer. Findings The FWC found that the employee was unfairly dismissed and awarded compensation. While excessive use of social media for personal purposes may constitute misconduct, the employer failed to follow the correct procedure. The employer should have presented the evidence of the employee’s excessive usage to the employee and given him an opportunity to address the issue.

The following guidelines may be used by an employer to regulate the use of social media by employees, and to minimise the risks of social media use to the employer. Tips for setting boundaries around social media use • Review any existing social media policies and ensure that the policies provide clear guidance to employees about: – the expectations of the employer with respect to social media use at all times – the relationship between the social media policy and other policies of the employer, including those relating to sexual harassment, discrimination, bullying and work health and safety, and – the potential consequences of failing to comply with the policy (including termination of employment). • Ensure that all employees are made aware of and provided access to, the social media policy and training with respect to their obligations under that policy. • The employer should ensure that all employees are aware that comments, posts and messages they send to or make about other employees or workers on Facebook or other social media platforms may constitute sexual harassment, bullying or discrimination. Particular areas to watch include: – employees adding each other as Facebook friends (particularly where more senior staff are communicating with subordinate employees) – employees posting inappropriate photos, videos or commenting on other employee’s photos, and – employees contacting other employees repeatedly via social media to invite them out socially. If this is unwanted it could lead to bullying or harassment complaints. • Enforce the social media policy fairly and consistently. • Review the social media policy regularly to ensure that it maintains its relevance and currency.

Drugs and alcohol Drug and alcohol use (including the use of prescribed medications) by employees presents a number of potential risks to an employer, including breach of work health and safety legislation, management issues or questions of misconduct. In recent years, employers have sought to implement drug and alcohol policies of varying levels of comprehensiveness to manage these risks. One of the most controversial aspects of those drug and alcohol policies has been the issue of drug and alcohol testing in the workplace, as employers have sought to gain maximum protection from their policies without the perception being formed that they are encroaching too extensively on their employees’ privacy. As such, this too has become an area in which the law is developing rapidly. The case law confirms that any drug and alcohol testing processes adopted by the employer must be: (a) reasonable and appropriate in light of the nature of the work performed by the employees (b) introduced and operate in a way that does not prejudice certain groups of employees

(c) open and transparent, with employees to be aware that they may be subject to random drug and alcohol testing procedures in the workplace, and (d) applied consistently to those who are subject to the process. The terms of an enterprise agreement or the particular legislation governing employment in an industry (such as the mining industry) may specify the manner in which drug and alcohol testing can be implemented in a particular workplace. With the law developing at a rapid pace, it is important that employers regularly review their drug and alcohol policies to ensure that those policies reflect best practice and provide the best possible protection for the employer, and effectively communicate any changes to employees. In reviewing and developing any revised drug and alcohol policies, the employer must also continue to be mindful of any legal drug use by ill or injured employees, such as in the case of prescription drugs. See Chapter 6: Managing Ill and Injured Employees for more information on drug and alcohol testing. The following case example highlights the importance of an employer effectively and consistently implementing drug and alcohol policies if the employer wishes to enforce a particular standard (zero tolerance or otherwise) regarding drug and alcohol use. Case example Importance of effectively implementing a drugs and alcohol policy Day v Sodexo [2011] FWA 8505 Background An employee was dismissed for failing an alcohol test while working for her employer at a client’s mine site. The employer had various existing drug and alcohol policies and had introduced a new policy to “crack down” on the drinking culture at work. The employee made an unfair dismissal claim. Findings The FWC found that the dismissal was unfair and ordered that the employee be reinstated. The Commission found that while drinking alcohol at work is “usually recognised as misconduct”, the employer had failed to implement the policies in a consistent manner. The employer continued to apply the old policy, and the employer failed to communicate the changes sufficiently under the new policy to the workforce. The employee was awarded the remuneration lost from the date of termination to the date of reinstatement. Sydney Trains v Hilder [2020] FWCFB 1373 Background The employee was a customer service attendant for Sydney Trains. The employer conducted a random drugs test on the employee who tested positive for cannabis. The employee admitted to smoking cannabis the night before. Sydney Trains had a zero-tolerance approach to drugs and alcohol. The employee’s misconduct was in breach of the Sydney Trains Drugs and Alcohol Policy (the Policy) and its Code of Conduct. Notwithstanding his six years of employment, he was dismissed. The employee alleged his dismissal was unfair and sought reinstatement. Findings The court at first instance found that the dismissal was unfair. The Commission found that the employer had failed to communicate their zero-tolerance policy to employees properly, who were not aware that they would be automatically dismissed for a positive result. Further, the employer had not applied the Policy consistently as some employees who had tested positive in the past had not been dismissed. The Commission considered the employee’s honesty, remorse and the difficulty he would have experienced finding alternative work, and so ordered reinstatement. On appeal to the Full Bench, the employer argued that the employee had committed serious misconduct in that he had smoked cannabis and then attended for work as a rail safety worker the next morning in breach of the Policy, his contract of employment, enterprise agreement and committed an offence under the Rail Safety National Law. The Full Bench agreed with the Commission finding that dismissal was too harsh and the appeal was dismissed.

The following case example highlights the inherent tensions between an employer’s obligation to ensure the health and safety of its employees and not encroaching on its employees’ privacy. Case example Safety v privacy considerations CFMEU General Division v Port Kembla Coal Terminal Limited [2015] FWCFB 4075 Background The employer introduced a workplace drug testing regime. The regime was originally proposed to involve random testing of urine

samples in accordance with the relevant Australian Standard, but was later extended to include both urine and saliva testing. The union agreed that the employer was entitled to test for impairment of employees arising from drug or alcohol consumption. However, the union was against the proposed regime because of the potential implications for the employees’ privacy, in that the testing could also reveal drug or alcohol consumption outside of work which did not give rise to any impairment. The union filed a dispute in the FWC. At first instance, the FWC found in favour of the employer. The union appealed that decision to the full bench. Findings The full bench accepted that urine testing “will identify whether an employee has taken a drug in the preceding days or even weeks — including at times when there is no serious risk that the employee will still be impaired when they attend for work”. However, the full bench stressed the importance of the employer’s safety obligations, which required it to eliminate, so far as practicable, the risk that employees might be impaired by drugs or alcohol. The full bench also noted that the use of urine testing in conjunction with saliva testing would allow for a broader range of drugs to be screened. The full bench upheld the employer’s use of both urine and saliva testing as “fair and reasonable”, as safety was paramount to the union’s concerns about employee privacy. This case example illustrates that a dismissal for non-compliance will be upheld if the employer’s drug and alcohol policy is reasonable. Nedelkovski v Tasmanian Freight Services Pty Ltd t/a Tas Freight [2020] FWC 3151 Background The employee was employed as a driver of a heavy rigid truck for almost four years. The employer had a Drug and Alcohol Policy (the Policy) which stated that failing to produce a urine sample for testing would be treated as a disciplinary matter which may lead to dismissal. The employer was alerted that the employee’s truck was outside his expected route. When questioned, the employee behaved erratically and so he was instructed to attend a testing clinic for a drug and alcohol test. When he arrived at the clinic, he said he was unable to provide a urine sample and he refused to drink any water. The employee was warned that if he did not provide a urine sample that day, he would be dismissed. The employee refused to comply and was summarily dismissed. Findings The FWC found that the employer had a reasonable basis for requiring the employee to submit to a drug and alcohol test in light of his behaviour. The employee had been unreasonable in refusing to provide the urine sample. The FWC, in finding that the employee committed serious misconduct, recognised the importance of complying with the Policy particularly because the employer operated in a safety-critical industry. The unfair dismissal application was dismissed.

It is recommended that employers who are considering implementing or amending drug and alcohol policies in their workplaces seek advice in relation to the proposed policy and its application to ensure that it is appropriate for their workplace and will, if necessary, withstand the scrutiny of the relevant regulators, courts and tribunals.

Assault This section explores the issues for employers associated with managing allegations of physical and verbal assault in the workplace. Physical assault In addition to any physical injuries sustained by the employee or employees involved, physical altercations in the workplace can have damaging consequences including a negative impact on morale, engagement and productivity, and can lead to bullying and harassment claims and/or workers’ compensation claims. Physical assault is regarded as “serious misconduct” for the purposes of the relevant legislation and at common law and, if proven, may provide grounds for summary dismissal. The concept of “serious misconduct” is discussed further in Chapter 7: Termination of Employment. Before making any decisions about the ongoing employment of an employee who is alleged to have engaged in a physical assault, an employer should conduct a thorough investigation into the allegations and ensure that all employees implicated in the altercation are provided with procedural fairness (including the opportunity to respond to the allegations of physical assault). Taking the time to conduct an investigation will not impact on the ability of the employer to terminate the employee’s employment summarily if the allegations are substantiated. For further information on investigating allegations of physical assault, see Chapter 5: Managing Complaints and Grievances. The following case example illustrates the seriousness with which courts and tribunals approach matters involving physical assault, irrespective of the employee’s length of service or whether the assault was

provoked. Case example Altercation with a supervisor Lambley v DP World Sydney [2013] FCA 4 Background DP World had employed Mr Lambley for over 30 years, when he was involved in a fight with his supervisor, Mr Smith, in the workplace. Following an investigation into the altercation, DP World dismissed both employees. Mr Lambley made an unfair dismissal claim to FWA. Findings The evidence before the FWA included that: • Mr Lambley had not previously received any warnings about his performance or conduct • the altercation was captured on CCTV footage and reviewed by the HR Manager. The CCTV footage appeared to be controlled, as the camera zoomed in and followed the altercation • the HR manager conducted 196 interviews over a five-week period. However, due to the organisation’s culture of not “dobbing”, the investigation produced little useful information, and • Mr Smith was known as a bully and appeared to have provoked Mr Lambley. Based on the evidence, FWA found that the altercation appeared to be a set-up against Mr Lambley. The employee was reinstated with continuity of service and partial payment of lost remuneration. The employer appealed this decision. The Full Bench found that given the very serious nature of the conduct and that it was in breach of DP World’s disciplinary policy, FWA had erred in reinstating Mr Lambley. His dismissal was found to be just and reasonable in the circumstances. Mr Lambley then applied to the Federal Court of Australia to have the decision of the Full Bench quashed. The Federal Court considered Mr Lambley’s dismissal to be not unfair, unjust or unreasonable and the application was dismissed.

Physical assault may amount to conduct of a criminal nature. As such, when an employer becomes aware of such conduct, it must consider its obligations to report it to the relevant authorities. It is recommended that employers seek advice regarding their reporting obligations before reporting any instances of physical assault by or against an employee in connection with their employment. Verbal assault Verbal assault may best be described as verbal conduct that creates, or is intended to create, a fear of physical harm in the person or persons to whom that conduct is directed. The consequences of an employee engaging in verbal assault will ultimately depend on the particular circumstances, including the personal characteristics of the individual who is the “victim” of the verbal assault and the manner in which they react to that conduct. Verbal assault presents a risk to the employer to the extent that it may amount to bullying, harassment or, depending on what is said, form the basis of some other form of legal claim (such as discrimination). If such behaviour is reflective of the employer’s culture, or is perceived to be reflective of the employer’s culture, it may have an adverse impact on the employer’s reputation. In order to avoid the perception that an employer condones such behaviour, and to reduce the risk of the employer not being able to take appropriate disciplinary action against employees in respect of the same or similar incidents in future, an employer should deal with aggressive verbal behaviour (which may include swearing) as soon as reasonably practicable after it becomes aware of such behaviour. Allegations of verbal assault should be dealt with largely the same way as allegations of physical assault — that is, the allegations should be investigated and any decisions about the alleged perpetrator’s employment made in light of the findings of such an investigation. The following case examples illustrate the importance of managing behaviour that may amount to verbal assault on a day-to-day basis, and of employers applying a consistent approach to all employees. It also serves to highlight the importance of considering the context in which aggressive verbal behaviour occurs before making any decisions about disciplinary action. Case example

Swearing in the workplace Melanie Davidson v Visa Global Logistics Pty Ltd [2015] FWC 7332 Background A transport industry supervisor told another employee over the phone to punch a co-worker in the face, but allegedly in a joking manner. The same supervisor had previously received a written warning for raising her voice and calling a co-worker a “f---king c--t”. The company claimed that the supervisor breached its anti-discrimination and harassment policy and terminated the supervisor’s employment. The supervisor made an unfair dismissal claim to the FWC. Findings The FWC found that the decision to terminate the employee’s employment was harsh in the circumstances, as the comments were likely a joke. The Commission took into account the supervisor’s length of service and role within a challenging work environment. The fact that the supervisor was the only one disciplined despite the involvement of others and the nature of this language in the workplace, were also considered relevant by the Commission. Paul Meredith v Chad Group Australia P/L [2020] FWC 1467 Background The employee was dismissed after he made a number of violent threats towards the young assistant shouting at him “fuck off you smartarse c---” and calling him a “f---king c---t”. He had also threatened to “take him to the Belanglo State Forest and give him the Ivan Milat treatment.” The assistant started to feel unsafe around the employee and he resigned. Following another conflict situation, a manager suggested that the employee go home. As he left, the employee told another employee to “Fuck off. Go fuck yourself.” He eventually left the workplace but only after shouting more expletives. The employer dismissed him for misconduct and failing to follow reasonable direction. Findings Commissioner Harper-Greenwell found that while there was a fair reason to terminate, the dismissal was devoid of procedural fairness. The employer had generally tolerated the employee’s bad behaviour; however, the tipping point came when his direct manager found the employee’s failure to follow his direction was unacceptable. The Commissioner found that dismissal was procedurally unfair and harsh in the circumstances.

Theft The nature and seriousness of employee theft can vary from case to case. Facts that may impact on the nature and seriousness of the theft include what has been taken by the employee and the potential implications of that conduct for the parties (including the financial or reputational impact of that conduct). Theft constitutes “serious misconduct” both at common law and for the purposes of the relevant legislation and, as such, a finding that an employee has engaged in theft may provide grounds for summary dismissal. In practice, however, whether theft constitutes grounds for dismissal (with or without notice) or some other form of disciplinary action, will turn on the factual circumstances of the case. However, theft of any kind by employees should not be condoned, or perceived to be condoned, by an employer. In order to minimise the risk of a legal claim, an employer should only make a decision about the nature and relative seriousness of allegations of theft only after conducting a thorough investigation into those allegations. For further information about conducting investigations in relation to allegations of theft, see Chapter 5: Managing Complaints and Grievances. Theft may also amount to conduct of a criminal nature. As such, when the employer becomes aware of such conduct, it must consider its obligations to report it to the relevant authorities. Case example Summary dismissal for theft without proper investigation Narwal v Aldi Foods [2012] FWA 2056 Background The Store Manager, Mr Narwal, was summarily dismissed after taking goods from a store without paying for them. Mr Narwal argued that he did not pay for the goods as he did not have his wallet at the time, and instead asked the cashier to suspend the sale and place the sale document on his computer so he could pay for them when he was next at work. Upon returning to work, Mr Narwal was informed by senior management that he had not paid for the goods, and he paid immediately. Mr Narwal continued to work for some period of time after the allegations were first raised, before he was summarily dismissed. Mr Narwal made an unfair dismissal claim. Findings

The FWC found that there was no basis for summarily dismissing Mr Narwal and awarded Mr Narwal 12 weeks’ pay as compensation. The Commission held that the investigation was not properly performed, and that Aldi had failed to satisfy even a basic level of proof that Mr Narwal had acted dishonestly or committed theft. The Commission also noted that Aldi appeared to have condoned Mr Narwal’s conduct by allowing him to continue working after being aware of the alleged theft. The conduct would have provided valid grounds to terminate Mr Narwal’s employment had Aldi not condoned that conduct. Jolley v Cannon Hill Services Pty Ltd [2020] FWC 2404 Background The employee was employed as a boner in an abattoir. He had nine and a half years’ service when he was dismissed for serious misconduct. He was accused of breaching the enterprise agreement and company code of conduct when he stole a can of coke from the vending machine at work. The employee conceded that theft was a valid reason for dismissal; however, he argued that in the circumstances, dismissal was harsh, unjust or unreasonable. Findings The FWC found that there were a number of mitigating factors to be considered such as the employee’s unblemished length of service, it was the day before the plant was closing for the holidays, the vending machine door had been left open and he had previously lost money in the vending machine on multiple occasions. Importantly, the employee showed immediate remorse and the theft was out of character for him. The Commissioner concluded that dismissal was harsh in the circumstances and so unfair. The employee had found alternative work and so was awarded compensation.

Risks to the employer This section examines the legal and reputational risks that employee misconduct poses for an employer, including but not limited to the risk of work health and safety prosecutions, workers’ compensation claims, and unfair dismissal claims. Given an employer can be liable for misconduct of its employees in the workplace, it is essential that proactive steps are taken to manage and prevent misconduct within the workplace. These steps are further discussed later in this Chapter. Unfair dismissal and general protections claims A number of the case examples set out earlier in this Chapter provide examples of situations where employees have made an unfair dismissal or general protections claim in connection with an employer’s management of allegations of employee misconduct. The following scenarios provide further examples of circumstances in which an employer’s failure to manage or prevent employee misconduct adequately may expose the employer to the risk of an unfair dismissal or general protections claim under the FW Act: • Where an employee has been bullied, harassed or discriminated against at work and because of the conduct engaged in by the employer (including failing to deal adequately with that behaviour or appearing to condone the behaviour) they may feel that they have no option except to resign. This is known as “constructive dismissal”. The FW Act allows employees to make an unfair dismissal claim where they were “forced” to resign because of the employer’s conduct. • Where an employee makes a complaint of workplace misconduct against another employee and their employment is subsequently terminated, the employee may bring an unfair dismissal claim or a general protections claim if they believe they are able to demonstrate that their dismissal was because of them having made that complaint. • The circumstances may provide grounds for an employee to make both an unfair dismissal claim and a general protections claim. The FW Act prohibits “double dipping”, and as such the employee must choose which of these claims they intend to progress. For further information about unfair dismissal and general protections claims, including the remedies that may be available to employees from those claims, see Chapter 7: Termination of Employment. Work health and safety breaches and prosecutions Under work health and safety legislation, an employer has a statutory obligation to provide and maintain, so far as is reasonably practicable, a working environment that is safe and without risk to health. In effect, the legislation imposes a positive duty on an employer to take a proactive approach to health and safety in the workplace in order to best ensure that it does not breach its obligations.

Further information on the work health and safety legislation and an employer’s work health and safety obligations is set out in Chapter 9: Work Health and Safety. Misconduct by an employee may create a health and safety risk in the workplace (eg a risk to the physical or mental health of the employee and/or others in the workplace through intoxication or verbal or physical assault). This in turn may result in an investigation by the regulator and potentially lead to a prosecution for breach of the employer’s work health and safety obligations. Breaches of an employer’s legislative work health and safety obligations can also result in the imposition of significant fines on employers (and representatives of an employer) and in the payment of damages to employees. The following case example reflects not only the legal risks of a work health and safety investigation and/or prosecution, but also the level of media and public attention that such matters may generate, which can negatively impact on the employer’s reputation and credibility. Case example Work health and safety prosecution for workplace bullying Brodie’s Case Background In 2006, Brodie Panlock, a 19-year-old employee at Café Vamp in Melbourne, was subjected to workplace bullying by three coworkers. The bullying included the co-workers calling Ms Panlock “fat”, “ugly” and a “whore”. The co-workers would also spit on Ms Panlock, pour fish sauce on her by holding her down and put rat poison in her handbag. This caused Ms Panlock on one occasion to attempt to commit suicide. Her unsuccessful attempt was met with comments from her coworkers that she was “not able to do it properly”. Ms Panlock later took her own life. Findings The café owner and his company were fined a total of $250,000 for failing to maintain a safe working environment. The three coworkers, who were employees of Café Vamp, pleaded guilty and were fined $45,000, $30,000 and $10,000 respectively.

Workers’ compensation claims Workers’ compensation provides a potential remedy for workplace misconduct, in that the relevant legislation provides employees with monetary payments for injuries sustained as a result of such conduct. For an employee to receive workers’ compensation payments, the injury must arise in the course of their employment and the employment must have significantly contributed to the injury. Workers’ compensation is not just payable for physical injury. It also provides employees with compensation for psychological injury. Approximately one-quarter of all psychological injury claims stem from workplace misconduct. An employer will not be liable for workers’ compensation payments if it can demonstrate that it has engaged in “reasonable management action”. While not bound by decisions in the workers’ compensation jurisdiction, the FWC has indicated that it may be guided by the principles arising from these decisions in determining the question of “reasonable management action” in anti-bullying applications. There are a variety of ways in which workers’ compensation claims directly impact on an employer. These include the time and resources that may be dedicated to responding to workers’ compensation claims and increases to an employer’s workers’ compensation premiums if a claim is accepted. Claims under anti-discrimination law As discussed in the context of sexual harassment claims earlier in this Chapter, anti-discrimination laws in Australia provide that an employer may be vicariously liable in respect of conduct engaged in by its employees in the course of employment in contravention of those laws, unless the employer can establish that it took all reasonable steps to prevent the conduct from occurring. An employee who has been subjected to sexual harassment or other discriminatory conduct in the workplace by another employee may make a complaint to the Australian Human Rights Commission (AHRC) or corresponding state authority, in relation to the conduct of another employee, to which the employer may be required to respond.

If an employee lodges a complaint with the AHRC in relation to workplace misconduct, the AHRC may investigate the complaint and ask the employer to respond to the allegations of workplace misconduct. Following an investigation, the AHRC may decide to conduct a conciliation. If a complaint is not resolved at the conciliation stage and proceeds to court, there are a wide range of remedies that may be awarded. These may include an apology, a declaration that an organisation has committed unlawful discrimination, a direction to perform a certain action or undertake a course of conduct, or payment of compensation for loss or damage suffered by the applicant employee. The following case examples illustrate the types of misconduct that may amount to discrimination under the relevant legislation. They also demonstrate the importance of an employer having measures such as policies in place, to minimise the risk of discrimination in the workplace and an employer responding to allegations of discrimination consistent with those policies. Case examples Employer vicariously liable for employee’s discrimination Murugesu v Australian Postal Corporation [2015] FCCA 2852 Background A delivery driver for Australia Post made complaints against his supervisor verbally abusing him based on his race, calling him a “black bastard”, saying that he should work “slave jobs” and “go back by boat” to his former country. Mr Murugesu brought a claim against the company for racial discrimination. Findings The Full Federal Court found that Australia Post was vicariously liable for the actions of the supervisor as it had failed to take the complaints seriously and implement its “exemplary” anti-discrimination policies. The court noted that it was not enough for the employer to say “all the right things” in order to highlight its opposition to racial discrimination (including providing training, “toolbox talk” sessions and distributing information leaflets to the workforce about code of conduct and anti-discrimination policies). Companies must act on and enforce these policies to be seen as taking reasonable steps to prevent prohibited conduct. Discrimination on the basis of race Gama v Qantas Airways Ltd (No 2) [2006] FMCA 1767 Background Mr Gama was an employee of Qantas. Mr Gama claimed that, throughout his employment, inappropriate comments were directed towards him by co-workers, including his supervisor, on the basis of his race. Mr Gama claimed that these inappropriate comments consisted of being told he looked “like a Bombay taxi driver”, being called “black” and told that “being black, you should be walking up the stairs like a monkey”. Mr Gama claimed that these inappropriate comments contributed to him developing a psychiatric illness. Findings The court held that these comments amounted to discrimination on the basis of Mr Gama’s race and were responsible for 20% of his psychiatric condition. Qantas was found to be vicariously liable and ordered to pay $70,000 in damages to Mr Gama. Newchurch v Centreprise Resource Group Pty Ltd, Graham Ride, Sarah Ride [2016] NTADComm 1 Background Newchurch was employed by Centreprise Resource Group (Centreprise) as a technical support and administration officer. Ride was the general manager of Centreprise. It was alleged that Ride made racially discriminatory comments about Newchurch due to her Aboriginal heritage. Ride made comments such as “blacks rely too much on welfare and Government handouts”, Aboriginal people were “taking liberties and stretching out the hours to get money”, “these days (blacks) are used to lying and cheating the system to get money without wanting to work an honest day in their life” as well as comments making distinction between “urbanised and westernised” indigenous people and those that were still “traditional people out of the bush”. Findings The Commission found that the comments amounted to racial discrimination. The Commission rejected the reasonable steps defence as the test was not met simply by relying on the existence of policies prohibiting the offending conduct. Employers must ensure policies are communicated effectively, training is provided and action is taken when the policies are breached. The employer was found vicariously liable and the employee was awarded compensation. Sexual harassment and bullying Kate Mathews v Winslow Constructors (VIC) Pty Ltd [2015] VSC 728 Background Ms Mathews worked for Winslow Constructors as a labourer for two years. She was described as an “industrious” worker who was “eminently promotable”. Ms Mathews was repeatedly shown pornographic material by co-workers and was called “a spastic”, “a bimbo” and “useless”. Additionally, a co-worker threatened that he would follow Ms Mathews home, rip her clothes off and rape her. When she complained to her direct supervisor about the incidents, he laughed in response. Following this, she complained to the Site Manager, who relocated her to a different work site. When Ms Mathews was subsequently returned to the original site, the harassment resumed. Despite her complaints about the harassment, the foreman asserted that she would “… work with whoever I fcking tell you to work with”. As a result of these incidents and the failure of her employer to respond, Ms Mathews developed PTSD, bipolar and a jaw injury which “progressively developed over a period of time due to her tension, holding her muscles very tight and

grinding her teeth”. Findings The Supreme Court found that Winslow Constructors was negligent in knowingly failing to provide a safe working environment and also in allowing Ms Mathews to be subjected to extensive abuse, sexual harassment and bullying. The evidence was unanimous that Ms Mathews was unlikely to ever work again. The court awarded damages of $696,085.41 to compensate for Ms Mathews’ general damages, past economic loss and future loss of earning capacity arising from the sexual harassment and bullying. Gilroy v Angelov [2000] FCA 1775 Background Gilroy and Angelov were both employees of a contract cleaning company. Gilroy alleged that she was sexually harassed by her fellow employee, Angelov. Gilroy was dismissed by the employer and she brought a claim of damages against Angelov and her previous employer. Findings The allegations of sexual harassment were proven and the issue to determine was whether the employer knew of the inappropriate behaviour. Gilroy had raised complaints with her employers on several occasions but she was not believed. The employers had done nothing to prevent the sexual harassment. The court found that the law does not distinguish between small and large employers. It was found that Gilroy’s complaint should have been taken seriously and investigated. Gilroy was awarded damages of $20,000 plus interest. Cincovic v Blenner’s Transport Pty Ltd [2017] QSC 320 Background The employee was employed as a truck driver for a road freight company. He was transporting a pallet jack through the depot back to his truck. While he was using the pallet jack, another employee, Starling, approached him from behind. Starling used his foot to push one of the tyres of the pallet jack. The employee fell backwards off the pallet jack and sustained compression fractures to his spine. The employee alleged the incident and his injuries were caused by the employer’s breach of duty and breach of contract, either directly through its own breaches or through its employee, Starling for whose acts it was vicariously liable. The employer argued that Starling’s conduct was unauthorised and so it should not be held liable for the wrongful act. Findings It was held that “employers choose to take on employees, knowing there will be consequences, including the assumption of the risk that in carrying out duties and functions relevantly connected to that employment, the employee will cause injury or damage to others”. The Queensland Supreme Court found that the employer was vicariously liable for Starling’s act as it was undertaken in the course of Starling’s employment. The employee was awarded damages in the amount of $791,514.71.

Anti-bullying claims under the FW Act The anti-bullying provisions of the FW Act and the protections that they afford to workers were discussed earlier in this Chapter. Under those provisions, a worker who believes that they are being bullied at work can make an application to the FWC for a “stop bullying” order. If the FWC is satisfied that the worker has been bullied at work and there is a risk that the worker will continue to be bullied at work, then the FWC may make any order it considers appropriate to prevent the bullying behaviour. Examples of the orders that the FWC may make include: (a) the individual/group of individuals stop the behaviour (b) regular monitoring of behaviours by an employer (c) compliance with an employer’s workplace bullying policy (d) the provision of information and additional support and training to workers, and (e) review of the employer’s workplace bullying policy. The FWC’s orders will not necessarily be limited or apply only to the employer. Those orders may apply to others, such as co-workers and visitors to the company’s premises. The FWC cannot make orders to reinstate a person, nor can the Commission require payment of compensation or a pecuniary amount. An application to the FWC for a “stop bullying” order will not preclude investigations and prosecutions being initiated under work health and safety legislation and/or criminal law. Indeed, the FWC is empowered to refer anti-bullying matters to a safety regulator if it considers such a referral appropriate.

Duty of care Every employer has a common law duty of care towards its employees. This means that an employer has a general duty to take reasonable care of its employees to avoid exposing them to unnecessary risks of injury. If there is a real risk of an injury to an employee in the performance of a task, an employer must take reasonable care to avoid the risk by adopting a method of operation for the performance of the task that eliminates the risk, or by providing adequate safeguards. In order for an employee to bring a successful claim for breach of an employer’s common law duty of care, the employee would need to demonstrate that the employer did not take the necessary care that a reasonable person would have taken, and that there is a connection between the employer’s breach and the employee’s loss or damage. In such a case, the employer may be liable to pay damages. It should also be noted that in addition to its employees, an employer may have a duty of care towards other people in the workplace, such as contractors, subcontractors and employees of contractors, depending on the level of control it exercises over the victims and the perpetrators. The following case illustrates the importance of taking adequate steps to manage or prevent misconduct in the workplace, regardless of whether the victim and the perpetrator involved is an employee. Case example Duty of care towards “surrogate” employees Nationwide News v Naidu; ISS Security Pty Ltd v Naidu (No 2) [2008] NSWCA 71 Background Mr Naidu was employed by a security company as a security guard. There was a contract between the security company and Nationwide News whereby the security company would provide Nationwide News with security services. This involved Mr Naidu predominantly working at Nationwide News’ premises. While working at Nationwide News, Mr Naidu worked as an assistant to Mr Chaloner, an employee of Nationwide News. Mr Naidu claimed that Mr Chaloner engaged in a range of inappropriate conduct, including calling him a “black bastard”, “coconut head” and “curry muncher”, threatening physical abuse, and requiring Mr Naidu to work extremely long hours. The bullying continued for a period of five years and Mr Naidu developed post-traumatic stress disorder, depression and anxiety as a result. Mr Naidu brought an action in tort and in contract against the security company that employed him and Nationwide News for his psychiatric injuries. Findings The court held that Nationwide News acted as a “surrogate employer” for Mr Naidu as the security company had no control over the supervisor. It was found that the labour hire management did not know about Mr Chaloner’s bullying behaviour and could not reasonably foresee harm to its employee, Mr Naidu, so was not negligent. The court of appeal held that the labour hire company was not vicariously liable. In the circumstances, Nationwide News was wholly liable to pay Mr Naidu $1,900,000 in damages. On appeal, Nationwide News was ordered to pay Mr Naidu $2,377,307 in damages.

Managing and preventing misconduct in the workplace Throughout this Chapter we have identified a number of steps that employers may take to manage and prevent specific types of misconduct in the workplace. This section examines the general principles that should guide an employer in managing and preventing misconduct so as to manage the risks. The risk management strategies identified in this section should be read in conjunction with the specific risk management strategies for issues such as workplace bullying, sexual harassment and misuse of email and IT facilities identified earlier in this Chapter. One important aspect of an employer’s strategy in managing and preventing misconduct is an employer’s response to allegations of misconduct if or when such allegations are made. An employer’s response to allegations and findings of misconduct is extremely important as it creates the disciplinary culture within the workplace and sets the standards of conduct by which employees will then abide. The employer’s response must be proportionate to the nature and seriousness of the misconduct. This is judged by considering all of the relevant circumstances. If the response is too harsh, the employer may be faced with defending a claim brought by the relevant employee. Conversely, if no action is taken, or if the action is not satisfactory to an individual affected by the misconduct, then the employer may face accusations of failing to protect other workers adequately.

General risk management strategies Determining an employer’s approach to managing and preventing misconduct in the workplace can be a complex task, given the broad spectrum of legal risks to which the employer may be exposed and the differing requirements under the relevant legislation for defending claims or avoiding liability. It is recommended that employers adopt a holistic approach to managing and preventing misconduct in the workplace, based on the following general risk management strategies. Workplace misconduct: general risk management strategies • Establishing clear expectations regarding the conduct of employees in the workplace through appropriate policies and procedures. The policies and procedures should not only set out the expected standards of conduct, but also the consequences of an employee failing to meet those standards (including potential disciplinary action). • Conducting training for employees in relation to the policies and procedures (including training employees with managerial responsibilities about their role in applying the policies and procedures). This training should be conducted with all new employees, and refresher training provided regularly or if there is a change in existing policies warranting additional training. • Taking prompt action in responding to allegations of misconduct and ensuring that the outcomes applied in misconduct matters are fair, consistent and proportionate to the misconduct. • Ensuring that senior employees “walk the talk” in that their behaviours (in terms of both compliance and enforcement) reflect the expectations of the employer. Responsibility for these matters may be linked to key performance indicators for senior employees. • Regularly monitoring and reviewing the relevant policies and procedures and how they are being applied.

Investigating allegations of misconduct When allegations of misconduct are made against an employee, one of the initial matters that the employer will need to consider, is when and how to investigate those allegations in order to determine if there is any substance to those allegations. Further details of the process for investigating allegations of misconduct are set out in Chapter 5: Managing Complaints and Grievances. As reflected in Chapter 5, one of the most important aspects of any investigation process is ensuring that the person against whom allegations are made is provided with the opportunity to respond to the allegations that have been made against them. Failure to provide procedural fairness may result in the employer being unable to rely on the investigation and its findings in taking further action against the perpetrator. This is illustrated in the following case example. Case examples Opportunity to respond to allegations Cowan v Sargeant Transport Pty Ltd [2014] FWC 6294 Background A delivery truck driver was dismissed for misconduct after CCTV footage revealed him urinating outside a major client’s receiving gate. The employer became aware of the incident after being alerted by its client that the applicant was banned from their sites for three months. The Respondent’s HR Manager rang the applicant and had a discussion about the incident (the details of which were disputed). Both the General Manager and HR Manager were under the impression that the applicant lied as part of this investigation (the FWC later determined it was miscommunication). A week later, the General Manager viewed the CCTV footage and together with the HR Manager, decided to terminate the applicant’s employment. The applicant brought an unfair dismissal claim. Findings Among other things, the FWC found that the decision to dismiss the employee was unreasonable as he was not afforded procedural fairness. This failure of procedural fairness arose from the employer neglecting to put the allegations and evidence to the employee. It also never provided the employee with an opportunity to explain why he should not be subject to disciplinary action, including dismissal. No particular formality BHP Coal v Schmidt [2016] FWCFB 1540 Background Mr Schmidt was employed as an operator at a coal mine. The nature of his employment required close attention to safety issues and strict compliance with safety procedures. The employee was dismissed following an incident in which a fuel tank was damaged and went unreported. The employee claimed that his employer had predetermined the outcome of an investigation into alleged misconduct before allowing him an opportunity for the employee to respond to the allegations.

Findings In concluding that the employee had not dismissed unfairly, the Full Bench stated that where an investigation reveals misconduct it is normal for the employer to form an initial view regarding the significance of the findings to possible disciplinary action. While the employer must remain open minded, it is natural for the employer to have certain leanings as to the likely sanction considering the allegations. The Full Bench found that the employee had been given a proper opportunity to respond which he did in a three-page letter.

Disciplinary action Once an investigation into allegations of misconduct has been finalised, the employer (through the assigned decision maker) must consider the findings from the investigation and make a decision as to whether the allegations of misconduct have been proven and, if so, what the appropriate response may be (including but not limited to disciplinary action). If an employer’s decision is to take disciplinary action against an employee, that disciplinary action may take any number of forms. The most common forms of disciplinary action typically taken by employers, including termination of an employee’s employment, are discussed below. Consistent with the general principles outlined above, any disciplinary action taken against an employee found to have engaged in misconduct must be proportionate to the nature and seriousness of the misconduct in question. When making decisions about what, if any, disciplinary action may be appropriate, it is important that the employer seek to understand if there are any mitigating factors that may explain why the employee has engaged in the misconduct, even in situations where they have admitted to the misconduct. This will also help to ensure an appropriate and fair outcome and to minimise the risk of the disciplinary action being overturned either by a court or tribunal, or as a result of a grievance procedure. Termination of employment Where an employee engages in misconduct that is considered sufficiently serious to warrant termination of the employee’s employment, but not serious enough to be “serious misconduct”, the employer will be required to provide the employee with notice of termination of their employment. The employee’s contract of employment or an applicable industrial instrument typically provides the amount of notice that an employer is required to provide to an employee in these circumstances (which is underpinned by the minimum amounts prescribed by the NES). In cases where the misconduct engaged in by the employee is serious enough to warrant it, an employer may terminate an employee’s employment without notice. The FW Regulations provide that “serious misconduct” includes: • wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment, and • conduct that causes serious and imminent risk to the health or safety of a person, or the reputation, viability or profitability of the employer’s business. Examples of conduct falling within these descriptions include theft, fraud, assault, intoxication at work and/or refusing to comply with a lawful and reasonable direction. The concept of “serious misconduct” and termination of employment more generally are discussed further in Chapter 7: Termination of Employment. Counselling In some cases, counselling an employee in relation to their conduct may be the most appropriate form of disciplinary action in light of the nature and seriousness of the conduct engaged in by the employee. Counselling may involve discussing what the employee has done wrong and the reasons for that behaviour. The standard of conduct required of the employee should be made clear during any counselling sessions. All counselling sessions conducted with an employee should be documented and those documents retained on the employee’s employment file. Warnings

In a disciplinary context, a warning is exactly that — a warning of the potential consequences of any further breach of the standards of conduct expected of employees by the employer. Warnings are typically issued where termination of employment is deemed to be inappropriate in the circumstances, and may be given to employees in writing or verbally. There is a widespread myth that employers are legally obliged to provide three written warnings prior to terminating an employee’s employment. The number of warnings given to an employee before their employment is terminated will depend on the circumstances of the particular case, including any policies and procedures that the employer may have in place regarding disciplinary action. An employer should document all warnings given to an employee (including verbal warnings), have the employee sign the warning, and place a copy on the employee’s employment file. Tips for drafting a written warning The employer should ensure that any written warning issued to an employee: • states the reason for the warning, the corrective action required from the employee and, if applicable, the timeframes for completion of the corrective action or review • warns of the potential consequences if the employee does not correct their behaviour or breaches any other policy • refers to any previous warnings issued to the employee and their dates (although some care should be taken in referring to warnings that are in excess of 12 months old and/or that are unrelated to the issues that are the subject of the present written warning) • is signed and dated by the senior employees present at the discussion, and possibly by all others at the discussion, and • is retained by HR on the employee’s employment file and a copy given to the employee.

Demotion Demotions involve transferring an employee to a position of lower responsibility, status and/or pay. A demotion may be offered to an employee as an alternative to dismissal. The demotion of an employee is viewed at law as the termination of an employee’s existing employment contract and the offer of a new employment contract. Therefore, irrespective of whether the employee accepts or rejects a demotion, the employee may commence a dismissal-related action, such as an unfair dismissal or general protections claim, or a breach of contract claim, if they are demoted. However, the FW Act provides that a demotion will not amount to a dismissal for the purposes of the unfair dismissal jurisdiction if it does not involve a significant reduction in the employee’s remuneration or duties and the employee remains employed by the employer. For this reason, the employer should consider measures that can be put in place so that the impact of any reduction is ameliorated (eg pay protection and a gradual transition to a lower wage). Otherwise, demotion should only be implemented where the employer is entitled to dismiss the employee, and the same procedures that apply to dismissal should be carried out. In particular, the required notice period should be given prior to demotion. For further information about termination of employment, see Chapter 7: Termination of Employment.

Special issues in managing and preventing misconduct in the workplace Off-site and “out of hours” events One of the most significant emerging areas of risk for an employer is the conduct of employees at events that are held in connection with their employment outside the physical confines of the employer’s premises and/or outside work hours. This risk is highlighted in the context of sexual harassment claims earlier in this Chapter. However, the risks are not limited to sexual harassment — there are a number of legal claims that may arise out of offsite or out of hours events that the employer needs to be aware of and manage the risks appropriately.

The following checklist has been produced to assist employers in managing the risk of work related offsite or “out-of-hours” events. Risk management at off-site events • Check that the employer’s policies, procedures, codes of conduct (and the like) are unambiguous in extending to those events and make sure that employees understand and have signed up to those policies. • Issue a reminder (by memo or email) to employees just prior to the event to reinforce behavioural expectations. • Ensure that, if providing alcohol, the employer has conducted an appropriate audit to ensure that the venue is aware of its obligations to serve alcohol responsibly. Appropriate supplies of food being made available should balance alcohol consumption. • The event should have a designated finish time. However, employees should be reminded that their behaviour at any gatherings held after the event may also be subject to scrutiny and potential disciplinary action by the employer, depending on the nature of that conduct. • Venues should be selected to take into account necessary transport to and from the venue. • If inappropriate behaviour is observed to be occurring at the event, it needs to be addressed immediately. • Any post-event gossip should be minimised but any serious issues that are identified need to be addressed, even in the absence of any formal complaints. • Those in leadership roles need to understand the importance of leading by example. Ideally, at least one senior manager should not consume alcohol at the event.

Suspension from work while allegations of misconduct are investigated Suspending an employee involves directing an employee not to attend work or to perform their duties for a given period of time. Whether the employer is entitled to suspend an employee, and whether any suspension is with or without pay, will be determined by the relevant employment contract and/or industrial instruments. Suspension is most likely to be appropriate following allegations of serious misconduct (such as bullying or sexual harassment) pending the conclusion of any investigation into those allegations. The decision to suspend an employee is typically based on the need to protect the interests of the parties to the investigation and the employer, and the integrity of any investigation. However, employers must take care to consider whether suspension is warranted in the circumstances, or if there are other adjustments that may be made (eg assigning the employee against whom the allegations have been made to other duties). All employees, including those against whom allegations have been made, are entitled to be treated in a fair and transparent manner, and suspending an employee can have a long-lasting impact on the reputation of an employee, irrespective of the outcome of the investigation.

Managing Complaints and Grievances Introduction Workplace complaints and grievances (referred to collectively as “complaints” in this Chapter) made by employees may take a variety of forms, and most commonly relate to the employee’s terms and conditions of employment or allegations of misconduct. On receipt of a complaint from an employee, an employer must consider how best to manage and respond to that complaint in light of the nature and seriousness of the allegations and any potential risk to the employer and/or employees. The employer should also be guided by any applicable process under the employer’s policies and procedures, an industrial instrument or the employee’s employment contract. This Chapter examines the general principles attaching to complaint handling processes and, in particular, the investigation of complaints made by employees. Complaints made by contractors may also need to be managed and/or investigated depending on the circumstances and the nature of the allegations. An employer should obtain advice before taking action in response to a complaint from a contractor as there may be other stakeholders who need to be consulted or involved in handling that complaint.

Overview of the complaint handling process An overview of the complaint handling process that the employer may apply on receipt of a complaint from an employee is provided in the following diagram, together with an examination of the various stages of that process. Typically, an employer will be required to manage and respond to a complaint by applying the process outlined in any applicable policies or procedures, industrial instruments and/or employment contracts. Indeed, failure to do so may expose the employer to legal, commercial or reputational risks. An employer must also consider the broader legal, commercial and/or reputational risks that may arise from the specific complaint before deciding on how best to manage the complaint. Overview of complaint handling process

The following case example illustrates the risks of an employer failing to comply with its own complaint management processes. Case example Departure from policy amounted to breach of contract Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAFC 177 Background In this case, an employee in the role of Second Officer reported to the ship’s Master. During a voyage in 2013, the employee and the Master had a falling out that resulted in the Master contacting HR to arrange a replacement for the Second Officer. At that time, the Master raised issues about the Second Officer’s competence and temperament. Following her departure from the ship, the Second Officer emailed the General Manager to complain about the behaviour of the Master, alleging his conduct was “relentless and

targeted bullying”. Her email did not constitute a complaint under the employer’s relevant policy due to its ambiguity and that it simply called for management to deal with the matters. However, HR proceeded to treat it as a formal complaint. HR contacted the Master to raise the allegations made by the Second Officer and the Second Officer was called to a formal meeting without notice. This developed into an investigation about the Master’s complaints of her incompetence and temperament instead of the allegations of bullying made by the Second Officer. This was a departure from the procedures in the employer’s policy. The Second Officer pursued a claim for breach of contract, alleging the policy formed part of her employment contract and in departing from its established procedures, the employer had repudiated her contract. At first instance, the primary judge determined the policy did not form part of the Second Officer’s contract. The Second Officer appealed the decision. Findings On appeal it was found that the policy was incorporated into the employment contract because: • the employment contract did not specify that policies would not have contractual effect • the language in the policy set clear expectations around mutuality of obligations • the policy was integrated into the induction process • employees were required to sign the policy in acknowledgement, and • the employer regularly enforced the policies. It was held that the proscriptive investigation had been breached in a number of ways, including: • treating the complaint as a formal complaint despite there being no reference to the policy in the complaint (meaning, in line with the policy, it should have been treated informally) • on that basis, not pursuing an informal resolution to the dispute, and • inadequate documentation of the interviews.

Receipt of a complaint by the employer An employer may receive a complaint from an employee (the “complainant”) in a variety of different ways. In some cases, the complainant may put the complaint in writing, for example through the HR Team or their line manager. In other cases, the complaint may be made to the employer on behalf of a complainant by a third party (such as their union representative). The complaint may also be made in a more informal setting, for example during discussions with employees about seemingly unrelated matters or in the context of an employee seeking advice from their manager or the HR Team before making a decision as to whether to formalise a complaint. Because of the obligations that an employer has to its employees and to other stakeholders (including obligations under WHS legislation), there can be no assumption by any party of any complaint being a “confidential” complaint, particularly if the allegations are of a serious nature, and give rise to a risk to health or safety and/or involve unlawful or illegal activity. Best practice dictates that if an employee makes a complaint informally, or raises matters that would properly form the basis of a complaint in an informal manner, the employer should request that the employee submit the complaint in writing. If the employee is hesitant to document the complaint, then it is recommended that the HR Team (or equivalent) document the complaint in an email and: • request the employee confirm the content of the email, and • advise the employee of any further steps that the employer intends to take in relation to the complaint (such as escalating the matter to management). It is important to remember that if an employee is reluctant to be identified or to particularise the issues that are the subject of the complaint, there may be valid reasons for this, so they should be treated with respect. The employer should also be alive to the reality that reluctance or reticence to formalise a complaint could mean that the employee may not be a reliable witness for the purposes of any investigation or subsequent proceedings, or alternatively it may be an indicator that the complaint is vexatious or malicious. Further, if the complaint discloses unlawful activity, the employer will need to consider what, if any,

obligations it has to report those matters to the relevant authorities or if any obligations arise under applicable legislation that deals with whistleblowers. Employees may be protected by whistleblowing provisions under the Corporations Act 2001 (Cth) when making complaints based on suspecting on reasonable grounds that information they have concerns that a company or organisation, or an employee or officer of the company or organisation, has engaged in conduct that: • breaches the Corporations Act • breaches other financial sector laws enforced by ASIC or APRA • breaches an offence against any other law punishable by 12 months’ imprisonment, or • represents a danger to the public or the financial system.

Determining how to manage a complaint The role of the employer in workplace investigations is to manage the complaints handling processes to ensure that the right process is being undertaken by the right person (or persons), in a way that protects the integrity of the process and the interests of those involved, including the interests of the employer. In deciding how to manage complaints, an employer must also ensure it is meeting its duty of care towards employees, as well as complying with its obligations at law, including but not limited to its obligations under WHS laws. Typically, employers will seek to manage a complaint by investigating that complaint and seeking to make findings of fact in relation to the matters that are the subject of the complaint. Conducting investigations in the workplace can be a difficult process for all involved, including the person against whom the complaint is made, the complainant and/or those who are responsible for the investigation. In many instances, complaints made to management or HR are about sensitive matters, are made by employees who may not want to be identified for a range of reasons, and/or involve allegations that are imprecise and lacking particulars. Furthermore, those charged with the job of “getting to the bottom of it” may not be, or feel they are sufficiently qualified to undertake such a task. Given the breadth of the complaints that an employer may receive from employees over time, and the particular risks they may pose for the employer, there can be no “one size fits all” approach to the management of complaints. Tips for planning an investigation There are a range of matters that an employer must consider when planning how to manage a complaint, including: • whether the employer will investigate the complaint • who will conduct the investigation • how to manage the participants in the investigation (including whether any of the participants should be stood down or suspended) • how and when the employer will investigate the complaint, and who will be responsible for coordinating the investigation • who will be interviewed as part of the investigation, and • who will be the decision-maker.

Will the employer investigate the complaint? Whether or not an employer decides to investigate a complaint formally (as opposed to conduct initial enquiries into that complaint) will largely depend on the subject matter of the complaint, and the information that is available in relation to the complaint.

For example, the employer may require an investigation to be carried out into any allegations of inappropriate behaviour or misconduct against one of its employees because: • the allegations of misconduct are complex and an investigation is required to clearly establish the relevant facts and circumstances • the allegations relate to “serious” misconduct • the allegations relate to alleged unlawful conduct • a formal investigation is required by a policy, employment contract or an industrial instrument, or • in all the circumstances, the employer determines that a formal investigation is warranted. Who will conduct the investigation? Crucial to any investigation process is the decision as to who will conduct the investigation process, including whether the investigator will be sourced internally or will be an external appointment. A range of factors will influence the employer’s decision as to whether to appoint an internal or external investigator. Central to that decision will be whether the employer considers that it has the appropriate resources to conduct the investigation internally, having regard to: • the nature and seriousness of the matters the subject of the complaint (including any sensitive matters) • the seniority of the employees involved in the investigation • the degree of bias that may be perceived if the investigation were to be conducted internally • the skill and experience within the employer’s business for conducting the level of investigation required • the timing or urgency of the investigation, including whether the complaint has been raised during a peak period for the employer, or if there is a risk to health and safety, and/or • the extent of the resources (time and personnel) that would need to be dedicated to the investigation when compared with the costs of an external investigator. Further, if an employer is concerned about ensuring that the investigation is protected by legal professional privilege, it is open to an employer to engage a legal practitioner to conduct the investigation. How should an employer manage the participants in the investigation? An important consideration in any investigation process is how to manage the participants in that investigation, so that not only are their interests protected, but the integrity of the investigation is maintained and all parties are afforded procedural fairness. There are various options open to an employer, each subject to the terms and conditions of the employees’ employment contract and their policies and procedures. Those options include suspending an employee or standing them down from their duties pending the completion of the investigation. Specifically, an employer will need to consider what it intends to do in respect of any employee against whom a complaint is made. The employer needs to be careful not to automatically stand down an employee against whom a complaint is made. A respondent to a complaint is entitled to be treated fairly and afforded procedural fairness. Any adverse treatment of the employee could expose the employer to legal risk. Standing an employee down should be considered in circumstances where: • the allegations involve serious misconduct

• the employee may disrupt the workplace or interfere with the investigation • there is a risk that the behaviour that is the subject of the complaint will be repeated by the employee. It is also open to the employer to consider alternatives such as moving the employee into a different workspace or, if possible, allowing the employee to work from home. Failure to manage the participants in an investigation appropriately may also expose the employer to adverse commentary or legal outcomes. For example, in Richardson v Oracle Corporation Australia (which is discussed in some detail in Chapter 4: Conduct Issues) the trial judge criticised the employer for requiring the complainant to maintain contact with her colleague (who was ultimately found to have sexually harassed her) during the investigation process. Only once the investigation had been completed, were the two separated at work. The trial judge was satisfied that the requirement to remain in contact during the investigation contributed in part to the complainant’s psychological injury for which she was awarded damages. Who will co-ordinate the investigation? Irrespective of whether an internal or external investigator is appointed, it is recommended that an employer designate one individual to co-ordinate the investigation and to act as a liaison between the employer, the investigator and the participants in the investigation. This will also assist in ensuring that all communications in respect of the investigation are consistent. How and when will the investigation be conducted? Determining the “how” and “when” in planning an investigation is crucial to the success of the investigation and to minimising the employer’s risk profile. The answer to the “how” and “when” may be set out in the complaints handling process set out in the relevant policy, industrial instrument or employment contract. If this is the case, the employer should prepare and follow an investigation plan consistent with that process. The “how” and “when” of investigation planning may also be determined by the nature of the complaint and the urgency with which that complaint must be dealt with. For example, immediate steps would need to be taken in relation to a complaint that discloses an imminent risk to health and safety. A general rule to observe is that investigations should be undertaken and finalised as quickly as possible (without compromise to procedural fairness), otherwise the position of the employer may be prejudiced in other legal proceedings. If the “how” and “when” are not prescribed by a policy, an industrial instrument or an employment contract, then these matters will be determined at the discretion of the employer. In these circumstances, the employer will need to consider and determine the most appropriate investigation process and when that will occur. Who will be the decision-maker? The employer will need to appoint a decision-maker to consider the findings and any recommendations of the investigator and to make a decision as to the appropriate next steps, including any appropriate disciplinary action. To the extent possible, the decision-maker should not have had any prior involvement in the matters the subject of the complaint and should be isolated from the investigation process so as not to give rise to an actual or perceived apprehension of bias. Communicating with investigation participants Once the preliminary questions outlined above have been answered and the investigator has been appointed, one of the first steps in the investigation will be to communicate with those who have been identified as potential witnesses, including the employee making the complaint and the person against whom the complaint is made. Irrespective of who is appointed to investigate the complaint, it is recommended that the first communication with all participants about the investigation of the complaint come from the employer. That

communication should include: • a short description of the nature of the investigation and why that person has been approached • details of the investigation process, including the name of the investigator and the date, time and place of any interview • if the interviewee is either the employee making the complaint or the person against whom the complaint is made, advise that person that they are entitled to have a support person present during the interview • directions regarding confidentiality and victimisation in relation to the investigation and details as to the possible consequences of breach of those directions, and • a reminder of the availability of any Employee Assistance Program in the event that further support and assistance is required. In addition, any communication with the employee against whom the complaint has been made should include a statement to the effect that no decisions have been made about any allegations that have been made against them, and no decision will be made until such time as they have been provided with particulars of the allegations and an opportunity to respond to those allegations. Where practicable, the initial communication with the investigation participants should be face-to-face and supported by a letter confirming what has been discussed. If a letter is not provided, detailed notes of that meeting should be kept and maintained on the investigation file. Briefing an external investigator If an external investigator is appointed, it is important that the investigator is briefed with all of the information relevant to the investigation. This includes but is not limited to: • the facts and circumstances of the complaint (and a copy of the complaint if it was received in writing) • details of any steps taken by the employer in relation to the complaint (including any preliminary investigations) • any policies, industrial instrument or employment contract relevant to the matters the subject of the complaint or which prescribe how the complaint is to be investigated, and/or • any relevant legislation. In briefing the external investigator, the employer should also make clear its expectations regarding: • communication with participants (ie whether the investigator will communicate with participants through liaison with the employer or directly) • the timeframes for completion of the investigation • how witness evidence is to be presented (eg whether interviews are to be recorded and/or written statements prepared), and • how the investigator’s findings and recommendations are to be presented (a written report is recommended). Conducting internal investigations There are a number of additional matters that an employer and the investigator may wish to consider in planning and undertaking an investigation, if the decision is made to appoint an internal investigator. One of the first matters that an employer will need to consider is the most appropriate person to appoint as the investigator. Relevant considerations in this regard include skills and experience in investigating workplace complaints and the availability of investigators at the relevant time.

The employer will also need to consider the potential impact of responsibility for the investigation on the investigator’s workload and make reasonable accommodations accordingly. Ultimately, it may be necessary for the employer to take the investigator “offline” for the duration of the investigation should the circumstances require this. For the investigator, it is important that they acknowledge and understand the nature of their investigative role and plan appropriately before commencing the investigation. Further, at all times during the investigation, the investigator should follow any relevant codes of conduct, maintain confidentiality, seek to investigate the complaint fairly and without bias, and maintain objectivity, impartiality and independence. The overarching purpose of the investigation is to uncover and test the relevant facts and circumstances of the complaint and then making findings and recommendations in relation to the complaint for the decision-maker to consider. Investigators should be encouraged to raise with the employer any issues that may impact on their independence, objectivity or impartiality as soon as practicable. Tips for an internal investigation If the decision of the employer is that the complaint will be investigated internally, it is important that the investigator: • understands and applies the correct process relevant to the investigation and the complaint • keeps an open mind and avoids simply following a checklist which will limit the information and evidence considered • provides procedural fairness to those involved in the investigation. In particular, the employee against whom the complaint is made must be given particulars of all allegations that have been made against them and be provided with an opportunity to respond to the allegations before the investigation is concluded and a decision is made • to the extent possible, documents each aspect of the investigation process so that there are contemporaneous records available in the event that the investigation process is challenged, and • seeks advice where required to ensure the employer’s actions are appropriate.

In most circumstances, the relevant facts will be uncovered and tested by interviewing potential witnesses and collating and reviewing relevant documentary material. Therefore, before commencing the investigation, it is recommended that the investigator: • review the information available to the employer regarding the complaint (including any written complaint), and collate any additional documentary evidence they may require • review the complaints handling processes relevant to the complaint to confirm if there is a mandatory investigation process. If not, the investigator will have the discretion to conduct the investigation as they consider reasonable and appropriate • identify who they wish to interview as part of the investigation. This may include a range of persons such as the complainant and any employee against whom the complaint has been made. Often other individuals (including other employees) may also be identified as having information that is potentially relevant to the investigation, including being able to verify facts or statements made by other interviewees. These individuals should also be interviewed as part of the investigation process, and • consider the logistics of conducting the investigation, including but not limited to: – dates, times and places for interviews – the order of the interviews. As a general rule, the person making the complaint should be interviewed first and the employee against whom the complaint has been made next, so that the relevant allegations may be put to the employee for his/her response. If there are further direct witness interviews stemming from the initial interviews, any further allegations should be put to the employee for response prior to the investigation proceeding.

– how records of interview are going to be created and maintained (eg recorded interviews, notetaking, and/or creating a witness statement as the interview progresses), and – what other sources of evidence relevant to the complaint may be available or required (eg documents or surveillance). In undertaking the investigation, the investigator will need to be conscious of the impact that involvement in the investigation may be having on interviewees, particularly the person making the complaint and/or the employee against whom the complaint has been made, and be prepared to deal with the emotional aspects of the investigation process. It is also recommended that the investigator prepare for interviews by drafting a script or a list of questions to be asked of the interviewees to ensure that all of the relevant issues are covered during the interview. At all times, the investigator should strive to ensure that participants are afforded procedural fairness.

Decision-making Findings and recommendations Once the investigation has been completed and the available evidence has been obtained and analysed, the investigator will make findings and recommendations in respect of the subject matter of the complaint. This includes findings on the factual allegations the subject of the complaint, and findings as to whether there has been a breach of any relevant law, industrial instrument, contractual term or policy. The standard of proof to be applied in an investigation is the “balance of probabilities”. This means it is necessary to be conscious of the gravity of the allegations and the consequences flowing from a particular finding. To this end, the case of Briginshaw v Briginshaw (1938) 60 CLR 336 has been regularly applied in relevant courts and tribunals. In this case, the court held that the standard of proof to be applied depends on: • the seriousness of the allegations made • the likelihood or unlikelihood of an event, and • the seriousness of the consequences flowing from a particular finding. Broadly, the findings of an investigation will likely reflect one of the following outcomes: • the allegation or allegations have been proven • the allegation or allegations have not been proven, or • there is insufficient evidence to substantiate the allegation or allegations. However, care should be taken to qualify these findings where appropriate (eg when part of an allegation has been proven but there is insufficient evidence to substantiate the balance of that allegation, then this should be reflected clearly in the findings). The investigator should not make any findings or recommendations in relation to any allegations that have not been put to the employee against whom they have been made for the employee’s response. To do so may give rise to claims that the investigation lacked procedural fairness, potentially undermine the findings and recommendations of the entire investigation and, if a decision made by the employer based on the findings and recommendations is successfully challenged, result in adverse findings against the employer. An investigator is not bound by the rules of evidence when conducting the investigation or in making findings and recommendations. However, other professionals, courts and tribunals may subsequently make use of the material. Further, the statements prepared by the investigator and signed by witnesses

may be used in later proceedings. It is therefore important that any statements be in admissible form, as far as is practicable. Therefore, care should be taken to ensure that material gathered during an investigation is in an appropriate form for these purposes. Making a decision Ultimately, it is a matter for the employer, through the appointed decision-maker, to decide what steps to take in response to the findings and recommendations made by the investigator in respect of the complaint. The decision-maker must undertake, and be able to evidence that they have undertaken, an independent assessment of the information available, including the findings and recommendations of the investigator, and the process conducted before making their decision. It is important that any decision about a complaint is not made until the investigation has been completed and the decision-maker has been provided with the findings and recommendations of the investigator (preferably in writing). The following case highlights the risks of making a final decision in a misconduct matter without properly considering an employee’s response to allegations or the process conducted in respect of the allegations. Case example Decision without proper consideration He v Peacock Bros Pty Ltd; Lac v Peacock Bros Pty Ltd [2013] FWC 7541 Background In this case, two employees were summarily dismissed after physically attacking their supervisor in an altercation during work hours. The first employee was said to have initiated an argument with his supervisor by swearing at him. The supervisor retaliated with verbal abuse and the first employee responded by pushing him. The argument escalated when the second employee joined the first in repeatedly punching the supervisor. A fourth employee intervened to restrain the dismissed employees and subsequently reported the incident to the Managing Director. The Managing Director called separate meetings with the dismissed employees to discuss the incident. The Managing Director set out the allegations to the first employee as she had been informed by the supervisor and the fourth employee, and asked for his response. The first employee was somewhat unresponsive due to his difficulties with English. The Managing Director advised him in that meeting that he was summarily dismissed. The second employee was also called to a meeting by the Managing Director. The second employee demanded the opportunity to recount his version of events before any action was taken against him and requested that witnesses be interviewed in respect of the altercation, however, his request was ignored and the Managing Director summarily dismissed him as well. The employees filed unfair dismissal claims. Findings The FWC found that the employees’ dismissals were unfair despite the altercation being a valid reason for dismissal. This was because the Managing Director failed to: • notify the employees of the purpose of the meeting prior to its occurrence • consider the responses from the employees properly before making a decision about their ongoing employment, and • provide them with a meaningful and sufficient opportunity to respond in detail to the allegations. The employees’ difficulties with English also contributed to the dismissal being found “unfair”. Each employee was awarded two weeks’ pay which was representative of the amount of time it would have likely taken to investigate the allegations properly before dismissing the employees.

The range of outcomes that the decision-maker may implement will depend on the nature of the complaint, the findings and recommendations made by the investigator and the outcomes available to the employer arising from the applicable policies and procedures or industrial instruments, or the employee’s employment contract. Outcomes may include disciplinary action (including but not limited to counselling, warnings or termination of employment) and/or further training or monitoring of the employee’s conduct or performance. The decision of the employer in respect of the allegations and any resulting outcome should be confirmed in writing, provided to the employee and placed on the investigation file and the employee’s employment file.

Finalising the complaint Following the completion of an investigation into a complaint, the participants in an investigation will often want to know the outcome of the investigation. Generally, what is appropriate for the employer to disclose to the participants in an investigation will depend on the nature of the complaint. It would not, for example, in a matter relating to allegations of misconduct against an employee, be appropriate for the employer to disclose to others, including participants in the investigation process, the specific details of the findings and recommendations of the investigator or the decision of the employer (including the details of any disciplinary action that may have resulted from the investigation process). It is recommended that once the investigation is complete and a decision made, the employer inform the participants that the complaint has been finalised, thank them for their participation in the investigation and remind them of their ongoing obligations regarding confidentiality and victimisation. It would then be a matter for the employer to decide on a case-by-case basis whether it is appropriate to make available any additional information about the outcome. All material in relation to the investigation, including any statements or recordings, but excluding evidence of any disciplinary action taken against the employee, should be retained on a separate confidential file and not on the relevant employee’s employment file. Unless required by law, at no time should an employer voluntarily disclose a copy of any investigation report, particularly if it wishes to maintain legal professional privilege over that report. The report must be kept confidential. Any requests for access to the investigation report should be denied until legal advice is obtained.

Managing Ill and Injured Employees Introduction From time to time, an employee may sustain an injury or be diagnosed with an illness that may impact on their ability to perform their duties. If this occurs, there are a range of issues that an employer must be aware of, irrespective of whether the injury or illness is contracted or sustained in the course of the employee’s employment, in order to ensure that the employer’s business is sufficiently protected from risk. This Chapter examines the obligations of the employer to an employee who has an illness or injury, to other employees and to third parties, and best practice in managing ill and injured employees.

Obligations to ill or injured employees This section considers the legal obligations the employer has to ill or injured employees, whether or not the illness is contracted, or the injury sustained, in connection with their employment. These obligations include or relate to: (a) WHS obligations (statutory and common law) (b) workers’ compensation (c) return to work (d) discrimination, and (e) privacy. Work health and safety obligations (statutory and common law) The WHS obligations of an employer are discussed in detail in Chapter 9: Work Health and Safety. In the context of managing ill and injured employees, WHS legislation provides that an employer has an obligation to ensure the health and safety of employees as far as reasonably practicable. An employer also has obligations under WHS legislation where a “notifiable or serious incident” has occurred in the course of the employee’s employment. Examples of a “notifiable or serious incident” are set out in Chapter 9. Even where an illness or injury is not a “notifiable or serious incident”, an employer should continually reassess whether it is necessary to report the illness or injury to the relevant regulatory authority. Failure by an employer to comply with its legislative WHS obligations may result in the employer being prosecuted and/or pecuniary penalties being imposed on the employer. In addition to its legislative obligations, an employer also has a duty of care at common law to ensure the health and safety of an employee. If it can be shown that the employer breached its duty of care, and this breach resulted in the employee’s illness or injury, it may be possible for the employee to seek damages from the employer. Workers’ compensation Where an employee contracts an illness or sustains an injury in the course of their employment, the employee may be able to make a workers’ compensation claim. The term “injury” is broadly defined under workers’ compensation legislation. Each state and territory has its own workers’ compensation arrangements and it is recommended that employers understand the specific arrangements applying in each state or territory in which they operate. If an employee makes a workers’ compensation claim, the relevant legislation imposes obligations on the

employer with respect to the management, return to work and dismissal of the employee. In circumstances where a workers’ compensation claim could potentially be made in respect of an employee’s injury or illness, an employer should also consider any additional obligations it may have in the context of its insurance arrangements (eg not making admissions without notifying or obtaining the approval of the insurer). Return to work If an employee recovers from an illness or injury and advises that they are fit to return to work, the employer will have an obligation to facilitate the employee’s return to work. This may be to the employee’s previous role or, if the employee is not fit to perform that role, an alternative role or alternative duties (commonly referred to as “suitable duties” under workers’ compensation legislation). When facilitating an employee’s return to work, an employer should be cautious that in returning the employee to work, it does not breach any of its WHS obligations to the employee or others at the workplace. Consideration must also be given to the employer’s obligations under workers’ compensation legislation if the employee has made a workers’ compensation claim. Therefore, as a matter of best practice, prior to returning an employee to work, the employer should obtain advice (including but not limited to medical or legal advice) about the employee’s capacity for work, management of the employee’s condition and any risks posed by the employee to co-workers or to third parties by any proposed return to work plan. Discrimination An employer will also need to consider carefully its obligation not to discriminate against an employee at any stage of the illness/injury management process on the basis of the employee’s illness or injury. Commonwealth, State and Territory legislation prohibits direct and indirect discriminatory conduct on the ground of disability (which includes an illness or injury). Indirect discrimination can include imposing a requirement or condition which an employee is unable to comply with because of the employee’s illness or injury, and the requirement adversely affects persons with a disability, and it is not reasonable. Privacy While it may seem intuitively important to communicate to employees that one of their co-workers has contracted an illness or sustained an injury, any decision by the employer to inform other employees of the relevant employee’s serious illness or injury may infringe privacy legislation. The APPs in the Privacy Act 1988 (Cth) regulate the disclosure of an employee’s personal information. Under the APPs, a disclosure of personal information may be made without an employee’s consent where it is unreasonable or impracticable to obtain the employee’s consent and the disclosure is necessary to lessen or prevent a serious threat to life, or the health or safety of any individual or the public. Sick leave during stand downs The mass stand downs in 2020 resulting from the COVID-19 pandemic closures and downturns resulted in questions being raised about the availability of personal leave (including sick leave) when employees are stood down. Case example Communications, Electrical Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Qantas Airways Limited [2020] FCA 656 Background Amid the mass stand downs that occurred in 2020 during the COVID-19 pandemic, a ruling was made by the Federal Court in relation to the requirement to pay personal leave to sick or injured employers during periods of stand downs. More than 20,000 workers were stood down by Qantas without pay under s 524 of the FW Act due to the restrictions on travel during the pandemic. The unions relied on s 525 of FW Act under which a worker is not taken to be stood down while: • taking paid or unpaid leave that is authorised by the employer, or • otherwise authorised to be absent from his/her employment. The unions argued that an employee who takes personal/carer’s or compassionate leave is authorised to be absent from his/her

employment. Accordingly, an employee who takes such leave should not be taken as having been stood down, and the employer must pay the employee for the leave period. Findings The Federal Court ruled that Qantas did not have to pay personal/carer’s leave or compassionate leave to any of the stood down employees. The Federal Court’s decision was based on the concept that leave entitlements are granted to relieve an employee from work that is required to be performed. The Federal Court characterised the leave entitlements as a “form of income protection”, which presupposes that an employee is in receipt of income. If an employee is lawfully stood down under s 524 of the FW Act because there is no work for them to do, and therefore no income available for the employees to earn, leave entitlements are not available to them. The Federal Court further commented that “to permit such an employee to nevertheless access personal/carer’s leave whilst stood down would be to allow them to ‘cash out’ their leave entitlements’ contrary to the FW Act”.

Obligations to other employees and third parties In addition to its obligations to the ill or injured employee, an employer has a range of obligations to other employees and third parties (including contractors or persons performing work for the employer in another capacity) that it must also be aware of and act upon in managing an ill or injured employee. For example, under WHS legislation, the employer has an obligation to ensure the health and welfare of all persons at its workplace — that is, not only the health and welfare of the ill or injured employee, but also that of other employees and third parties who may be on site. The decision in Ranui Parahi v Parmalat Australia Ltd referred to later in this Chapter provides an example of when an employer’s WHS obligations are a relevant factor in determining how to manage the illness or injury of an employee. Therefore, it is appropriate to consider whether an employer has appropriate mechanisms in place to ensure the health and safety of employees and third parties against any risk that the return of the ill or injured employee to the workplace may pose. To determine whether appropriate mechanisms are in place, the employer should conduct a risk management process relevant to the employee’s duties and location involving: • Hazard identification — identifying the potential hazard sources, including identifying activities where hazards exist • Risk assessment — determining the risk of illness or injury to other employees and third parties, that could arise as a result of the employee returning to work. This should include looking at the availability of personal protective equipment, access to relevant medical first aid services and individual risk factors for each employee, and • Risk control — developing and implementing policies and procedures to control the risks and monitor and review the effectiveness of the policies and procedures. In adopting particular risk management measures, it is important that an employer is able to establish that the decision to adopt a particular risk management measure is reasonable and appropriate. This is illustrated by the recent case example below where the employer attempted to direct an entire segment of its workforce to adopt a risk management measure in the form of a compulsory health assessment. Case example What are lawful and reasonable risk management measures? Transport Workers Union of Australia v Cement Australia Pty Ltd [2015] FWC 158 Background Cement Australia issued a direction to all of its transport employees (whose employment was covered by various enterprise agreements) to participate in a Physical Risk Review Program. The Program was developed and implemented after heavy vehicle drivers reported higher average rates of incidents and injury than other employees across the business. The Program included compulsory assessment by an external health professional. Cement Australia provided an assessment of the employee’s level of risk in performing their duties subsequent to that external health assessment. Employees were advised that if they refused to participate in the external health assessment they could be subject to disciplinary action. Concerns were raised about the direction

that transport employees must participate in the Program, and the potential disciplinary consequences of these employees refusing to participate in the Program. Concerns were also raised about privacy and the safekeeping of the information arising from the external health assessments. The Transport Workers’ Union lodged a dispute in the FWC, seeking a determination as to whether the direction that employees participate was a lawful and reasonable direction. Findings The FWC found that it was unlawful and unreasonable for Cement Australia to direct workers to attend compulsory health assessments since there had been an insufficient particularisation of the data to establish a genuine need to direct an entire segment of the workforce to undertake the program. Concerns were also raised by the FWC about whether the Program would provide medical information that was not directed to the inherent requirements of the job and therefore this information could potentially be discriminatory if used against an employee.

The above case example provides a salient reminder for employers that the need for and objective of any medical assessment process (whether during employment or otherwise) must be clear and genuine, and must be directed to ascertaining whether the relevant employee or employees are able to perform the inherent requirements of their role. If the purpose or scope of the medical assessment extends beyond ascertaining the ability of an employee to perform the inherent requirements of the role, there is an increased risk that the assessment process will be found to be unreasonable and/or discriminatory. However, as the following case example demonstrates, this decision should not deter employers from directing employees to attend an independent medical assessment where: (a) the objective of the medical assessment is genuine or clear, and/or (b) an employee has been absent from work for a significant period of time and the purpose of the medical assessment is to assess whether the employee can perform the inherent requirements of the role, or the reasonable adjustments that may be required. Case example Lawful and reasonable direction to attend an independent medical examination Grant v BHP Coal Pty Ltd (No 2) [2015] FCA 1374 Background The employee was dismissed from his job as a boilermaker for BHP Coal after he failed to submit to a medical assessment by a doctor nominated by BHP Coal following a lengthy absence from work due to injury. The employee made an unfair dismissal claim to the FWC. When the FWC (both at first instance and on appeal to its Full Bench) found that there was a valid reason for the termination of his employment and that BHP Coal had not unfairly dismissed him, the employee appealed the decision of the Full Bench to the Federal Court. Findings The Federal Court found in favour of BHP Coal, affirming that it was lawful and reasonable for BHP Coal to require the employee to submit to an assessment by a company-approved doctor, given the inherently dangerous nature of the workplace, and the increased safety risks associated with his work. In particular, the Federal Court found that while s 39(1)(c) of the Coal Mining Safety and Health Act 1999 does not entitle an employer to force an employee to undergo a medical examination, it does enable this direction in circumstances “where there are health or other concerns in respect of the employee” which may lead to exposure to an unacceptable level of risk. Accordingly, the Federal Court found that the FWC had not erred in finding that BHP Coal’s instruction was lawful and reasonable and, furthermore, the employee’s failure to comply with that direction formed a valid reason for his dismissal.

Steps in managing ill or injured employees Set out below is a flowchart of the recommended steps for managing an employee who has sustained an injury or illness, in light of the employer’s obligations to the ill or injured employee, to other employees of the employer, and to third parties. The extent to which any or all of the following steps are adopted by the employer will be determined by factors including the nature and seriousness of the employee’s injury or illness, whether or not the injury or illness is work-related, and the anticipated length of the employee’s absence from the workplace. What prompts an employer to take any or all of the following steps is likely to differ in each circumstance. For example, an employee may express their desire or fitness to return to work, or the employer may receive information that an employee’s illness or injury is different or more serious than previously

understood. In those circumstances, the employer will need to adapt the steps that they adopt in order to ensure that the employer is meeting its obligations and protecting itself from risk. In this regard, each set of circumstances will also give rise to different legal and operational risks and issues for the employer — particularly in circumstances where termination of an injured or ill employee’s employment is the option pursued by the employer. The legal risks are outlined below. It is recommended that employers adopt a case-by-case approach and that an employer carefully consider its response to an employee’s injury or illness so as to minimise the employer’s risks. It is recommended that, irrespective of the circumstances, employers manage employees in a fair and consistent manner from the outset of any absence due to illness or injury. Recommended steps

The following case example confirms that if termination of employment is to be the outcome of the injury/illness management process, then the appropriate time for consideration as to whether the employee has capacity to perform the inherent requirements of their role is at the time of termination of their employment. Case example Timing of decision to terminate Fia v Corinthian Industries (Australia) Pty Ltd [2013] FWC 2694 Background The employee was injured while performing work for another employer. The injury required the employee to take sick leave from Corinthian as he was unable to perform both roles on account of his injury. The employee’s employment with Corinthian was terminated when he reached four months of sick leave as it was deemed that he was not able to perform his duties due to a non-work related injury and at the time of termination, was not able to provide medical clearance for work. The employee argued this was unfair as he received medical clearance two weeks after the termination of his employment. Findings The FWC held that there was a valid reason for the employee’s dismissal as Corinthian was correct to consider his ability to perform

the role at the time of termination. At that time, they were not sure of his ability and capacity to return to work, therefore being fit for work two weeks later was not relevant.

What are “reasonable adjustments”? Disability discrimination law imposes a positive obligation on employers to identify and make reasonable adjustments for an employee with a “disability”. The term “disability” is broadly defined under that legislation. The word “adjustment” has been interpreted to have its ordinary meaning of “an alteration or modification”. An adjustment will be a “reasonable adjustment” unless making the adjustment would impose an unjustifiable hardship on the employer (ie employers are not required to make an adjustment that would be, for example, too expensive, impractical or time-consuming). Reasonable adjustments may include: • providing flexible work hours • providing time off work (including access to unpaid leave) in order for the employee to recover where there is a prognosis that recovery is feasible • providing regular breaks for employees with chronic pain or fatigue, and/or • purchasing desks with adjustable heights, installing ramps and modifying toilets. More than one adjustment may be necessary, and more than one option may be available. Employers are not required to look for solutions such as redeployment or radical redesign of alternative positions. An employer should make its own inquiries as to whether there are any reasonable adjustments that could be made for an employee. The employee is required to co-operate with the employer’s efforts in this regard. The employer is also able to conduct its own research and consult any other experts regarding changes that could be made to accommodate the employee. The following case provides an example of what a court may consider to be “reasonable adjustments”. However, it is important to note that the question of whether any adjustments are reasonable will always depend on the circumstances, including the nature of the employee’s disability, the nature of the workplace, the “inherent requirements” of the employee’s substantive position and the adjustments required. Case example Reasonable adjustments Watts v Australian Postal Corporation [2014] FCA 370 Background The employee was a manager who suffered a psychological injury as a result of not being selected for a leadership training program offered by the employer, Australia Post. Australia Post formed the view that the employee could not perform the full requirements of her original position and therefore sought to manage her return to work by providing her with alternative positions. The employee pursued a claim for discrimination against the employer. Findings The Federal Court held Australia Post engaged in unlawful discrimination by failing to make reasonable adjustments for the employee to return to her position. Justice Mortimer stated: “In my opinion, matters such as limited working hours which gradually increased, alterations to supervision arrangements, modifications to face to face meeting requirements, amelioration of deadlines being too tight, changes in the kind of work being performed, minimising conflict situations, avoiding the need to lead teams, where all those matters are envisaged as necessary for a limited period of time of approximately three months, are adjustments which could have been made for [the employee] without imposing unjustifiable hardship on Australia Post.”

As illustrated in the following case example, in circumstances where reasonable adjustments have been made for an employee, it is important for the employer to communicate formally to the employee the nature and duration of any changes and how any future assessment of their fitness for work will be

undertaken (whether the assessment will be against their original or modified role). Case example Standards against which employees are to be assessed Mottaghi v Adelaide Community Healthcare Alliance Incorporated T/A The Memorial Hospital [2013] FWC 1906 Background After approximately eight years in her employment, the employee was diagnosed with carpal tunnel syndrome. She subsequently submitted a WorkCover claim, which was accepted. She returned to work six months later after surgery and was placed into a role with modified duties (“new role”). After two years in this role, concerns were expressed about the employee’s fitness to perform this new role. She was subject to two medical examinations after which it was concluded that she was not fit to perform the role she was in immediately prior to the new role, and her employment was terminated. The employee made an unfair dismissal claim to the FWC. Findings In support of her unfair dismissal claim, the employee argued that the dismissal was unfair as she should have been assessed against her fitness to perform her new role, not her previous role, as she had been informed that the new role was to be her substantive role going forward. Her employer argued that the new role was merely a modified role and any assessment of fitness for work to be done against her previous role. The FWC held that based on an assessment of facts and events, the employee’s version of events should be preferred and that the new role was her substantive role and she should be assessed against her ability to perform this role. Accordingly, the dismissal was held to be unfair as there was a gross failure to provide procedural fairness in assessing the employee’s fitness for work, in failing to provide an adequate explanation of the reasons for termination and in failing to allow her the opportunity to respond to their concerns. The FWC ordered that the employee be reinstated to her position, with her continuity of service maintained, and backpay from the date of termination to the date of reinstatement.

The following case example confirms the need for the employer to communicate with the employee about the medical evidence it receives and to consider what, if any, reasonable adjustments can be made to enable an employee to return to work before proceeding to make a decision about the employee’s ongoing employment. Case example Reasonable adjustments Dziurbas v Mondelez Australia Pty Ltd (Human Rights) [2015] VCAT 1432 Background Mondelez dismissed a 63-year-old production worker who had worked with the company for close to 30 years on the basis that Mondelez understood the employee did not have the capacity to carry out the inherent requirements of his role. The employee had limited English-speaking abilities and could not read English. Mondelez failed to give the employee access to the medical advice it obtained in relation to the employee’s capacity, which related to the employee’s chronic elbow condition. Mondelez also failed to give the employee an opportunity to consider or propose any ideas or alternatives prior to his dismissal. The employee made a disability discrimination claim against Mondelez to the VCAT. Findings VCAT found that Mondelez directly discriminated against the employee on the basis of his disability, and ordered Mondelez to pay $20,000 in compensation for the shock caused by the summary dismissal, as well as an additional amount for economic loss. Mondelez was unable to prove genuinely that it had investigated the employee’s role at the time of termination and determined that it was more probable than not that the employee would be unable to adequately perform the requirements of his role. VCAT outlined the need under s 20 of the Equal Opportunity Act 2010 (Vic) to consider the genuine and reasonable requirements of the employment, and make enquiries as to whether the role can be reasonably adjusted to accommodate an employee, including considering evidence about the worker’s capacity, analysis of the reasonableness of adjustments and evidence relating to the ability of the employee to perform the inherent requirements of the role.

Legal risks in managing ill or injured employees For employers, there are a number of legal risks that attach to the management of ill and injured employees. The extent of the risk will typically depend on how far the employer has progressed through a process such as the one outlined above.

The legal risks include: (a) discrimination claims (b) workers’ compensation claims (c) claims under WHS legislation (d) claims for breach of the general protections provisions of the FW Act. The FW Act deems unlawful any form of adverse action against an employee on the basis of disability. Adverse action includes terminating an employee’s employment or varying the position of the employee to an employee’s detriment. The general protections provisions also provide protection for employees whose employment is terminated because the employee is temporarily absent from work because of injury or illness (e) unfair dismissal claims, and (f) unlawful termination claims (on similar grounds to the claims that may be made under the general protections provisions). The case example below demonstrates that ill or injured employees may have a variety of claims available to them in respect of an employer’s management of their injury or illness, and that if one of those claims then becomes unavailable due to circumstance, this will not necessarily impact on the balance of the employee’s remaining claims. Case example Multiple claims McGarva v Enghouse Australia Pty Ltd [2014] FCCA 1522 Background The employee had been absent from his work as a channel manager at Enghouse for 10 months before his employment was terminated. He was on unpaid leave due to suffering from grade IV stomach and liver cancer. While on leave, the employee had kept his employer informed about his progress and had confirmed via email that he was looking at a possible return to work within two to four weeks. Enghouse responded with a termination letter. This interlocutory proceeding concerned whether the employee’s dismissal could constitute adverse action under s 352 of the FW Act (being the prohibition on termination for temporary absence or illness) if the dismissal was not prohibited by s 351 (which prohibits adverse action on grounds of discrimination). Findings The Federal Circuit Court allowed the employee to proceed with his adverse action claim, holding that a dismissal may still be unlawful even if he was away from work for longer than the three months specified under the FW Regulations. The court affirmed that while the employee’s dismissal may be authorised under s 352 of the FW Act, this does not carry any implication for an action for discrimination under s 351. The court encouraged the parties to attend mediation to resolve the outstanding issues.

Employers must also remain mindful of the broad application of the relevant legislation, in managing not only ill or injured employees, but also in dealing with employees who may have carer’s responsibilities for another individual (whether or not a fellow employee), particularly in the discrimination sphere. It is a defence to a variety of these claims if an employer can establish that the reason for termination of the employee’s employment was because the employee could not perform the inherent requirements of the role or any reasonable adjustments that were made to that role. The case examples below: (a) confirm the availability of the “inherent requirements” defence in unfair dismissal claims, and (b) highlight the significance of employees being able to perform the inherent requirements of their role safely in the determination of employee claims by courts and tribunals in this area. Case examples Inherent requirements

Rowe v V/Line Pty Ltd [2014] FWC 1437 Background The employee had worked for the employer for almost 44 years and over his working career, had previously been involved in 20 reported train incidents involving collisions, fatalities and near misses. In December 2010, the employee indicated that he was suffering from post-traumatic stress disorder (PTSD) and was unable to perform his role. Almost two years later, the employee had still not returned to work and was asked to attend a medical examination which indicated that he would never return to his full preinjury duties as he was still suffering from PTSD and reported that he continued to be startled by passing trains and had concentration issues. Therefore, the doctor found he was unfit to work in any position within the railway safety environment or an office environment. The employee was dismissed in December 2012 on the basis that he was permanently unfit to return to his role and unfit to perform any alternative suitable employment. The employee made an unfair dismissal claim. Findings The FWC found Mr Rowe was unable to fulfil the inherent requirements of the job and while doctors’ reports suggested a structured return to work program based on him being retrained, it was not for the FWC to decide whether he might be able to perform some other set of duties, but rather whether he had the capacity to perform the inherent requirements of his job as it was at the time of the termination. The FWC therefore dismissed the employee’s unfair dismissal claim. Inherent requirements and safety Parahi v Parmalat Australia Ltd [2015] FWC 7191 Background The employee was employed as a cool room operator at a distribution centre. The employee (among other employees) completed a manual handling hazard and risk assessment conducted by an external occupational therapist. He was considered to have a medium to high risk assessment based on his fitness, weight and associated medical-type issues which raised concerns that he may not be able to perform his role safely and competently. The employee weighed 165 kg which precluded him from operating forklifts due to the forklifts’ maximum weight safety rating. The employee was later dismissed from his employment due to his medical incapacity to perform his role safely. The employee made an unfair dismissal claim. Findings The FWC found that the employer had a valid reason for dismissal as the employee was unable to undertake the inherent requirements of his role safely and the dismissal was not “harsh, unjust or unreasonable” as he was afforded procedural fairness.

The key to managing the risks attaching to ill or injured employees is preparation and consideration of the issues from all perspectives, particularly in circumstances where meetings and discussions with ill or injured employees often involve difficult and emotionally charged conversations, and potentially expose the employer to a number of legal and/or reputational risks. The “Tips for Managing Ill and Injured Employees” below include a number of practical tips to assist in managing illness/injury management processes in the best interests of the employer and the employee. Tips for managing ill or injured employee

What is apparent from these tips is that an important aspect of managing the situation is communication with ill or injured employees. An employer must ensure that it clearly communicates to employees, any changes or reasonable adjustments to their substantive roles, the period the changes or reasonable adjustments are expected to apply and how any future assessment of their fitness for work performance will be undertaken (ie whether the assessment will be against their substantive or modified role). The following case example illustrates the potential consequences of an employer terminating an employee’s employment without giving appropriate consideration to either the inherent requirements of the role or any reasonable adjustments that could be made. Case example Reasonable adjustments Huntley v State of NSW; Department of Police and Justice (Corrective Services NSW) [2015] FCCA 1827 Background Ms Huntley suffered from Crohn’s Disease and, as a result of her disability, Ms Huntley required frequent bathroom access and was restricted in her ability to travel without immediate access to a bathroom. When Ms Huntley was on secondment with the Corrections Intelligence Group, she was required to travel more than 30 minutes to attend the workplace and when her condition worsened, she was given the choice to medically retire or undertake a medical assessment to assess her ability to continue to work. Ms Huntley underwent a medical examination and was deemed permanently unfit for her substantive position and the secondment was terminated. The reason for the termination was due to the amount of sick leave taken and her inability to travel for more than 30 minutes. Ms Huntley made a claim of disability discrimination against Corrective Services NSW.

Findings The Federal Circuit Court found that Corrective Services NSW unlawfully discriminated against Ms Huntley and failed to make reasonable adjustments after she was diagnosed with Crohn’s Disease. The court found that the sole basis for the decision to end her secondment was the manager’s incorrect interpretation of Ms Huntley’s doctor’s report which stated that she could take trips longer than 30 minutes if she was able to plan for a break along the way. No manager or supervisor turned their minds to the inherent requirements of the position and any reasonable adjustments that could be made. Instead of attempting to implement the doctors’ advice, they required Ms Huntley to take leave. As a result, the court ordered that Corrective Services NSW pay Ms Huntley more than $180,000 plus interest for economic loss, pain, suffering and general damages.

Termination of Employment Introduction Termination of employment can present a number of significant risks for an employer, and developing and executing an effective exit strategy is key to managing those risks. An employee’s employment may come to an end for one of a range of reasons, including: (a) misconduct (b) unsatisfactory performance (c) inability to perform the inherent requirements of their role due to illness or injury (d) redundancy, and (e) resignation. This Chapter examines termination by reason of redundancy and resignation in some detail. The balance of the reasons for termination referred to above, are examined in detail in earlier Chapters, namely: (a) misconduct — Chapter 4 (b) unsatisfactory performance (in the context of performance management) — Chapter 3, and (c) termination based on an employee’s inability to perform the inherent requirements of their role due to illness or injury (in the context of managing ill and injured employees) — Chapter 6. As such, this Chapter should be read in conjunction with the relevant aspects of those earlier Chapters. This Chapter also examines: (a) how termination may be effected by an employer (b) the legal risks for employers attaching to termination of employment, and (c) additional matters to be considered in effecting the termination of an employee’s employment.

Redundancy What is a redundancy? A redundancy occurs if an employee’s employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour. The following case example examines the concept of “ordinary and customary turnover of labour”. Case example Ordinary and customary turnover of labour Berkeley Challenge Pty Ltd v United Voice [2020] FCAFC 113 Background Berkeley Challenge Pty Ltd (Berkeley) and Spotless Services Australia Pty Ltd (Spotless) (both being part of the Spotless Group of companies) appealed two separate decisions relating to the “ordinary and customary turnover of labour” exception to the obligation to pay redundancy under s 119 of the FW Act. These appeals were heard together by the Full Federal Court. Berkeley terminated the employment of 21 employees following the loss of a contract for the provision of security, cleaning and related services at a shopping centre. Berkeley had performed these services under a series of contracts since 1992. Similarly, Spotless terminated the employment of three employees in 2015 following the loss of a catering and hospitality contract at Perth

International Airport. Spotless had provided these services under a series of contracts since approximately 1986. Berkeley and Spotless both argued that as members of the Spotless Group, they were not required to make redundancy payments to redundant employees as the “ordinary and customary turnover of labour” exception was available to them based on their business practices. Findings The Full Federal Court determined that the employees were entitled to redundancy pay and dismissed both appeals. In considering this issue, the Full Federal Court noted that whether there was “ordinary and customary turnover of labour” in any particular case depends on the facts of the case. The court provided a non-exclusive list of relevant factors which included: • the expectation of employees • whether the “ordinary and customary turnover of labour” was a normal feature of the business • the nature of the job • whether the “custom” is longstanding, and • whether the event of termination is unusual (eg a closure or liquidation of a business).

Key considerations Set out below is a list of key matters that an employer should consider before commencing a redundancy process. Ultimately, the processes adopted by an employer in a redundancy situation will depend on the circumstances, including the relative seniority of the employee whose role is being made redundant and the risks for the employer attaching to the particular process. An employer must also take care to ensure that if an employee’s separation from their employment is characterised as a redundancy, it is a “genuine redundancy”. Often employees will request that their separation from their employment be characterised as a redundancy because of the concessional tax benefits that flow from a redundancy. In agreeing to this arrangement, an employer assumes a considerable amount of risk, including that it may potentially be in breach of its obligations with respect to withholding tax and therefore it could be subject to penalties issued by the Australian Tax Office. The employer could also be the subject of enquiry by the Fair Work Ombudsman. The following case example examines the concept of a “genuine” redundancy. Case example “Genuine” redundancy Deeney & Others v Patrick Projects Pty Ltd [2019] FWC 1772 Background In January 2014, Patrick Projects was notified by its client that its schedule of work was to be reduced. On 22 January 2014, Patrick Projects held a site meeting and provided each applicant with written information concerning their redundancies. Following this meeting, there were further discussions and a call for expressions of interest for voluntary redundancies. On 19 February 2014, Patrick Projects notified 43 employees (including the applicants) of their redundancy and offered each applicant employment as a casual. Patrick Projects also provided the applicants with a list of available positions at Asciano, an associated entity of Patrick Projects. The applicants did not accept the offer of casual employment nor did they express interest in the available positions at Asciano. The applicants each asserted that their termination as a full-time permanent employee was not a genuine redundancy and that they were unfairly dismissed. Findings The FWC was satisfied that Patrick Projects no longer required the applicants’ jobs to be performed by anyone because of changes in the operational requirements of the enterprise following a direction from its client. The FWC found the fact that casual opportunities still remained did not detract from the need to reduce the full-time permanent workforce. The FWC further considered and was satisfied that the consultation requirements had been met and that it was not reasonable in all the circumstances for the applicants to be redeployed in Patrick Projects or an associated entity. Accordingly, the applicant’s claims for unfair dismissal were dismissed based on the dismissals being genuine redundancies.

There are situations in which it is necessary and appropriate for the employer to adopt an alternative strategy to redundancy in securing the termination of an employee’s employment. This was particularly prevalent during the COVID-19 pandemic in 2020 and in the temporary JobKeeper measures implemented by the Australian Government pursuant to that scheme. Employers should seek further advice if an alternative strategy is being contemplated.

The following table sets out the key considerations that employers should have in relation to potential redundancy situations.

The first and second case examples below examine the concept of “acceptable alternative employment” in the context of the redundancy pay provisions in the FW Act. The third case example looks specifically at the obligations of employers where the relevant redundancy policy provides that “meaningful work” be provided to employees pending a permanent position becoming available through redeployment. The fourth case example looks at the scope of the “consultation” obligation in a redundancy process. Case examples What is not acceptable alternative employment? Golden Glow Corporation (NT) Pty Ltd t/a Golden Glow Nursing v Cooke [2020] FWC 3327 Background Golden Glow Nursing sought to reduce the redundancy entitlement of the applicant to nil on the basis that Golden Glow Nursing had obtained her other acceptable employment. Following a decision to close down Golden Glow Nursing and make its staff redundant, Mrs Schaffer (a Director of Golden Glow Nursing) held meetings with staff to inform them of her intention to assist them in obtaining alternative employment as soon as possible. As part of this effort, Mrs Schaffer contacted a number of prospective employers (including Linkup Australia Pty Ltd) to inform them that her staff required employment and updated staff on employment opportunities at a number of organisations. While she endeavored to organise meetings with prospective employers for the benefit of staff, there was no specific proposed employment. The applicant subsequently secured employment with Linkup Australia Pty Ltd. Findings The FWC determined that Golden Glow Nursing did not obtain other acceptable employment for the applicant and dismissed its application. The FWC found that the applicant obtained other employment through her own individual efforts rather than the “conscious and intended pursuit of a specific job” for her by Golden Glow Nursing. The FWC characterised the efforts of Mrs Schaffer as “general initial routine inquiries” and found that her actions were not a “strong moving force towards the creation of the available opportunity.” In the absence of a finding that Golden Glow Nursing “obtained” other employment for the applicant, the FWC did not conduct a comparison of conditions to ascertain whether the other employment was “acceptable” other employment. Australian Footwear t/a Diana Ferrari [2018] FWC 7864 Background The applicant was employed as a part-time retail assistant at Diana Ferrari at the Birkenhead Point outlet store. Following notification that Diana Ferrari would exit the apparel business and all stores would be closed, the applicant was offered employment at a Williams store in Macquarie (owned by the same entity) with all other terms of employment remaining unchanged. The applicant declined the offer and Diana Ferrari applied to the FWC to vary the applicant’s redundancy pay to nil on the basis it had offered her other acceptable employment. Findings The FWC noted that the test of acceptability of the alternative employment is an objective one involving consideration of matters such as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters. The FWC declined the application in consideration of the cost of parking at the Williams Macquarie store which would cost the applicant at least $50 per week. Having calculated the wage of the applicant to be approximately $615 a week, the FWC found that the proportion of the added expense of parking at Williams Macquarie to the wage of a retail worker on the Award rate of pay was not insignificant.

What is not “meaningful work”? Australian Municipal, Administrative, Clerical and Services Union v Essential Energy [2015] FWC 8971 Background Three unions brought an action on behalf of their members against Essential Energy, claiming that Essential Energy’s direction to 57 employees not to attend work during a redundancy process contravened its redundancy policy. Essential Energy’s redundancy policy relevantly provided that “employees who are not placed into an acceptable alternative permanent position and who are not taking voluntary redundancy … will be placed into a meaningful work placement”. The policy defined “meaningful work placement” as “any position that the company feels is suitable for the redeployee prior to a permanent position becoming available through redeployment”. Findings The FWC accepted that while the policy gave Essential Energy a “wide discretion”, it was still expected to act reasonably and in good faith. In an exception to the principle that there is no common law right for employees to be provided with work, the FWC held that Essential Energy could not issue a direction to the employees not to attend for work, and ordered that the employees be placed on meaningful work placements, in accordance with the objective intention of the redundancy policy. Consultation Australian Municipal, Administrative, Clerical and Services Union v Auscript Australasia Pty Ltd [2020] FWC 1821 Background On 27 March 2020, Auscript advised staff that Auscript needed to implement drastic measures in response to the impact of COVID19 and that staff should consider four proposed options (being the closure of offices, voluntary redundancy, job share or reduced hours of work) and communicate with management by 1 April 2020 regarding the four options and any other alternatives. Prior to this announcement, the union was confidentially advised that Auscript offices would close and that redundancies would take place. The union sought urgent assistance from the FWC to avert redundancies and to urge Auscript to consider (as part of a consultation process) a range of alternative options to redundancy. Findings The FWC determined that Auscript did not consult its employees or the union as required by the relevant enterprise agreement. The FWC noted that consultation has a purpose and it cannot be conducted for mere show or treated as a mere formality. It further noted that consultation was of no value if it did not provide an employee with an opportunity to influence the decision. While the FWC acknowledged that Auscript had determined that its future was unviable, it found that there remained an obligation to treat staff with dignity at a time of crisis.

Resignation: Special issues for consideration When does a resignation occur? A resignation occurs when an employee tenders their resignation from their employment and provides the relevant period of notice, and the employer accepts that resignation. In doing so, the parties bring the employment relationship to an end. The amount of notice that an employee is required to provide on terminating their employment can vary from employee to employee, and may be set out in the employee’s employment contract, an industrial instrument that is applicable to their employment or in the employer’s policies. Providing an employee with an opportunity to have the termination of their employment characterised as a resignation, rather than termination at the initiative of the employer, may also form part of the terms of a termination by mutual agreement or negotiated separation. “Forced” resignation and its consequences One of the most significant risks attaching to a resignation arises in circumstances where there is doubt as to whether the employee resigned from their employment voluntarily — that is, where it may be arguable that the employee was “forced” to resign as a consequence of the employer’s conduct or a course of conduct in which the employer has engaged. The distinction is an important one, because if it is determined that an employee was “forced” to resign (a determination which would be based on the common law principles that have been established in relation to “constructive dismissal”), the termination will then be characterised as being at the initiative of the employer and the employee may then be eligible to make an unfair dismissal claim. Unfair dismissal claims and their consequences are discussed later in this Chapter. Case example

What is a “forced” resignation? Boswell v 208 South Terrace Manage t/a Sage Hotel/Grand Chifley [2018] FWC 135 Background The applicant was a 72-year-old full-time maintenance attendant at the Chifley Hotel who resigned after working 14 days with his new manager Mr Cantaros. The applicant asserted that this resignation was “forced” as his employer unreasonably allowed an impossible situation to arise between him and Mr Cantaros by not investigating or acting on his complaints. The applicant perceived Mr Cantaros as presenting “smug” and complained of “rude behavior” towards him. This included Mr Cantaros asking the applicant questions relating to his age and asking if his “house was this messy” with reference to his workshop. The applicant also objected to the implementation of a new system of “time and task sheets” which required maintenance staff to record their work and the time taken on each task. The applicant made numerous complaints to the Executive Assistant Manager and the Regional Human Resources Manager. However, when asked if his “written notes” constituted a “formal complaint”, the applicant advised that his notes were simply “for the record”. Findings The FWC did not consider the resignation to have been “forced” and dismissed the claim. In determining whether the resignation was “forced”, the relevant question was whether the employer engaged in conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable result of the employer’s conduct such that the employee had no effective or real choice but to resign. While the FWC found that Mr Cantaros made remarks which were rude and smug, it considered the operational measures introduced by Mr Cantaros to be within the legitimate operational discretion of the employer. Further, although the complaints were not formally investigated, in light of the “mixed messages” given by the applicant and recognition that this was a “transitional phase” for the applicant, the FWC did not believe that the employer could be fairly criticised for the informal way it dealt with the complaints.

Retracting a resignation Risks arise in situations where an employee resigns “in the heat of the moment” and then, prior to or following the employer accepting that resignation, the employee seeks to retract that resignation. One of the primary risks is an employee seeking to access the unfair dismissal jurisdiction. Whether an employee who retracts a resignation may access the unfair dismissal jurisdiction will depend on the circumstances of the resignation and the retraction. Termination must still be at the employer’s initiative in order to pursue an unfair dismissal claim. An employee is more likely to be able to access the jurisdiction if: (a) the circumstances of the resignation involved some pressure on the employee to resign, or made resignation the most desirable option (b) the resignation can be said to be “in the heat of the moment”, or (c) the retraction of the resignation is within a short period of the resignation being submitted. However, it is important to remember the general principle that a retraction of notice of termination may not be unilateral — the idea being that giving notice brings the contract to an end automatically at the end of the notice period, and the parties must agree to enter a new contract if the employment relationship is to continue. Additionally, an employee will be less likely to be able to access the unfair dismissal jurisdiction if: (a) the resignation can be characterised as at the employee’s initiative (eg if resignation is one or a number of options available to the employee in respect of their employment), or (b) the resignation is in clear and unambiguous terms. If an employee resigns from their employment, it is recommended that the employer confirm acceptance of that resignation in writing, including confirming the employee’s last day of employment, the arrangements for the payment of the employee’s final entitlements and the return of any company property that may be held by the employee.

How is termination of employment effected by an employer? Termination of an employee’s employment may be effected in a number of ways. The following are

discussed below: (a) termination on notice (b) summary dismissal, and/or (c) termination by mutual agreement or negotiated separation. Irrespective of how the termination of an employee’s employment is effected, there are a number of additional considerations that employers should have regard to in effecting that termination. Those issues are discussed further below. Termination on notice An employer may terminate an employee’s employment at any time by giving the employee the relevant period of notice under their employment contract or applicable industrial instrument or the minimum amount prescribed by the NES. However, the employer must take care to ensure that it has a valid reason for terminating the employee’s employment if notice is given, particularly if the employee is eligible to make an unfair dismissal claim. The concept of a “valid reason” is discussed later in this Chapter. If an employer cannot demonstrate that it has a valid reason to terminate an employee’s employment, the employer may be unable to defend that decision if challenged by the employee. In most cases, written notice of termination must be given to an employee in order to fulfil the employer’s legislative obligations. That notice cannot provide for a date of termination prior to the date on which notice is provided to the employee (that is, the notice cannot be backdated). Summary dismissal Summary dismissal means the termination of the employment of an employee without notice. An employee will typically be summarily dismissed where they are found to have engaged in “serious misconduct” in their employment with the employer. “Serious misconduct” is defined at common law and in legislation. Under the FW Regulations, serious misconduct is defined to include: (a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract, such as theft, fraud, assault, intoxication at work, or disobedience of lawful and reasonable orders, and (b) conduct that threatens the health or safety of others, or the reputation, viability or profitability of the employer. When an employee is summarily dismissed, the employer is only required to pay the employee for work performed up to the time of dismissal (including any outstanding wages) plus their accrued but untaken statutory leave entitlements and superannuation. As there is no requirement to give notice where an employee is summarily dismissed, there is no corresponding requirement to pay notice. Ultimately, if the termination of the employee’s employment is challenged, the employer must be able to demonstrate, among other things, that it had a valid reason for the termination, and the employee was afforded procedural fairness (including the opportunity to respond to any allegations of serious misconduct), before the decision to terminate was made. Terminating an employee’s employment summarily can present significant risks to an employer, and it is recommended that employers seek advice before proceeding. Mutual agreement or negotiated separation A further option available to an employer in effecting the termination of an employee’s employment is termination by mutual agreement or negotiated separation. In the majority of circumstances where termination is effected by agreement or negotiated separation, it will be the employer that initiates that discussion. It is important that the employer develop a strategy that

is appropriate to the circumstances of the particular employee before embarking on those discussions. The strategy adopted by an employer in raising the prospect of an agreed termination with the employee will differ, with factors such as the circumstances of the proposed termination and the potential reaction from the employee to be carefully considered and accommodated. Failure to develop and effectively execute a strategy appropriate to the individual employee and their circumstances, may result in the employee claiming they were constructively dismissed. The employer may be afforded additional protections by ensuring that the terms of any termination by mutual agreement or negotiated separation include a release for the employer in respect of any future claims in relation to the employee’s employment, and that the terms of the agreement or negotiated outcome are reduced to writing, preferably in the form of a Deed. It is therefore recommended that employers seek advice as to how to initiate that discussion with an employee when the opportunity for that discussion arises. Tips for termination meetings • Prepare scripts for meetings with employees to ensure consistency of messaging and use it as a checklist to ensure that all of the relevant issues are addressed. • Consider practical logistics, including where the meeting will be held and any post-termination communications that may be issued. • Have documentation that is to be provided to the employee prepared in advance of any meetings. However, before providing that documentation, it is important to consider whether it is appropriate to do so at the meeting. For example, if a termination letter has been prepared before a meeting where an employee is responding to allegations and assurances have been made that the employer will consider that response before a decision is made, providing the employee with a pre-prepared letter may undermine those assurances and create the perception that the decision was pre-determined. • Appropriately document meetings and discussions with employees in connection with the termination process.

Legal risks The primary legal risks for the employer in relation to termination of employment are: (a) unfair dismissal claims (b) general protections claims (c) breach of contract claims (d) discrimination claims, and (e) unlawful termination claims. Each of these risks is discussed further below. Unfair dismissal On termination of their employment, employees may make an application to the FWC if they consider that the termination of their employment is “unfair”. An unfair dismissal application must be made within 21 days of the date of the employee’s termination of employment, or within such further time that the FWC allows. What is “unfair dismissal”? Unfair dismissal occurs if the dismissal of an employee was “harsh, unjust or unreasonable” or, in the case of redundancy, the dismissal was not a case of “genuine redundancy”. In determining whether a dismissal is unfair, the FWC must have regard to matters including: (a) whether there is a valid reason for the dismissal related to the employee’s capacity or conduct

(b) whether the employee was notified of, and provided with an opportunity to respond to, that reason (c) whether there was any unreasonable refusal by the employer to allow a support person present to assist the employee at discussions relating to the dismissal (d) if the dismissal was related to unsatisfactory performance, whether the employee was warned about that unsatisfactory performance (e) whether proper procedures were followed to effect the dismissal, taking into account the size of the employer (f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal, and (g) any other matters the FWC considers relevant in determining whether a dismissal is “unfair”. The FW Act also provides that a dismissal will be a “genuine redundancy” if: (a) the employer no longer requires the employee’s job to be done by anyone because of changes in the operational requirements of the employer, and the employer has complied with any consultation provisions about redundancy in any Modern Award or enterprise agreement that is applicable to the employee’s employment, and (b) it would have been unreasonable in all of the circumstances for the employee to be redeployed with the employer or an associated entity. Who is eligible to make an unfair dismissal claim? In order to bring an unfair dismissal claim, an employee must meet the eligibility criteria set out below.

What remedies are available for unfair dismissal? The following table outlines the possible remedies that employees can obtain in an unfair dismissal case before the FWC.

What is the process for an unfair dismissal claim? The figure below reflects the process adopted by the FWC in relation to unfair dismissal claims. Unfair Dismissal Claims in the Fair Work Commission

General protections What are the general protections provisions? The general protections provisions in the FW Act are largely a consolidation of protections that existed under previous legislative regimes. These provisions allow employees to bring a claim against an employer for taking steps that resulted in a detriment or hardship (adverse action) to the employee in circumstances where, among other things, that employee has sought to exercise a “workplace right”. An employee has a “workplace right” if they are: (a) entitled to the benefit of and/or have a role or responsibility under a workplace law (b) able to initiate or participate in a process under a workplace law, or (c) able to lodge a complaint or enquiry in relation to their employment or to seek compliance with a workplace law. In the context of termination of employment, the general protections provisions also extend to protection from adverse action in relation to an employee’s participation in industrial activity (including their choosing not to participate in such activity), discrimination, dismissal due to temporary absence or illness and coercion.

Significantly, employees are able to seek injunctive relief in relation to adverse action claims, which, if granted, could have the effect of delaying the employer effecting the termination of an employee’s employment while the matter is resolved. Case example Adverse action in connection with a redundancy Heraud v Roy Morgan Research Ltd [2016] FCCA 185 Background The applicant was employed as the National Customised Operations Director for Roy Morgan prior to taking parental leave. During her parental leave, Roy Morgan underwent a restructure and made some employees redundant. Roy Morgan had advised the applicant that she would be redeployed within the newly created Roy Morgan Research Centre. Days later, the applicant made a request for flexible work arrangements. Roy Morgan subsequently informed the applicant that the position at the Research Centre would no longer be offered, and that her role would be made redundant. The applicant made seven adverse action claims, alleging among other things that Roy Morgan had failed to consult her with regards to the redundancy and the role changes. She also alleged that Roy Morgan’s failure to return her to her pre-parental leave position, or a suitable alternative position, constituted adverse action. Findings The Federal Circuit Court found that Roy Morgan had acted adversely against the applicant: • in failing to return the applicant to her pre-parental leave position or a viable redeployment option • by altering the applicant’s position to her prejudice after she had requested flexible work arrangements, and • in terminating the applicant’s employment following her request for flexible working arrangements. Roy Morgan was fined $52,000 for taking adverse action in relation to the applicant’s flexible work request. The court held that it was a “fundamental entitlement of an employee” to take parental leave with knowledge that their employment will not be prejudiced by the exercise of this right. The court also awarded $20,000 to the applicant to compensate her for the loss of enjoyment, loss of reputation and distress she experienced after her dismissal.

What is the process for a general protections claim? Unlike unfair dismissal matters, there is no remuneration threshold applying to applicants in general protections claims. Consequently, there is a growing trend of employees who are ineligible to make unfair dismissal claims, attempting to use the adverse action provisions as a “de facto” unfair dismissal process. If the alleged adverse action against an employee includes termination of the employee’s employment, the employee has 21 days from the date of their dismissal to bring a claim. Once the general protections claim has been filed in the FWC, the next step in the process will typically be for the employer to submit an Employer’s Response to the claim, and for the claim to be listed for conciliation in the FWC. If the general protections claim relates to the dismissal of an employee, the employer must attend the conciliation. If a general protections claim is not resolved at conciliation, the FWC will issue a certificate to this effect and an employee may commence proceedings in the Federal Court or Federal Circuit Court. Such proceedings must be commenced within 14 days of the certificate being issued. What remedies are available in relation to general protections claims? The courts have a broad discretion in relation to the remedies that they may order in respect of general protections claims. They include reinstatement and compensation orders (which may, unlike unfair dismissal matters, include a component for shock, distress and humiliation). The courts may also order pecuniary penalties in relation to any breach of the general protections provisions. As highlighted in the following case example, the court may make penalty orders not only against the employer, but also those in a supervisory or manager role. At the time of publication, the maximum penalties for a breach of the general protections provisions of the FW Act were $66,600 for a body corporate, and $13,320 for an individual. Case examples

Personal liability of managers for engaging in adverse action Qantas Airways Limited v ALAEA [2012] FCAFC 63 Background The applicant was a Qantas engineer who was posted to Japan for six weeks. On his return, he claimed payment for additional hours worked, including night shift penalties. The applicant unsuccessfully sought to recover his entitlements through his Line Manager. The applicant lodged a dispute under the enterprise agreement dispute settlement procedure. Following the dispute being raised, all overseas postings from Brisbane (where the applicant was based) were suspended pending resolution of the dispute. Findings Qantas was found to have taken adverse action against the applicant by coercing the applicant not to exercise his workplace right under the enterprise agreement. Furthermore, Qantas took adverse action against the applicant by suspending all overseas postings from Brisbane where the applicant was based. Qantas was fined $13,200. For his involvement in the matter, the applicant’s Line Manager was also found to have coerced and taken adverse action against the applicant and was fined $2,200. Adverse action v genuine redundancy Aitken v Virgin Blue Airlines and Vandeven v Virgin Blue Airlines [2013] FCCA 981 Background Two female employees alleged the redundancy of their positions was not a case of genuine redundancy, but rather amounted to adverse action in response to them exercising their workplace rights and, in particular, the right to request flexible working arrangements (one was on parental leave and the other was pregnant at the time their positions were made redundant). They also raised claims on the basis of sex discrimination. Findings The general protections claims failed as it was established that it was a case of genuine redundancy. The evidence presented by Virgin Blue was very specific about operational and restructuring arrangements that motivated the redundancy decisions. However, one breach of the FW Act was found as Virgin Blue failed to take all reasonable steps to give one of the applicants information about, and an opportunity to discuss, the effect of the decision made to her pre-parental leave position. It was also found that there was a breach of contract as the company failed to comply with the consultation requirements in their policy.

Breach of contract An employee whose employment is terminated may also bring a claim for a breach of the employment contract. Such a situation may arise where the termination of the employment contract by the employer is alleged to constitute a breach of an express or implied term of the contract. To avoid breach of an express term, prior to the termination of an employee’s employment, the employer should carefully check the terms of the relevant employment contract. Breach of contract may also be argued on the basis that an employer has repudiated the employment contract (that is, acted in such a manner as to evidence a fundamental breach of the contract of employment) and the employee has accepted that repudiation. Examples of situations where an employer may be said to have repudiated the employment contract include where the employer has sought to unilaterally vary aspects of that contract (eg the location of the employee’s employment, the role performed by the employee, and/or the employee’s remuneration). Recent cases confirm that repudiation of the employment contract can occur where an employer acts inconsistently with the maintenance of an ongoing employment relationship. For example, demanding the return of company property while an employee is on garden leave (and technically still an employee) can amount to repudiation of the employment contract. The jurisdiction in which an employee may ultimately take legal action in respect of an alleged breach of their employment contract will largely depend on the amount of loss or damage that the employee is claiming to have suffered and is seeking by way of the claim. A successful breach of contract claim may entitle an employee to a range of remedies, including: (a) payment of damages compensating the employee for loss or damage arising from the breach (b) orders requiring the payment of outstanding wages or other benefits under the employment contract, such as bonus payments, or (c) depending on the nature of the obligations under the contract, specific performance of the contract (that is, orders requiring the employer to perform its obligations under the contract). Some common breach of contract claims are set out in the table below.

Discrimination claims A common claim by employees in response to termination of their employment by the employer is to allege that the employer engaged in discrimination against them in their employment. As discussed in Chapter 1: Recruitment and Selection, there are a range of personal attributes that are protected under Commonwealth, State and Territory anti-discrimination legislation and the FW Act, and which employees may rely on in making a discrimination claim. Those attributes include: (a) age (b) race, colour, ethnic background or nationality (c) sex (d) pregnancy or potential pregnancy (e) marital or relationship status (f) disability, and (g) sexual orientation and gender identity. Example of the types of discrimination claims that employees may make on termination of their employment include claims that discriminatory selection criteria were relied on in selecting positions for redundancy (eg age, gender or family responsibilities) or the employee has been terminated from their employment because they have a disability. The following case example highlights the matters that a court or tribunal will take into account when considering a discrimination claim and determining the appropriate remedy or remedies where discrimination is found to have occurred. Case example Discrimination Burns v Media Options Group Pty Ltd & Ors [2013] FCCA 79 Background The applicant was employed by Media Options Group (the “Company”) as a printer. He was also the carer for his terminally ill partner, who was also an employee of Media Options Group, after she was diagnosed with a rare form of cancer. The applicant’s partner required extensive chemotherapy and had no one but the applicant to care for her. He took her to multiple medical appointments and supported her through her physical and emotional reactions to her illness. For a period of approximately 18 months, a manager of Media Options Group and his wife (who were both later appointed directors of the company), were alleged to have discriminated against the applicant on the grounds of family responsibilities and/or subjecting

the applicant to a detriment in his employment because of the disability of his “associate” (being his partner) contrary to the Sex Discrimination Act 1984 (Cth) (SDA) and the Disability Discrimination Act 1992 (Cth) (DDA). Examples of the conduct in which the manager and his wife were alleged to have engaged included: • telling the applicant to leave, or “get rid of” his partner, and not stay home to care for her • refusing to grant the applicant leave to care for his partner and applying pressure on him to attend work • not allowing the applicant to leave work until he had finished his tasks • berating the applicant for being late to work and not being able to work overtime • making derogatory and offensive comments about the applicant and his partner, including calling him “stupid”, advising the applicant that his work should come before his partner and that he had cost the company a lot of money because of his caring duties • downgrading the applicant’s status in the workplace — “you are no longer the manager of the printing in this factory” — and requiring the applicant to return his keys to the factory and wait for other employees to attend at the factory to gain access, and • terminating the applicant’s employment in circumstances where it was alleged he had been drunk on the job, had sexually harassed a colleague and had been verbally and physically threatening towards several staff members. Findings The Federal Circuit Court found that the manager and his wife did engage in the conduct alleged against them and that, as a result, the Company had discriminated against the applicant in contravention of the SDA and the DDA. The court awarded the applicant in excess of $100,000 in compensation and interest (comprising $40,000 in general damages, $25,000 in interest and approximately $31,000 in lost earnings).

The process that will apply in relation to a discrimination claim will depend on the jurisdiction in which the claim is lodged. This in turn will be determined by the legislation under which the claim is being made. For example, if the discrimination claim is: (a) made under the general protections provisions in the FW Act, it will be lodged with and dealt with at first instance in the FWC (b) made under Federal anti-discrimination legislation, the claim will be lodged with and dealt with at first instance by the AHRC, and (c) made under State anti-discrimination legislation, it will be lodged with and dealt with at first instance by the tribunals established for that purpose in the relevant jurisdiction. The primary remedy in respect of discrimination claims is compensation for any loss or damage suffered by the employee (or former employee) as a consequence of the discrimination. Typically, there is no cap on compensation that may be awarded in discrimination claims (although the New South Wales jurisdiction is an exception). This has resulted in awards of significant amounts of compensation in recent years, albeit in a very small proportion of cases. However, the proportion of cases attaching higher awards of compensation may be set to change. In recent cases, the relevant courts and tribunals have confirmed that there is an increased expectation on employers with respect to taking steps to manage and prevent discrimination in the workplace effectively, and that they are willing to award larger compensation payments in order to deter employers from engaging in discriminatory practices. Unlawful termination claims The FW Act includes provisions relating to unlawful termination in addition to the unfair dismissal regime. The grounds upon which it is unlawful for employers to terminate an employee’s employment include: (a) temporary absence due to illness or injury (b) trade union membership (c) filing a complaint

(d) discrimination, and (e) absence from work for parental leave or emergency management activity. There is some overlap between the protections afforded to employees under the unlawful termination, unfair dismissal and general protections provisions in the FW Act. Employees who may be eligible to make a claim under more than one set of these provisions in respect of the termination of their employment are required to choose between those claims — “double dipping” is not permitted. The unlawful termination provisions in the FW Act apply to all employees in Australia, and not just “national system employees” as defined under that Act. Unlawful termination claims may be made by the affected employee or an industrial association who is entitled to represent their interests. The process for making an unlawful termination claim is not dissimilar to that for a general protections claim, in that: (a) the employee must make an application to the FWC within 21 days of the date of termination or such other timeframe as the Commission allows (b) the matter may be dealt with by the FWC by mediation or conciliation, or by making a recommendation or expressing an opinion, and (c) if it is satisfied that all reasonable attempts to resolve the dispute (other than by arbitration) have been, or are likely to be, unsuccessful, the FWC will issue a certificate to this effect and the employee will have 14 days from the date on which the certificate is issued (or such other time as allowed by the Commission or the relevant court) to elect to have the matter arbitrated by the FWC or make an application to a relevant court. The remedies that the FWC or the court may order in an unlawful termination matter include reinstatement, compensation, payment for the amount of remuneration lost by the employee and continuity of the employee’s service.

Additional matters for consideration Set out below are a range of matters that employers are encouraged to consider when contemplating whether to terminate an employee’s employment and how best to effect that termination. Written notice of termination Under the FW Act, an employer is, in most situations, required to provide an employee with written notice of the day of termination of their employment, which cannot be before the day the notice is given (that is, the notice of termination cannot be backdated). As such, it is recommended that employers have the notice of termination prepared and ready to provide to the employee personally at any termination meeting or, in circumstances where the notice cannot be delivered to the employee personally, ensure that there are arrangements in place to have the notice delivered to the employee on the relevant date. Garden leave Where an employer has decided to terminate the employment of an employee or where an employee has tendered their resignation, the employer will need to consider whether it will require the employee to work out their notice period, pay the employee in lieu of notice or place the employee on garden leave (if their employment contract provides for it). Placing an employee on garden leave can have important strategic benefits for an employer and may be used in a variety of ways, including facilitating an effective handover without having the employee remain on site. It is recommended that employers seek advice if considering placing an employee on garden leave prior to the termination of their employment. Entitlements

On termination, an employee may be entitled to payments in relation to the following entitlements: (a) pay for work performed up to the date of termination (b) payment in lieu of notice (if provided for under the employee’s employment contract or an applicable industrial instrument) (c) redundancy pay (dealt with in this Chapter) (d) accrued but untaken annual leave and long service leave (e) accrued but untaken personal/carer’s leave (if payment on termination is provided for under the employee’s employment contract or an applicable industrial instrument) (f) any superannuation payable on the employee’s entitlements on termination (g) outstanding bonus or commission payments to which the employee may be entitled, and/or (h) outstanding expense claims that are yet to be settled. It is recommended that the written notice of termination (or any document confirming an employee’s resignation) deal with the arrangements for payment of the employee’s final entitlements, and that any entitlements paid are accurately reflected in a payment advice provided to the employee, in order to reduce the risk of later disputation about those arrangements. Return of property It is important that employers account for and ensure that an employee returns any property of the employer that the employee is not entitled to retain under their employment contract or any other agreement, on termination of their employment. In effecting the termination of an employee’s employment, the employer should carefully consider what, if any, company property the employee has or is likely to have in their possession or control, and specifically request return of the property, in writing, at or about the time of the employee’s termination from their employment. If on termination of the employee’s employment, there is agreement for an employee to retain certain employer property (other than in their employment contract or any other written agreement entered into during the employee’s employment), this should be confirmed in writing. This written confirmation should be kept on the employee’s employment file to minimise the risk of a dispute. Communications One of the most sensitive aspects of the process of terminating an employee’s employment is developing the communications that will attach to the departure of the employee. There is an inherent tension between the need or desire of the employer or the employee to disclose sufficient information about the termination to explain the employee’s departure and maintaining the privacy and confidentiality of the parties. This is particularly so in circumstances where the employee’s employment is being terminated by the employer for reasons such as misconduct or underperformance. However, failure to provide a reason for the employee’s departure may result in other interested parties, including other employees, filling the vacuum of information based on rumour, gossip or innuendo. It is therefore important that the employer develop an appropriate communications strategy to manage the employee’s departure. To the extent possible, it is recommended that employers consult with the employee about the messaging that will be used to explain why the employee is leaving the employer. It is recommended that employers seek advice in more complex situations, where the correct messaging is crucial to managing the legal, financial or reputational risks to the employer. Directors and officers’ termination payments Where the employee is a person who holds a managerial or executive office in a company, the employer will need to consider whether the provisions of s 200A of the Corporations Act 2001 (Cth) apply. The relevant provisions of the Corporations Act prohibit the payment of certain types of severance or

retirement payments to such employees without shareholder approval. Restraints and confidential information On an employee’s separation from their employment, however occurring, it is important that the employer: (a) determines if there are any contractual restraints applying to the employee or specific confidential information held by the employee that it wishes to protect, and (b) consider what, if any, steps it may need to take to enforce those restraints or protect that information. Contractual restraints, including those relating to the use and disclosure of confidential information by employees post-employment, and the enforcement of those restraints are discussed in further detail in Chapter 10: Post-employment Issues.

Third Parties Introduction While the human resources function is primarily responsible for managing the “people” issues within a business, managing these issues may also involve interactions with third parties with statutory or contractual rights, such as unions and suppliers. It is therefore important that those who are responsible for managing “people” issues within an employer’s business are aware of the type of issues that may arise when dealing with third parties when those third parties seek to exercise their rights. Awareness of the steps that can be taken to manage these interactions effectively should form part of the employer’s holistic approach to its employment and industrial strategies. This Chapter provides guidance with respect to managing interactions between employers and unions generally, union rights of entry, and the rights of employees to participate in industrial activity and industrial action. This Chapter also examines employee relations issues that may arise in commercial dealings for the provision of services to the employer.

Relationship with unions generally The importance of an employer appropriately managing its relationship and interactions with employee associations such as unions cannot be understated. These organisations have rights regarding their participation in many aspects of the employer’s business enshrined in legislation, including but not limited to: (a) enterprise bargaining (b) organisational change (including redundancies), and (c) ensuring compliance with minimum terms and conditions of employment under relevant legislation and industrial instruments, and with WHS legislation. Maintaining amicable (or at least functional) relationships with unions who have the right to represent employees of an employer can have a significant impact on the operation of an employer’s business, and on the ability of an employer to meet its strategic objectives. This can only be achieved if there is an understanding of the unions’ rights and obligations, and a holistic industrial relations framework is implemented which includes appropriate communication and stakeholder management strategies and is consistent with the strategic objectives of the employer.

Union right of entry under the FW Act Union officials have the right to enter an employer’s premises for specific purposes and under specific circumstances as set out in the FW Act. A general overview of the union right of entry provisions under the FW Act is set out below. Union right of entry is a highly technical, complex area of the law and employers are encouraged to seek advice in relation to their specific rights and obligations in devising their individual industrial strategies and responses to approaches from unions. Requirements to enter an employer’s premises In order to enter an employer’s premises, a union official must apply for and be issued with a valid entry permit from the FWC. Union officials who have an entry permit are called “permit holders”.

Permit holder’s rights and obligations on entry The rights and obligations of a permit holder while on an employer’s premises under the FW Act are set out in the table below. In summary: (a) a permit holder has powers to enter the employer’s premises to either investigate suspected breaches of workplace laws or Fair Work Instruments, or to have discussions with employees (b) in limited circumstances, a permit holder may also be able to enter, or exercise rights on premises, if the right is conferred by a State or Territory WHS law, and (c) enterprise agreements may be an additional source of rights and obligations in relation to rights of entry. Each of these sources of rights and obligations is discussed in further detail below. Entry to investigate a suspected contravention A permit holder may enter the employer’s premises, and exercise rights while on those premises, for the purpose of investigating a contravention of the FW Act or a Fair Work Instrument (eg Modern Awards or enterprise agreements). To enter the premises, a permit holder must have reasonable grounds for suspecting a contravention has occurred or is occurring. It is the permit holder’s responsibility to establish this is the case. In addition, the permit holder can only exercise these rights if all of the following conditions are met: (a) the suspected contravention relates to or affects at least one member of the permit holder’s organisation (b) the organisation is entitled to represent the industrial interests of that member (c) the member performs work on the premises, and (d) except where the permit holder has an exemption certificate exempting them from the right of entry requirements (see below), an entry notice is given to the employer during working hours at least 24 hours, but not more than 14 days, before the entry. Where a permit holder has an exemption certificate, he/she must provide it to the employer before or as soon as practicable after entering the workplace. Exemption certificates are issued by the FWC on application and may only be issued when a permit holder wants to investigate suspected contraventions, and not when he/she wishes to hold discussions with employees. The FWC must issue an exemption certificate if it believes that giving an employer advance notice of the entry might result in evidence being destroyed, concealed or altered. Entry to hold discussions A permit holder may enter premises to hold discussions with one or more employees who perform work on the premises, whose industrial interests the permit holder’s organisation is entitled to represent and who wish to participate in those discussions. The right to enter a workplace to hold discussions with employees no longer depends on the employees being covered by a Modern Award or enterprise agreement that is binding on the relevant union. A permit holder must provide an entry notice to an employer and provide at least 24 hours’ notice, but no more than 14 days’ notice, before entering premises to hold discussions with employees. Further, a permit holder may only enter premises during working hours and may hold discussions only during mealtimes or other breaks. If there is a dispute between an employer and permit holders about the frequency with which the permit holders and/or other permit holders from the same organisation enter the employer’s premises, the matter may be referred to the FWC for determination. Rights of entry under enterprise agreements The FW Act provides for enterprise agreements to include terms giving unions rights of entry for purposes

other than those set out in the FW Act. For example, an enterprise agreement might provide an entitlement to enter the workplace for a range of reasons connected to the enterprise agreement, such as: (a) to assist with representing an employee under a dispute resolution or consultation term (b) to attend induction meetings of new employees, or (c) to meet with the employer when bargaining over a replacement enterprise agreement. What must an entry notice contain? Unless an exemption certificate has been issued, a permit holder’s entry into the employer’s premises is conditional on the permit holder giving the employer an entry notice, during working hours, and at least 24 hours, but not more than 14 days, before the entry. All entry notices must specify: (a) the premises to be entered and the day or days of entry (b) the organisation to which the permit holder belongs (c) the section of the FW Act that authorises the entry, and (d) if the entry is to investigate a suspected contravention, particulars of the suspected contravention. The permit holder must also declare in the entry notice that they are entitled to represent the industrial interests of an employee who performs work at the premises and the provision of the union’s rules which entitles the permit holder’s union to represent members performing work on the premises. Rights and obligations of permit holder when entering the employer’s premises

The following case example illustrates the position of the courts in relation to deliberate breaches of the entry permit provisions by permit holders. Case example Breaches of right of entry permits Australian Building and Construction Commissioner v CFMEU (Castlemaine Police Station Case) [2018] FCAFC 15 Background Mr Tadic, a CFMEU official, entered a construction site as the holder of an entry permit as he considered the site to be unsafe. He subsequently contacted WorkSafe Victoria and an inspector; Mr Sharples attended the site to conduct a safety inspection. At various points during the inspection, Mr Tadic made complaints about perceived safety concerns. Mr Tadic expressed his dissatisfaction directly and forcefully to Mr Sharples, using swear words liberally (by way of a “sentence enhancer”) and at a volume louder than normal conversation. During the course of the inspection, Mr Tadic called Mr Sharples “the worst inspector he had ever seen”, “pathetic” and asked if he was applying for a job with the builder. As Mr Tadic left the site, he said “this is not over” to Mr Sharples in the presence of workers at the site. Findings The Full Court found that Mr Tadic acted in an improper manner in breach of s 500 of the FW Act. The Full Court found that while Mr Tadic’s subjective perception as to the competence of Mr Sharples may explain his conduct, it did not excuse it. The matter was remitted to a single judge to deal with penalty and it was ordered that Mr Tadic pay $8,500 and the union pay $51,000 to the Commonwealth in respect of their contraventions of the Act.

Access to records and documents The table below outlines permit holders’ right to access records or documents for the purpose of investigating a suspected contravention. In certain circumstances, a permit holder may also enter premises other than the employer’s premises, or issue a notice to the occupier of premises other than the employer’s premises following entry onto those premises, to obtain access to records or documents in relation to a suspected contravention.

The employer and/or the occupier of other premises are not required to produce, or provide access to, a record or document if this would contravene a Commonwealth or State or Territory law. A permit holder who has access to records or documents in investigating a suspected contravention must not use or disclose that document for any purpose that is unrelated to the investigation or to rectifying the suspected contravention. However, certain exceptions apply, including where the official reasonably believes that the use or disclosure is necessary to lessen or prevent a serious threat to the health and safety of an individual or the public. Employer’s rights and obligations on entry Where a permit holder has a right to enter the premises and/or to access certain documents and records, the employer must not: (a) refuse or unduly delay entry to a permit holder entitled to enter the premises (b) refuse or fail to comply with a permit holder’s request to produce or provide access to records or documents (c) intentionally hinder or obstruct a permit holder who is exercising their right of entry powers, and/or (d) misrepresent themselves by intentionally or recklessly giving the impression they are authorised to do things they are not authorised to do. Non-compliance with right of entry obligations There are a number of options available to an employer if a permit holder does not comply, or appears not to be complying, with their right of entry obligations. As the options and recommended response will be specific to the circumstances, it is recommended that employers seek advice if it is suspected that a permit holder has not complied with their obligations. Tips for managing rights of entry Employers should develop protocols and provide their employees with relevant training on how to respond in the event that a union official purports to exercise a right of entry on the employer’s premises. These protocols may include but not be limited to instructing employees to request copies of permits and entry notices and nominating specific individuals within the employer’s business to be the first point of contact in such matters. Employers should always ask to see a union official’s entry permit or a copy of the entry notice or exemption certificate, and the union official must provide it. These documents must also be provided before the union official asks for access to any of the employer’s records or documents. If an employer wishes to find out in advance whether a particular union official holds a current entry permit, it may conduct a search on the FWC’s website (www.fwc.gov.au). The search function allows searches to be conducted on either the union or the particular permit holder.

Employee participation in industrial activity

Employees are provided with a range of legislative protections in relation to engaging in industrial activity, including the general protections under the FW Act. Under the general protections provisions in the FW Act, an employer is prohibited from taking “adverse action” against an employee or a prospective employee because of a “proscribed reason”. Examples of “adverse action” and what may constitute a “proscribed reason” in the context of industrial activities are set out below.

For the avoidance of doubt: (a) adverse action against an employee in relation to their industrial activity may include a range of actions that are short of dismissal, including suspension of opportunities or work benefits, change of duties and demotions, and (b) the rights and benefits conferred on employees in connection with industrial activity under industrial instruments, including enterprise agreements (eg leave granted to union delegates to attend trade union training or to be released from duties to attend union meetings) are “workplace rights” for the purposes of the general protections provisions. It is recommended that an employer familiarise itself with the terms of applicable enterprise agreements to enable it to identify the employees who have rights and benefits in connection with industrial activities conferred on them under such an agreement, to minimise the risk of general protections claims. In addition, the protection against adverse action in the context of “workplace rights” or “industrial activity” also extends to rights that may be exercisable by third parties on behalf of employees. This means that an employer must not take adverse action against an employee because a third party (such as a union) has exercised a workplace right for their benefit, or for the benefit of a group of people to which they belong. For instance, an employer will be prohibited from taking adverse action against an employee because a union representative or official made a complaint in relation to the employee’s employment on the employee’s behalf. If an allegation is made that an employer has taken adverse action against an employee because of a proscribed reason, the onus will fall on the employer to demonstrate that it did not take the adverse action for a proscribed reason. For example, an employer may have disciplined an employee for breach of a safety or conduct policy, not because the employee was engaging in industrial activity. In those circumstances, the employer would need to be able to demonstrate that the breach of policy was the reason for the disciplinary action/adverse action to defend its position. The following case examples confirm that the subjective intention of an employer is relevant to determining if the employer took adverse action for a proscribed reason. Case examples Adverse action and subjective intention Board of Bendigo Regional Institute TAFE v Barclay [2012] HCA 32 Background Mr Barclay was a senior teacher and the sub-branch president of the Australian Education Union at Bendigo TAFE. In his capacity as a union officer, he sent an email to union members at the workplace in which he alleged that several colleagues had told him of serious misconduct by unnamed individuals at the TAFE, in that they had witnessed or been asked to be part of producing false and fraudulent documents. The TAFE’s CEO saw copies of the email and believed that it could cause considerable harm to the TAFE’s reputation. The TAFE reacted by suspending Mr Barclay on full pay, denying him internet access, and refusing him permission to enter the workplace. Mr Barclay alleged that the TAFE’s actions had breached the general protections provisions that protect the right of union officials and members to employ and pursue common goals. TAFE denied these allegations. Findings

At first instance, the Federal Court held that there was no unlawful adverse action because, on the balance of probabilities, the TAFE acted due to Mr Barclay’s contravention of the code of conduct and his employee obligations, not because of his union activity. The court stated that the decision maker’s subjective reasoning should be considered when deciding whether adverse action was taken. This decision was reversed by the Full Federal Court on appeal, which determined that the objective intention of the decision maker is the most relevant consideration in determining whether adverse action is taken for a prohibited reason. On this view, if the employee is, as Mr Barclay was, an official of the union engaging in industrial activity, then this would have formed part of the decision maker’s considerations. The decision of the Full Federal Court was appealed to the High Court. The majority of the High Court overturned the Full Federal Court decision and affirmed the use of a subjective test for determining whether adverse action was taken because of a prohibited reason, and that factors such as the decision maker’s motives and intentions will be relevant in assessing an adverse action claim. Adverse action CFMEU v BHP Coal Pty Ltd [2014] HCA 41 Background Mr Doevendans, a CFMEU official, was dismissed from his role at the Saraji mine after “repeatedly and deliberately” holding a sign reading “No Principles SCABS No Guts” during a protected industrial action, and despite Mr Doevendans having a range of other signs from which to choose. He was observed on four occasions during the protests waving the “SCABS” sign at vehicles entering and leaving the mine. Mr Doevendans acknowledged that he knew his conduct in waving the “SCABS” sign was inappropriate and contrary to the company’s Workplace Conduct Policy, and was dismissed by BHP. The CFMEU brought a general protections claim in response to Mr Doevendans’ dismissal, alleging that the dismissal amounted to adverse action because he had participated in industrial activity in his capacity as an officer of the CFMEU. Findings The High Court held that BHP had not terminated Mr Doevendans for the prohibited reason of engaging in industrial activity, and accordingly dismissed the CFMEU’s appeal. In approving the decision in Barclay discussed above, the court rejected the argument that adverse action connected to an industrial activity must be taken to be a reason for the adverse action. The court affirmed that the protection against adverse action under s 346 of the FW Act is “protection against adverse action being taken by reason of that act or omission having the character of a protected industrial activity” and that merely because adverse action has a connection to an industrial activity, it does not mean that the adverse action was taken because of the industrial activity.

Industrial action The FW Act regulates industrial action in the workplace. Industrial action is typically taken as a means of resolving disputes about terms and conditions of employment of employees in the workplace, and may take many forms including: • work bans (or partial work bans) • strikes, and/or • a lockout of employees by the employer. There are limited circumstances in which lawful or “protected” industrial action — that is, industrial action in respect of which the parties are protected from legal action — may be taken. This protection relates to the right to strike as an enterprise bargaining tool. Parties are not protected from legal action if, for example they engage in tortious conduct such as defamation. If the industrial action is not protected, it may be unlawful and may expose those engaging in or facilitating that industrial action, to legal action. Protected industrial action For industrial action to be protected under the FW Act, it must either be in support of a new enterprise agreement, or in response to industrial action taken by the other party. The figure below sets out the steps that must be taken for industrial action to be protected, including the party wishing to take protected industrial action making an application to the FWC for a protected action ballot order. In addition, for industrial action to be protected: (a) any existing enterprise agreement must have passed its nominal expiry date (b) the industrial action must not involve pattern bargaining

(c) where employees initiate the industrial action, the FWC must have granted a protected action ballot order and the resulting ballot must endorse the action being taken (d) the required notice of the industrial action has been given to the other party, and (e) the bargaining representative(s) organising the action, or representing the employees who are taking or organising the action, must be “genuinely trying to reach agreement”.

* Eligible voters must be employees who will be covered by the proposed agreement, who were represented by the applicant for the PABO, and were included in the list of employees specified in the PABO.

When industrial action is not protected Industrial action will not be protected if it: • is taken while the bargaining period for the enterprise agreement has been suspended • relates significantly to a demarcation dispute • is in support of claims for a multi-enterprise or greenfields agreement • is in support of the inclusion of claims that cannot be lawfully included in an agreement, or • contravenes any orders made by the FWC. Options for responding to industrial action An employer has a number of options in terms of its response, if faced with industrial action by employees. These options are outlined in the table below.

Case example When can an employer stand down its employees? Marson v Coral Princess Cruises (N.Q.) Pty Ltd T/A Coral Expeditions [2020] FWC 2721 Background Coral Expeditions was a cruise operator that was unable to continue its operations by reason of government directions during the COVID-19 pandemic. As a consequence, Coral Expeditions stood down non-essential crew, being approximately 50% of their workforce. The applicant, a Marine Superintendent, disputed his stand down on the basis that his role was still required and that there was no stoppage of work for him. While the cruises had stopped for guests, the applicant asserted that his role in maintaining and repairing the fleet of ships to applicable standards and meeting all certification/licensing requirements must continue. Findings In considering whether the applicant could be “usefully employed”, the FWC referred to a two-part test. First, it must be determined if there is useful work and then the number of employees required to perform that useful work. Second, a more general analysis of the conduct of the employer against notions of good faith and fairness must be undertaken. The FWC stated that it is a question of fact as to whether an employee “cannot usefully be employed” and in resolving that question regard may be had to the “economic consequences” to the employer. The FWC dismissed the claim finding that the applicant was not capable of useful employment. While it was acknowledged that there was work which exists that can be done, the FWC found it difficult to classify an abundance of work as useful when one contemplates the extreme economic pressure of the situation and considered the allocation of work by Coral Expeditions to be reasonable.

Case study Lockout of employees at Qantas In November 2011, Qantas grounded its fleet in preparation for a full scale lockout in response to industrial action taken by three trade unions representing licensed aircraft maintenance engineers, baggage handlers and pilots in connection with the negotiation of new enterprise agreements. Partial work bans had been taking place for some time which had, among other things, delayed flights, and it was considered that there was no end in sight with respect to either the negotiations for the new enterprise agreements or the industrial action. In response to the lockout, the federal government applied to the FWC to terminate the industrial action, arguing that the lockout threatened to cause significant damage to the Australian economy. The FWC terminated the industrial action and commenced arbitration in relation to the enterprise agreements.

Industrial disputes If employees have concerns over the terms and conditions of their employment, and more specifically, the application of an industrial instrument that applies to their employment (such as a Modern Award or enterprise agreement), they and/or their representatives may seek to address their concerns by way of an industrial dispute in accordance with the dispute resolution procedures set out in the relevant Modern Award or enterprise agreement. Dispute resolution procedures in Modern Awards and enterprise agreements typically require employees to attempt to resolve their concerns at the workplace level before the dispute is referred by one, or both, of the parties to an external body. The external body to which the disputes are most often referred is the FWC, with the terms of the Modern Award or enterprise agreement dictating the powers of the Commission to deal with the dispute (ie either by way of conciliation, mediation and/or arbitration).

An employer should ensure that any disputes with employees regarding the interpretation or application of an industrial instrument are, to the extent possible, managed and resolved at the workplace level, so as to minimise the risk of the dispute being escalated. While it may be beneficial to have the FWC or another external body available to determine disputes if the relevant issues cannot be resolved at the workplace level (including from a strategic perspective when managing a dispute), the risk for the employer is that a determination by one of these bodies may create a precedent which the employer will then have to apply for the life of the industrial instrument. Such a decision may also impact on future enterprise agreement negotiations.

Enterprise bargaining As noted above, enterprise bargaining is another area where there is likely to be interaction between an employer and a third party such as a union. The process for negotiating and making an enterprise agreement under the FW Act is summarised at Appendix 1 to this Chapter. Each of the mandatory steps in the enterprise bargaining process must be followed or the FWC will be unable to approve the enterprise agreement — there is no discretion exercisable by the FWC in relation to most aspects of the enterprise agreement making process. These steps include but are not limited to: (a) the requirement that employees who are employed by the employer at the “notification time” for the enterprise agreement and who will be covered by the enterprise agreement must be issued with a Notice of Representational Rights in the terms provided in the FW Regulations, and (b) the requirement that employees have access to a copy of the proposed terms of the enterprise agreement and any material incorporated by reference into the enterprise agreement for a period of at least seven days prior to being asked to vote to approve the enterprise agreement (the “access period”). In addition to requiring compliance with each of the mandatory steps for approval of the enterprise agreement, the FW Act also requires the bargaining representatives for a proposed enterprise agreement to bargain in good faith. The good faith bargaining requirements are as follows: (a) attending, and participating in, meetings at reasonable times (b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner (c) responding to proposals made by other bargaining representatives for the agreement in a timely manner (d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals (e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining, and (f) recognising and bargaining with the other bargaining representatives for the agreement. The good faith bargaining requirements do not require a bargaining representative to: (a) make concessions during bargaining for the agreement, or (b) reach agreement on the terms for inclusion in the agreement.

Case example Good faith bargaining in practice Australian Municipal, Administrative, Clerical and Services Union [2020] FWC 1787 Background The FWC issued bargaining orders against Mater Misericordiae Limited T/A Mater Group (Mater) following the union making a claim that Mater was not complying with its good faith bargaining obligations. Following an unsuccessful ballot, Mater met with the union and employee bargaining representatives and indicated that there was room to move on two issues of contention. Following informal discussions with two representatives, Mater adopted amendments to the proposed agreement without reverting to the bargaining group and proceeded to put the agreement to a second vote. Findings The FWC found that the decision to proceed to a second ballot without affording the union an opportunity to put further proposals, in all of the circumstances of this case, was capricious or unfair conduct that undermined collective bargaining. The bargaining orders issued delayed the second ballot for a minimum period of 21 days and required a minimum of two further meetings to be conducted prior to the second ballot.

Commercial relationships From time to time, an employer engages suppliers to provide services. This may involve employees of the supplier providing services to an employer both in and outside of the employer’s premises. Such arrangements could expose the employer to various claims for entitlements from both the supplier and the supplier’s employees. In order to avoid such exposure, it is important to review the terms of the engagement carefully. The employer as a “joint employer” If a supplier has employees or subcontractors who provide services to the employer, subject to the nature of the arrangement, the key “watch out” is that the employer could be exposed to claims from these employees seeking termination payments and other benefits ordinarily provided to employees. Such benefits may include: • payment of leave entitlements including accrued but untaken annual leave and long service leave • payment of minimum entitlements under any applicable Modern Award or enterprise agreement, including overtime and leave loading • payments made to employees which exceed payments made to employees by the supplier, and • termination payments (including redundancy pay and payment in lieu of notice). The argument of joint employment generally arises where one employer has day-to-day control of an employee while the other employer has responsibility in relation to payment of the employee. Such a claim would most likely be made on the basis that the employer is a joint employer. While the relevant courts and tribunals have debated the doctrine of joint employment, it is not a concept that has been adopted by Australian law. Services Agreement The express terms of the Services Agreement will be significant in determining what, if any, legal obligations an employer has in relation to employees of suppliers. However, despite the express terms, a supplier could bring a claim arguing that it was an implied term of the Services Agreement that the employer would be responsible for paying staff entitlements. Even where there is a written contract, a court may imply terms into a contract in certain circumstances. For a supplier or contractor to be successful in arguing that the employer is responsible for staff entitlements and termination payments, the supplier or contractor would need to establish that the implied term met the “BP Refinery Test” adopted by the High Court. This test requires that for a term to be implied into a contract, the term must be capable of clear expression, is reasonable and equitable, is necessary to give business efficacy to the contract, or is so obvious that it goes without saying and does not contradict any express terms of the contract.

Representations to suppliers Employers should also be careful not to make misleading or deceptive representations over the course of engaging a supplier. This is because the supplier could argue that the employer made certain representations, for example that the employer is responsible for the day-to-day management of the supplier’s employees and would pay all staff entitlements if the Services Agreement was terminated. In such circumstances, the employer may be liable to pay for staff entitlements. Therefore, the employer should be aware of the distinction between its employees and the employees of the supplier and avoid making misleading representations that imply that the employer has any additional obligations towards employees of the supplier. APPENDIX 1: BEST PRACTICE ENTERPRISE AGREEMENT PROCESS

Work Health and Safety Introduction Employers have obligations under statute and at common law to ensure that they provide a safe and healthy working environment for their employees and others who might be in the workplace from time to time. This Chapter sets out an overview of the key aspects of the “harmonised” work health and safety (WHS) legislation and of an employer’s legal obligations in the event of workplace incidents or injuries. Because of the specialised and complex nature of WHS, and the differing legislative regimes that apply across Australia, it is recommended that employers seek advice in relation to their specific WHS obligations in each of the jurisdictions in which they operate. This Chapter also examines two of the most topical WHS issues of recent times: working from home arrangements and transitioning to smoke-free workplaces, and outlines some of the WHS risks and best practice recommendations attaching to those issues.

Overview of the applicable legislation and standards The primary WHS legislation that applies in each State and Territory is as follows:

The WHS Laws have not been adopted in Victoria and WA. While the same general principles apply, care should be taken to ensure that employers are complying with their duties under the Victorian and WA legislative regimes, where relevant.

While the basic principles of WHS legislation are similar across the various states and territories, employers must ensure that they comply with the precise obligations that apply in the specific jurisdiction in which the work is performed. WHS legislation is not the only source of obligations for employers and workers in a work health and safety context. Set out below are a number of other sources of WHS-related obligations, including relevant codes of practice and standards. Other legislation and applicable standards

Key features of the “harmonised” WHS legislation WHS legislation In recent years, WHS legislation has been “harmonised” in many Australian states and territories, with the intention of creating a uniform set of laws and safety standards for a nationally consistent scheme. Prior to harmonisation, states and territories operated under different WHS legislation, which presented challenges for employers who operate in multiple jurisdictions. In New South Wales and Queensland, new WHS laws took effect from 1 January 2012. South Australia and Tasmania adopted new WHS laws on 1 January 2013 and Western Australia introduced a new draft Work and Safety Bill 2014. To date, Victoria has not adopted the model laws in their current form, while Western Australia may pass a new Work Health and Safety Bill with some amendments to the model laws. Despite the objective of consistency across all Australian states and territories, and despite each of the new WHS laws being based on the same model laws, there are differences in the new WHS laws that have been adopted in New South Wales, Queensland, South Australia and Tasmania (and those that may be adopted in Western Australia). As such, care should be taken when interpreting and applying the new WHS laws where an employer operates in multiple jurisdictions. In 2018, a review of the operation of the Model WHS laws was undertaken with the final report published on 25 February 2019. It included 34 recommendations to improve the application and enforcement of the laws. These recommendations are currently the subject of a regulatory impact assessment process, awaiting a decision by WHS ministers later in 2020. The key features of the harmonised WHS laws include:

The following table outlines the obligations of an employer and its officers and workers under the WHS legislation. It is important that the employer and the individual employees are aware of, and meet, these obligations in order to avoid prosecution under the WHS legislation.

The legislation in each jurisdiction provides guidance as to what the term “reasonably practicable” means for or requires from employers. For example, s 18 of the Work Health and Safety Act 2011 (NSW) provides that “reasonably practicable”, in relation to a duty to ensure health and safety, means that which is, or was at a particular time, reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters including: (a) the likelihood of the hazard or the risk concerned occurring, and (b) the degree of harm that might result from the hazard or the risk, and (c) what the person concerned knows, or ought reasonably to know, about: (i) the hazard or the risk, and (ii) ways of eliminating or minimising the risk, and (d) the availability and suitability of ways to eliminate or minimise the risk, and (e) after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk. The following case example from Victoria demonstrates that in determining what is “reasonably practicable” in terms of an employer ensuring WHS, the courts will take into consideration whether something is capable of straightforward and low-cost rectification. It also highlights the importance of an employer providing appropriate training and supervision to new employees in order to meet minimum conditions for the safe conduct of the employer’s business. Case example Meaning of “Reasonably Practicable” Orbit Drilling Pty Ltd v The Queen; Smith v The Queen [2012] VSCA 82 Background Orbit Drilling was performing drilling works for a mining company when an employee suffered a fatal injury while driving a Mack truck with defective brakes. The employee had been working for Orbit Drilling for just over a week and had not been effectively trained. Findings In the first instance, Orbit Drilling was fined $750,000 and the director of Orbit Drilling was fined $120,000. The fines were appealed on the basis that they were excessive. The Court of Appeal rejected this argument and noted that the deficiencies in the brakes were capable of straightforward and low-cost rectification. In those circumstances, it was reasonably practicable for Orbit Drilling to ensure that a new driver was appropriately trained and supervised, and that its trucks were maintained in a safe and roadworthy condition.

It is also noted that an employer may impose obligations upon employees that affect their individual rights and preferences, in order to meet its own WHS obligations in ensuring the health and safety of its workers and to minimise its risk profile, as illustrated in the following case example. Case examples To what extent can employers encroach on individual rights and preferences? Felton v BHP Billiton Pty Ltd [2015] FWC 1838 Background BHP Billiton Pty Ltd (BHP Billiton) introduced a clean shaven policy in the context of the need to wear appropriate Personal Protective Equipment which included respirators. This arose from the need for employees to be protected against the potential exposure to an array of dusts, gases and carcinogenic materials. The applicant had a goatee beard and a moustache and repeatedly refused to attend work clean-shaven, after which he was dismissed for his refusal to follow lawful and reasonable directions. Findings It was found that the clean shaven policy was reasonable and appropriate given the potential hazards in the mine, the impact of facial hair on the effectiveness of the PPE provided by BHP Billiton and that BHP Billiton had significant WHS obligations as an employer. While the FWC acknowledged that the policy affected individual rights and preferences, in light of the actual hazards, the nature and size of the mine and its workforce and the impact of the relevant WHS obligations, the interests of protection of safety and health were considered to be more important than personal preference and desire to maintain a certain physical appearance. Corporate manslaughter R v Brisbane Auto Recycling Pty Ltd & Ors [2020] QDC 113 Background A 58-year-old casual contractor was crushed by a reversing forklift in 2019. A subsequent report commissioned by Brisbane Auto Recycling indicated that, apart from a supervision system, safety measures “consisted of little more than the installation of signage, plastic bollards and marked exclusion zones” after three years of operation. Findings Brisbane Auto Recycling was the first entity in Australia to be convicted of corporate manslaughter and was fined $3m under s 34C of the Work Health and Safety Act 2011 (Cth). Its directors were given suspended 10-month sentences for their role in the death of a worker after pleading guilty to Category 1 reckless conduct charges under s 31 of the Act. Judge Rafter elected to suspend the prison terms after weighing the directors’ co-operation, clean records and personal circumstances against the available five-year maximum penalty and prosecution arguments for a portion to be spent behind bars. As Hazara refugees from Afghanistan, the men risked deportation if their sentences were a year or more, a factor Judge Rafter concluded should be juxtaposed against circumstances where defendants faced no such prospect.

Incident management To the extent possible, an employer should ensure that it has appropriate procedures and protocols in place for incident response and management, including incident notification and first aid to ensure that it complies with its WHS obligations. “Notifiable incidents” under WHS Laws Under the WHS Laws, an employer has an obligation to immediately notify the regulator of a “notifiable incident” after becoming aware of it. A “notifiable incident” is defined as a death of a person, a serious injury or illness or a dangerous incident. Reproduced below is a list of the types of circumstances that constitute a “serious injury or illness” or “dangerous incident” under the WHS Laws. “SERIOUS INJURY OR ILLNESS” AND “DANGEROUS INCIDENT”

The current details for notifying the regulators are as follows:

In addition to its notification obligations, an employer also has the following obligations regarding site preservation and record-keeping in respect of “notifiable incidents”. Site preservation The person with management or control of a workplace at which a notifiable incident has occurred must ensure, so far as is reasonably practicable, that the site where the incident occurred is not disturbed until an inspector arrives at the site or directs otherwise. Requirements to preserve the incident site apply to any plant, substance, structure or thing associated with the notifiable incident. This means that any evidence that may assist an inspector to determine the cause of the incident is preserved. However, an incident site may be disturbed to assist an injured person or remove a deceased person, to make the site safe or to minimise the risk of a further notifiable incident, to facilitate a police investigation or after an inspector has given a direction to do so either in person or by telephone. If after arriving at the incident site an inspector considers that it should remain undisturbed in order to facilitate investigation of the incident, they may issue a non-disturbance notice. This notice must specify the period for which the notice is to apply — although this period is to be for no more than seven days. Record-keeping requirements The notifier must keep a record of the notifiable incident for at least five years from the date of notification. Penalties apply for failing to do so. As a practical matter, these records should include any directions or authorisations given by an inspector at the time of notification (including authorisations to disturb incident sites) and any confirmation that the employer notified the regulator about the incident. Workers’ compensation Incidents occur from time to time which may lead to workers’ compensation claims such as claims for lost time or medical expenses. In these circumstances, regardless of whether the incident is a “notifiable

incident”, the employer should also contact the relevant workers’ compensation insurer to avoid paying a claims excess.

WHS and working from home Under WHS legislation, the “workplace” means a place where work is carried out for the employer. This means that an employer has WHS obligations in relation to employees who work from home. Where the home is a workplace, a hazard identification and risk assessment must take place in much the same way as the employer would assess the hazards and risks at a site. Controlling or eliminating the identified risks in a workplace which is also a home, may include replacing, repairing, servicing or providing appropriate equipment, and implementing policies. It should also involve an agreement between the parties as to the specific working from home arrangements. The following case example illustrates some of the risks for employers associated with working from home arrangements. Case example Workers’ compensation coverage of injuries at home Hargreaves and Telstra Corporation Limited [2013] AATA 579 Background An employee had an informal arrangement with Telstra which allowed her to work from home two days per week. While working from home, the employee sustained shoulder injuries when falling on two separate occasions. The employee brought a workers’ compensation claim in respect of these injuries, which she argued led to the development of depression and anxiety as she was no longer able to work as a result of the injuries. Findings The main issue was whether the injury had occurred in the course of the employee’s employment, given she was working from home. Telstra was held liable as on both occasions the injuries had been sustained while the employee was acting in the course of her employment, as she was taking a toilet break when the first injury occurred and the second injury arose when locking her front door (as she was directed to do by Telstra). Therefore, the injuries were found to be within the scope of the employee’s work duties and to have occurred in the course of the employee’s employment.

An employer should ensure that prior to the commencement of any working from home arrangements, it takes steps to confirm that the employee is working in a safe environment.

WHS and the global pandemic COVID-19 As a result of the 2020 COVID-19 pandemic, which resulted in a significant increase in working from home arrangements and safety measures against contagion being implemented in workplaces, Safe Work Australia released a COVID-19 Resource Kit (Kit) to assist businesses in keeping workers safe and reducing the spread of COVID-19, including working at home arrangements. The Kit can be found here: www.safeworkaustralia.gov.au/sites/default/files/2020-05/COVID-19_Workplace-Checklist.pdf Under WHS law, all PCBUs are required to assess and minimise the risk of COVID-19 to workers and others in the work environment. Businesses and workers must: 1. comply with national and state public health directions and advice from state and federal authorities in a timely manner 2. practise social distancing and hygiene measures 3. immediately report instances of COVID-19 in the workplace or amongst close contacts of workers 4. raise any concerns about the risk of contracting COVID-19 immediately with the employer and work with them to identify solutions. SafeWork Australia has provided significant support to PCBUs to assist workplaces to assess the risk (in

consultation with workers) and look for ways to minimise the spread of COVID-19. Businesses (and other PCBUs) are required to notify the WHS regulator in their state of any serious illnesses (including COVID-19) arising out of work. Case example COVID-19 travel survey was reasonable and lawful direction Knight v One Key Resources (Mining) Pty Ltd t/a One Key Resources [2020] FWC 3324 Background The applicant was employed by One Key Resources in March 2019. On 6 March 2020, an email was sent to employees setting out the employer’s COVID-19 safe work strategy, which included, amongst other things, a direction that employees complete a COVID19 survey which asked: 1. their name 2. whether they had travelled to 10 high-risk or moderate-risk countries in the past five weeks, and 3. whether they had any travel plans in the near future. The applicant refused to complete the survey. He alleged that the direction to employees was in breach of the APPs in Sch 1 of the Privacy Act 1988 (Cth) and both unreasonable and unlawful. He was issued with a warning letter on 16 March 2020 which confirmed that if the applicant failed to comply with the direction, this would result in further disciplinary action which may include termination. The applicant refused to answer the survey questions. On 16 March 2020, his employment was terminated. Findings The FWC found that the questions in the survey related to travel information and not sensitive health information. The Commissioner recognised that the purpose of the One Key Resources’ request was to meet its obligations under the Work Health & Safety Act 2011 (Qld) (WHS Act). In terms of s 18 of the WHS Act, an employer must do what is reasonably practicable to ensure the health and safety of its workers. Even if the information was “sensitive information”, the Commissioner stated that it was likely the permitted general exemption would have applied. Under the permitted general exemption, consent is not necessary where the collection of sensitive information is undertaken “to lessen or prevent a serious threat to the life, health or safety of any individual, or to public health and safety.”

Smoke-free environment Each State and Territory has separate legislation regarding smoking in the workplace which, to differing degrees, prohibits smoking in and around the workplace. In order to meet their work health and safety obligations in this regard, employers may consider transitioning to a smoke-free work environment. Set out below are some of the stages that an employer may progress through in transitioning to a smokefree work environment. Transitioning to a smoke-free environment

The following case example highlights the types of issues that the employer needs to consider in transitioning any site to a smoke-free site. Case example Smoking ban reasonable Construction, Forestry, Mining and Energy Union v Glencore Mt Owen Pty Ltd [2015] FWC 7752 Background A smoking ban was introduced across the Mt Owen Complex for Mt Owen employees who work in the Coal Handling and Preparation Plant. The dispute was in relation to whether the direction given by Mt Owen to its employees banning smoking was a lawful and reasonable direction. Findings It was found that, while it may be difficult for some employees, particularly heavy smokers, to get through entire shifts without smoking and the ban posed a restriction on the personal liberty of the workers, the direction was lawful and reasonable because Mt Owen: • offered to support employees to help them quit or reduce smoking • consulted extensively with the employees about the proposal, and • provided employees with six months’ notice of its intention to introduce the ban.

This case reinforces the principle that with sufficient planning and consultation with employees, in conjunction with measures to ameliorate the impact of a smoke-free site on employees, an employer can transition to a smoke-free site and issue directions to employees regarding the imposition of a ban on smoking in the workplace.

Post-employment Issues Introduction There are a number of obligations imposed on an employee as part of the employment relationship that will survive the termination of their employment. These obligations relate to matters including restraints of trade, confidentiality and confidential information, intellectual property and non-disparagement. The extent of an employee’s post-employment obligations is typically determined by the terms of the employee’s employment contract and/or any terms that the employee and the employer agreed to on separation (which may be reflected in a Deed of Release). This Chapter examines these post-employment obligations, the strategies that an employer may adopt to minimise the risk of employees breaching these obligations, and steps that an employer may take if a former employee breaches their post-employment obligations. It is a commercial reality that when employees leave their employment with one employer, they may go to work for a competitor and, in that new employment, apply skills and knowledge developed while working for their former employer. What is absolutely essential, though, is that should an employer be concerned that a former employee is in breach of their post-employment obligations and this may cause loss and damage to the employer, the employer acts quickly in order to protect its interests.

Restraint of trade Restraint of trade clauses are terms in employment contracts that seek to prevent employees from engaging in a range of activities during their employment and after that employment has come to an end. The prohibited activities may include working for a competitor or dealing with clients or other employees of their employer. The legal position in relation to restraint clauses in employment contracts is that they are unenforceable on public policy grounds unless the party seeking to enforce the restraint (typically the employer) can satisfy the following tests: • Legitimate interest: Does the employer have a legitimate interest to protect (such as commercial interests, customer connection, confidential information or a stable workforce)? • Reasonableness: Is the restraint reasonably necessary to protect the legitimate interests of the employer? • Remedies: Would it be appropriate to grant an injunction or award damages in respect of any breach of the restraint? Each of these tests is discussed further below. Legitimate interest? An employer is entitled to protect, within reasonable limits, the relationships and opportunities afforded to an employee by their employment with the employer. This includes but is not limited to the personal knowledge and influence that an employee might have acquired while employed by the employer and which may be exerted over clients, customers or other employees.

As illustrated by the following case example, employers must ensure that restraints in employment contracts are drafted appropriately for the role held by the employee, lest the restraints be found too broad and therefore unenforceable. Case example Reading down post-employment restraints Charltons CJC Pty Ltd v Fitzgerald [2013] NSWSC 350 Three senior employees left an accounting firm that they worked for and established their own firm. The restraint of trade clause in their employment contracts purported to restrain the former employees from dealings with clients with whom they had contact at “any time” during their employment. The court held that the restraint only apply to persons or entities with whom the former employees had dealings in the last 12 months of their employment. The court stated that there was no clear practical commercial necessity for any wider protection. Note: The application of the restraint in this case was limited in accordance with the Restraints of Trade Act 1976 (NSW), which specifically allows courts to “read down” restraints that they view as too broad. This type of legislation does not exist in all jurisdictions.

Employers are encouraged to take advantage of any opportunities that present themselves to review employee’s restraints and to determine if they remain appropriate (eg if there is a change in the employee’s role or remuneration). If it no longer remains appropriate, varying the restraint or drafting a new employment contract should be considered. As illustrated by the following case example, courts are likely only to rectify the absence of a restraint clause in an employment contract if it can be objectively demonstrated that the written contract did not reflect the true intention of the parties. Case example Rectifying an employment contract to include a restraint clause omitted mistakenly Helensburgh Property Management Pty Ltd v Brady [2015] NSWSC 1861 Background Ms Brady was employed as a Property Manager by Helensburgh Property Management (HPM) from 2010 until her resignation in September 2015. Approximately two months prior to her resignation, Ms Brady established her own real estate agency in competition with HPM. HPM alleged that Ms Brady had poached 25 clients of HPM and commenced proceedings for breach of contract, alleging that Ms Brady had breached a post-employment restraint which prevented her from competing with HPM within 15 kilometres of HPM’s office for six months following the termination of her employment. A complicating factor was that Ms Brady’s most recent employment contract did not include the restraint that was relied on by HPM. Rather, that restraint had been included in her original contract of employment with HPM. HPM argued that Ms Brady’s most recent contract should be rectified to include the original restraint. Findings This case may be said to be a remarkable one due to Ms Brady’s admissions that she had established her company to compete with HPM, had discussions with clients of HPM with the intention of obtaining their business for her company while she was still

employed by HPM, modified HPM’s rental records to mislead HPM, and knew that what she was doing was wrong. HPM successfully argued that Ms Brady’s most recent employment contract should be rectified to include the original postemployment restraint because it had been unintentionally omitted during a remuneration review. In this respect, the court was “satisfied that both the plaintiff and the defendant intended that the clause in the 2010 Agreement in relation to the restraint on postemployment activities would be included in the 2012 Agreement”. Ms Brady was found to be in breach of the restraint, which provided an “appropriate balance to protect [HPM’s] confidential information and to provide the freedom for the defendant to establish a viable business”, and in a later damages decision, Ms Brady was ordered to pay HPM $33,740 in respect of lost commissions during the restraint period.

Reasonableness Whether a restraint is “reasonable” is generally judged at the time the employment contract was entered into. The scope of the restraint (whether it be the applicable time period or geographical area, or both) must be no wider than necessary to protect the employer’s legitimate business interests. The onus falls on an employer to demonstrate the reasonableness of a restraint or it may otherwise, depending on the jurisdiction, be unenforceable. Factors relevant to assessing reasonableness include

those set out below. The duration of a restraint is usually an important factor in determining whether the restraint is reasonable, and will depend on the employer’s interest that is being protected and on the field in which the restraint is designed to operate. For example, in assessing a reasonable time period for restraining client or customer activity, courts will consider a number of factors including: (a) the time it would take to train a replacement employee (b) the amount of time required for the former employee’s influence to dissipate, and (c) the amount of time required for the replacement employee to show effectiveness and establish a rapport with customers. Other factors that a court will consider in assessing a restraint clause for reasonableness include: (a) the geographical area which the restraint is intended to cover. Again the proposed restraint area must be directed to protecting a legitimate interest of the employer’s business. Worldwide or nationwide restraints were previously unlikely to be enforceable, however as the business world moves towards globalisation, this may no longer be the case, depending on the timeframe for which it is intended that the restraint will apply (b) the benefits to the parties from entering the restraint (c) what restraints are usual in similar circumstances, within the industry and within the employer (d) whether the former employee is prevented from earning a living, and (e) the bargaining position of the parties.

The opportunity to seek legal and taxation advice, as well as a clause that contains an express acknowledgement by the employee of the reasonableness of a restraint, will add weight to any reasonableness argument. Case example Pryse v Clark [2017] NSWSC 185 The NSW Supreme Court granted law firm Herbert Smith Freehills (HSF) an interlocutory injunction restraining eight former partners from taking clients or soliciting HSF lawyers to join White & Case, a rival law firm. White & Case intended expanding their Australian practice by acquiring various senior lawyers from HSF. Justice McDougall stated that he had “some difficulty in seeing why the court should relieve them of the consequences of what must have been a careful decision.” The orders made prevented the retired partners from joining White & Case or acting for or soliciting business from their clients for a period of six months.

In some cases, an employer’s commercial contracts with external parties may also be relevant in assessing the reasonableness of the time period for the restraint. In one case, a 12-month restraint was held to be reasonable because contracts with the clients that the employee had dealt with, were not entered into very often and usually extended well beyond 12 months. In the following case example, a three-year restraint period was held to be reasonable, largely due to the narrow application of the restraint. This case provides a useful illustration of how adapting the restraints to suit the particular circumstances can improve the likelihood of the restraint being found to be enforceable. Case example Three-year restraint period held to be enforceable Birdanco Nominees Pty Ltd v Money [2012] VSCA 64 In this case, a restraint period of three years was held to be reasonable in respect of a non-solicitation restraint imposed on an accountant. The period was considered reasonable because the restraint was “relatively narrow” in that it did not prevent the employee from working as an accountant or from providing services to the whole of his former employer’s client base, only to those with whom he had established a continuing relationship during his employment.

The following case example illustrates that the courts will typically consider each aspect of a restraint clause separately when determining the reasonableness and enforceability of that restraint clause, and that ultimately the courts will seek to balance the interests of the employer with the interests of the employee or employees. Case example Each aspect of the restraint clause considered separately when determining reasonableness DC Payments Pty Ltd v Tyson Jay Lester [2013] VSC 469 In this case, the employer sought to restrain its former National Sales Manager (who was at the relevant time employed by a competitor) from engaging in a number of actions. The court granted three out of the four injunctions sought, restraining the former employee from soliciting business, causing another person to do the same, or using or disclosing confidential information. However, the court stopped short of preventing the former employee from working with the competitor, noting that it was unreasonable given the impact of such a restraint on the former employee’s livelihood relative to the potential damage to the employer. The employer’s interest in its client relationships and confidential information could be protected without the non-compete restraint being enforced. Undertakings provided were sufficient SAI Global Property Division Pty Ltd (ACN 089 586 872) v Jones & Ors [2018] NSWSC 438 SAI Global Property Division Pty Ltd (SAI Global) provided IT services to law firms, banks and other businesses involved in property settlements. The employee was engaged by SAI Global as its head of segment and strategic sales. After 18 months, he left SAI Global’s employ after signing a deed of release. He then began talks with Infotrack, a competitor of SAI Global. However, SAI Global made it clear to the employee that it would seek to enforce his 12-month non-compete clause if he joined Infotrack. Instead, the employee joined a subsidiary of Infotrack, Perfect Portal. SAI Global then brought an application in the NSW Supreme Court for an interlocutory injunction to be granted stopping the employee from joining either Infotrack or Perfect Portal. The employee, Infotrack and Perfect Portal offered undertakings not to solicit suppliers and customers of SAI Global Property and related undertakings. The court found that it was not necessary to grant the interlocutory injunction to protect the rights of SAI Global as Perfect Portal was in a position to comply with the undertakings. Interestingly, Infotrack had included a clause in the employee’s contract which required him to strictly comply with the representations which Infotrack had made to SAI Global. In dismissing the application, the judge also considered the personal circumstances of the employee who was the main breadwinner in his family.

Remedies The third limb of the test in considering the enforceability of a restraint clause is whether it is appropriate for the court to grant the employer an injunction or award damages for a breach of a restraint clause. If these are not appropriate remedies for the breach, the court will typically refuse to grant them. The factors that the court will consider are examined further below.

Confidentiality and confidential information The common law has long recognised the value of confidential information in the form of implied contractual duties owed by employees to their employers during and after their employment. Employment contracts will typically contain express provisions regarding an employee’s use and disclosure of confidential information both during and after their employment, in effect codifying the employee’s common law obligations. The purpose of such a clause is to prevent employees from using or disclosing confidential information without first seeking permission from the employer (unless that disclosure is required by law, or required to be used or disclosed by the employee to perform their duties for the employer). Other sources of obligations in relation to confidential information may include relevant clauses in any Deed of Release entered into on termination of an employee’s employment, either reiterating or supplementing the obligations under the employee’s employment contract and at common law. In Reed Business Information v Seymour [2010] NSWSC 790, Bell J summarised the factors that will be considered by a court when determining whether or not information is truly confidential. Those factors are

reflected in the following diagram. If an employer has concerns that an employee (either during or after their employment) is using or disclosing the employer’s confidential information contrary to his/her obligations, it is open to the employer to take remedial action as set out in “Risk management and remedial strategies” below. As illustrated in the following case example, remedial action may include seeking an injunction against the employee to prevent them using or disclosing confidential information of the employer. Case example Restraints on use of confidential information APT Technology Pty Ltd v Aladesaye [2014] FCA 966 In this case, an employee was found to have used the confidential information of his employer to further the interests of a business he established in competition with it. The court granted an injunction, restraining the employee from doing so, despite there being no contractual restraint to this effect in the employee’s employment contract. The court held that the injunction was justified based on the “springboard principle”: that a person, who has obtained information improperly or in confidence, should not be allowed to use that information as a springboard for activities detrimental to the person to whom that information belongs. On the return date, the court found that the employer was entitled to a permanent injunction.

Intellectual property

Employment contracts may also incorporate clauses setting out an employee’s obligations during and after their employment in respect of any intellectual property that they may develop during their employment with the employer. The purpose of such clauses is to obtain agreement from the employee that they will transfer intellectual property rights to the employer and do anything that might be necessary to complete such transfers so that the employer retains the benefit of any intellectual property developed by an employee during their employment. If an employer has concerns that a former employee is not complying with his/her obligations with respect to intellectual property, then it is open to the employer to take remedial action as set out below.

Non-disparagement Employment contracts and Deeds of Release may impose various obligations on employees regarding non-disparagement of the employer during and after the employee’s employment, including in relation to the termination of the employee’s employment. If a current or former employee breaches their obligations in this regard, and the employer can establish that it has suffered loss or damage as a consequence of the breach, then it is open to the employer to commence legal action against the employee for breach of the employment contract or the Deed. In doing so, it is recommended that the employer adopt an approach similar to that set out below.

Risk management and remedial strategies There are a number of steps an employer may take in order to minimise the risk of employees breaching their post-employment obligations and/or to protect the employer’s position in the event that there is a breach of those obligations and legal proceedings are commenced. Initial steps As reflected in the figure below: (a) an employer should take care to remind the employee of their ongoing obligations to the employer under their employment contract (and any other source of post-employment obligations) when their employment comes to an end, however that occurs. If the employee raises concerns about those obligations (eg the potential impact of a restraint clause on their ability to obtain other employment), it is open to the employer to consider whether it wishes to enforce or modify the obligations. Any agreement to modify the employee’s ongoing obligations should be recorded in writing so that there is clarity about the employer’s position (b) if an employer becomes aware of a breach of the employee’s post-employment obligations, the employer should act promptly and decisively. Depending on the nature of the breach, there may be significant loss or damage suffered by the employer. If steps are not taken immediately to address the breach, the employer may be seen to have acquiesced in the behaviour, potentially compromising their ability to take action against the employee at a later time (c) as a first step in responding to concerns about a breach, the employer may send a letter of demand to the current or former employee, putting them on notice of the alleged breach of their obligations and that the employer may commence legal action (eg for injunctive relief, damages and/or an account of profits) if they do not cease and desist from engaging in the breach, and (d) if a former employee and/or their new employer appears to be benefiting from the breach, it is also open to an employer to write to the employee’s new employer and put them on notice that if they do not take steps to prevent the breach, the employer will consider it tantamount to inducing a breach of contract and may commence legal action against the new employer. RISK MANAGEMENT AND REMEDIAL STRATEGIES

Legal action If the initial breach of the employee’s post-employment obligations is significant or the former employee continues to engage in the breach despite any demand by the employer that they cease and desist from doing so, an employer may commence legal action to enforce the post-employment obligations. As noted above, there may be a range of remedies available as a consequence of legal action, including but not limited to injunctions, liquidated damages and accounts for profit. The circumstances and the nature of any legal proceedings will typically determine the nature of the remedy sought. The first step in any legal action to protect the employer’s interests arising out of an alleged breach of an employee’s post-employment obligations would typically be to apply to a court for an injunction (such as an interim or interlocutory injunction pending a final hearing — see further below) preventing the former employee from engaging in any further breaches of those obligations. Sometimes, commencing legal proceedings may result in the former employee providing undertakings to the effect that they will not engage in conduct in breach of the post-employment obligations in order to avoid the prospect of an injunction, or to resolve those proceedings. However, if no such arrangement is made between the parties and the court is required to consider the application, the court will consider the following matters in determining whether to grant an injunction: (a) Is there a prima facie case? (b) Are damages adequate? (c) Would hardship be caused by the grant of an injunction? (d) Does the balance of convenience favour the granting of the injunction? Injunctions may be granted on an interlocutory basis pending a final hearing. In granting interlocutory relief, a court will require the employer to show a “sufficient likelihood of success”. The employer may also seek to recover liquidated damages or an account of profits from the employee or their new employer, depending on the nature and seriousness of the breach of the post-employment obligations. The following case examples highlight that careful consideration of the available evidence should be

undertaken before deciding to commence legal proceedings in respect of any breach of an employee’s post-employment obligations. In order to secure relief, the employer must demonstrate that the relief sought is appropriate and there is a clear basis for the claim. Ultimately, the question the employer must ask itself is whether taking action in respect of a breach of an employee’s post-employment obligation is justified in light of the potential financial and operational impact of such action on their business. Case examples Nominal damages awarded for breach of post-employment obligations: Is the cost justified? De Poi Consulting v Dutton (No2) [2015] SADC 111 Background Ms Dutton was head of strategy and development with a workplace injury management specialist. Her role involved immediate supervision of up to 15 return-to-work consultants. Ms Dutton resigned from her employment, citing study and travel commitments. The next day she began work with a direct competitor. Her former employer successfully argued that Ms Dutton had breached the post-employment restraint in her contract. This decision was with respect to damages and costs. Findings Although it was clear that the employee had committed a “brazen” breach of her non-compete restraint, the employer’s claim for $185,000 for the loss of 37 rehabilitation files was dismissed for lack of evidence. While there had been a surge in the competitor’s client base since the employee joined it, this was put down to a coincidence. The court held: “Despite the observation as to the potential of referrals on account of personal appeal, the evidence does not support that supposition, at least to the point of proof on the balance of probabilities … The inescapable fact remains that Ms Dutton did not assume an active managerial or consulting role in the two months in question. In that time she was not taking referrals and it is not proven she received any, except for the few temporary watching briefs identified in the primary judgment. It follows that had Ms Dutton only taken up the position at IPAR two months after resigning from De Poi, it is not shown De Poi would be in any worse position, or that the change in circumstances (assuming that was the case) was attributable to her taking that employment immediately after resigning.” As a result, the company was awarded only $1 in nominal damages for the employee’s breach of the restraint (and 60% of its costs). Consideration of undertakings in the context of injunctive proceedings OAMPS Gault Armstrong v Glover [2012] NSWSC 1175 Three days after two employees’ redundancies took effect, they commenced employment with a direct competitor of their former employer. The former employer then sought interlocutory injunctions to prevent their employment continuing. In an attempt at settlement, the former employees offered undertakings regarding non-solicitation of clients, employees and customers, but did not undertake to cease employment with their new employer. The undertakings were seen as insufficient to protect the employer’s legitimate interests. The court granted an injunction to prevent the employees working as marine insurance brokers (their area of expertise), but not preventing them from working with their new employer all together. Special Broadcasting Service Corporation v Andrew Corbett [2016] NSWSC 461 Background Mr Corbett was a senior technical employee of SBS engaged under a fixed-term contract which was not able to be terminated by him prior to its end date of 30 June 2017. In February 2016, Mr Corbett purported to resign by giving five weeks’ written notice to SBS, and it came to SBS’ knowledge that Mr Corbett had (through his company) entered into a contract to provide services to the ABC from 4 April 2016. SBS contested Mr Corbett’s ability to resign with notice and sought an interlocutory injunction to restrain him from working for the ABC (or any other media organisation or competitor of SBS) for the remainder of the term of his contract (on the basis that Mr Corbett had access to the confidential information of SBS). Findings The court granted the injunction in favour of SBS and, in doing so, rejected Mr Corbett’s argument that an implied term should be read into the contract allowing him to terminate it on “reasonable notice”. This was because the termination provisions included in the contract showed a clear intent to cover the whole subject without conferring a right of termination on Mr Corbett. It was particularly relevant that Mr Corbett “apparently bargained for a contract duration of no less than two years” (primarily to facilitate his application for permanent residency in Australia). Further, because the contract’s two and a half year duration could be described as “short to medium term”, this was not a case in which it was necessary to include a provision allowing termination with notice. Not doing so would not have the effect of shackling the parties to one another for an unreasonable length of time. It should be noted that, in granting the injunction, the court had regard to SBS’ undertaking to pay Mr Corbett for the duration of the injunction, and Mr Corbett’s acknowledgement in the contract that SBS would be entitled to seek an injunction against him in circumstances akin to those that arose.

Information Collection and Management Introduction There are specific legislative requirements that prescribe the type of records that an employer needs to make and keep, summarised in the “Employee record obligations matrix” below. In addition, as part of good governance and to deal with any related legal proceedings that may arise, an employer should maintain all records relating to performance and performance management, any investigations conducted into an employee’s conduct, any complaints or disputes raised by the employee, and the reasons for any decisions made by the employer in respect of the employee’s employment (possibly taking the form of correspondence or file notes). It is also best practice for an employer to retain, in a central location, all versions of its employment policies, not simply the most recent version, as disputes can arise with respect to entitlements that pertain to a particular point in time when a specific policy was in place. Each version should have a control number or date for easy reference and identification.

Legislative requirements relating to employment and taxation EMPLOYEE RECORD OBLIGATIONS MATRIX

NB: State industrial legislation may also impose specific obligations with respect to record-keeping for those employers and employees not covered by federal legislation.

Work Health and Safety legislative requirements The primary record-keeping requirement under WHS laws is in relation to notification to the relevant WHS/OHS Regulator of incidents in the workplace (such as serious illness, injury or death). These are set out in the table below. Although not included in the Table, depending on the nature of work and types of plant/structures, additional record-keeping requirements may exist in applicable State/Territory regulations. By way of example, under the Work Health and Safety Regulation 2011 (NSW): • results of air monitoring for airborne contaminant levels must be kept for 30 years after the date the record is made (reg 50(2)) • records of confined space training to workers must be kept for two years (reg 76(2)), and • records of electrical equipment testing must be kept until the next test or the equipment is disposed of (reg 150(3)).

NB: Unless otherwise specified, retention periods are from the date the record was created.

Employer obligations in relation to employee records Pursuant to s 535(1) of the FW Act an employer must make, and keep for seven years, employee records

of the kind prescribed by the FW Regulations in relation to each of its employees. Pursuant to s 536(1) of the FW Act, an employer must give a payslip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work. The records and payslip must: • if a form is prescribed by the regulations — be in that form, and • include any information prescribed by the regulations. Section 80 of the Paid Parental Leave Act 2010 requires an employer to give information to an employee to whom the employer pays an instalment under that Act. The information will usually be in the form of a payslip and must be provided to the employee before the end of the next working day. Employers must keep records of the receipt of paid parental leave funding amounts and of the parental leave payments

made to an employee. Manner in which records should be kept While the FW Act and the FW Regulations do not specify whether records need to be in hard copy or electronic format, Regulation 3.31 of the FW Regulations does require that employee records need to be: • in a legible form • in the English language, and • in a form that is readily accessible to a Fair Work Inspector. Types of employee records Pursuant to the FW Regulations, an employer must keep a record in respect of each employee about basic employment details such as the name of the employer and the employee, the nature of their employment (eg part-time, full-time, permanent, temporary or casual), the date on which the employee’s employment began, and the Australian Business Number (ABN) (if any) of the employer.

The FW Regulations then proceed to set out in further detail, the information which must be contained in the various types of employee records that are required to be kept under the FW Act including: • pay • overtime hours

• averaging arrangement • leave entitlements • superannuation contributions • termination of employment (where applicable) • IFAs, and • guarantees of annual earnings. Payslips Section 536 of the FW Act requires an employer to give a payslip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work. A payslip must be in electronic form or hard copy. A payslip must specify: • the rate of remuneration paid to the employee • the gross and net amounts paid to the employee • any deductions made from the gross amount paid to the employee • if the employee is a casual or irregular part-time employee who is guaranteed a rate of pay set by reference to a period of time worked, the record must set out the hours worked by the employee, and • details of the payment, bonus, loading, rate, allowance or entitlement. Section 557C of the FW Act provides that if an employer fails to comply with its record-keeping or payslip obligations or to make a record available for inspection, without reasonable excuse, the employer bears the onus of proving that the contravention did not occur. Hourly and annual rate If the employee is paid at an hourly rate of pay, the payslip must include: • the rate of pay for the employee’s ordinary hours (however described) • the number of hours in that period for which the employee was employed at that rate, and • the amount of the payment made at that rate. If the employee is paid at an annual rate of pay, the payslip must also include the rate as at the latest date to which the payment relates. Overtime records If a penalty rate or loading (however described) must be paid for overtime hours actually worked by an employee, an employer must make and keep a record that specifies: • the number of overtime hours worked by the employee during each day, or • when the employee started and ceased working overtime hours. Record of agreement regarding averaging of hours If an employer and employee agree in writing to an averaging of the employee’s hours of work, a copy of the agreement must be made and kept. Leave records

If an employee is entitled to leave, an employer must make and keep a record that sets out: • any leave that the employee takes, and • the balance (if any) of the employee’s entitlement to that leave from time to time. If an employer and employee agree to cash out an accrued amount of leave, the employer must make and keep: • a copy of the agreement • the rate of payment for the amount of leave that was cashed out, and • when the payment was made. Other employee records Superannuation contributions If an employer is required to make superannuation contributions for the benefit of an employee, an employer must make and keep a record that specifies: • the amount of the contributions made • the period over which the contributions were made • the date on which each contribution was made • the name of any fund to which a contribution was made • the basis on which the employer became liable to make the contribution, including: – a record of any election made by the employee as to the fund to which contributions are to be made, and – the date of any relevant election. “Contributions” does not include a contribution in respect of a defined benefit interest (within the meaning of the Superannuation Industry (Supervision) Regulations 1994 (Cth)) in a defined benefit fund (within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth)). Individual Flexibility Arrangement If an employer and an employee agree in writing on an IFA under the FW Act, the employer must make and keep: • a copy of the agreement, and • a copy of a notice or agreement that terminates the agreement. Guarantee of annual earnings If an employer gives a guarantee of annual earnings under s 330 of the FW Act, a record of the guarantee and of the date of any revocation of the guarantee, must be made and kept. Termination of employment If an employee’s employment is terminated, the employer must make and keep a record that sets out: • whether the employment was terminated: – by consent – by notice – summarily, or

– in some other manner (specifying the manner) • the name of the person who acted to terminate the employment. Modern Awards In addition to the above, Modern Awards may also include specific record-keeping obligations when an employer provides an employee with an annualised salary arrangement under the Modern Award so it is important to check any applicable industrial instrument.

Timeframe for maintaining records As the seven-year record retention period provided for under the FW Act is one of the longer retention periods under the various pieces of relevant legislation (excluding some very specific periods specified under WHS legislation referred to earlier), this is the recommended period of retention of employee records. Such a timeframe ensures that records are retained by the employer during the six-year limitation period for some employment-related legal actions (such as general protections applications, underpayment claims and breach of contract and trade practices laws). This period of seven years is from the creation of the record or, if it is a record which is likely to be updated over a course of time, then the retention period commences from the date the last entry was created. It should be noted that in all States and Territories (except Western Australia), prosecutions under the WHS legislation must be commenced within two years of the regulator being notified of the offence which is the subject of the prosecution (in Western Australia, the time limit is three years). Where a coronial inquest is required, the time limit in these jurisdictions becomes one year from the release of coronial findings. Accordingly, requirements to retain records of notifiable incidents for five years would likely cover this period for the purposes of any WHS related prosecutions.

Should medical information be stored separately? There is no strict legal obligation for medical information to be stored separately from employee records. It should be noted that although medical information is considered “sensitive information” under the Privacy Act 1988 (Cth) (Privacy Act), nothing in the Privacy Act and the APPs which form part of the Privacy Act, require sensitive information to be separated from other personal information. Further, s 7B(3) of the Privacy Act provides that the APPs which would otherwise govern the collection, use, security and access of personal information and sensitive information, do not apply in respect of “employee records” — which is expressly defined by the section to include employees’ medical information. However, it is best practice, and in an employer’s interest, to keep the files separated and impose a more restricted access regime on medical information, so as to prevent against unauthorised or inadvertent disclosure and access. This may also have the additional benefit of minimising the risk of any employment-related claims such as adverse action or discrimination on the basis of the information contained in those records.

Destruction of documents generally Some years back, a law firm was heavily criticised for its alleged involvement in the destruction of records which were/may have been relevant to personal injury/tobacco litigation. The lesson to be learned from that case and other key cases in subsequent years, was that documents should not be destroyed if there is the likelihood, or it would be reasonable to assume, that they could become relevant in litigation. On this basis, once the seven-year timeframe has expired (being the maximum period of time under various laws that employee records are required to be kept and a year after time limitations for many employment legal actions expires — if not earlier), unless the employer has knowledge of, or reasonably contemplates the possibility of legal action arising, then records can be destroyed.

Destruction of general employment related documents

As the exemption under s 7B(3) of the Privacy Act specifically pertains to employee records, any other general employment-related documents (such as unsuccessful candidate resumes and information regarding independent contractors) are not exempt from the operation of the Privacy Act and collection, use, security and access of this information continues to be governed by the APPs. The APPs do not provide any specific guidance as to when such information is required to be destroyed or how long such information can be retained, but merely states in APP 11.3 that “an APP entity must take reasonable steps to destroy or de-identify the personal information it holds once the personal information is no longer needed for any purpose for which the personal information may be used or disclosed under the APPs”. As recruitment can be an ongoing process, it would be difficult to say with certainty when information is “no longer needed”. Based on these broad privacy principles, it is best practice for an employer to establish its own internal guidelines around the retention period for such information — with this retention period being informed by a consideration of when it is reasonable to assume that such information is no longer accurate or current. These guidelines can be communicated to a candidate. An employer, in the relevant documentation in its recruitment process application form (electronic or otherwise), should set out the period it proposes to retain the candidate’s resume and other personal information and their consent obtained for such retention, with the option of having documentation returned on request during the retention period.

Transfer of business Where a transfer of business occurs as described in s 311 of the FW Act, the old employer must transfer to the new employer each employee record concerning a transferring employee that the old employer was required to keep for s 535(1) of the FW Act at the time at which the connection between the old employer and the new employer mentioned in s 311(1)(d) of the FW Act occurs. If the old employer is a Commonwealth authority, the old employer only has to provide copies of those records. If the transferring employee becomes an employee of the new employer after the time at which the connection between the old employer and the new employer mentioned in s 311(1)(d) of the FW Act occurs, the new employer must ask the old employer to give the new employer the employee records concerning the transferring employee. If the old employer receives a request, it must give the employee records to the new employer. The new employer who receives transferred employee records must keep the records, as if they had been made by the new employer at the time at which they were made by the

old employer.

Inspection, copying and accuracy of a record Where an employee record is required to be made and kept under the FW Act, an employer must make a copy of an employee record available for inspection and copying on request by the employee or former employee to whom the record relates. The employer must make the copy available in a legible form to the employee or former employee for inspection and copying. If the employee record is kept at the premises at which the employee works or the former employee worked, the employer must make the copy available at the premises within three business days after receiving the request or post a copy of the employee record to the employee or former employee within 14 days after receiving the request. If the employee record is not kept at the premises at which the employee works or the former employee worked, the

employer must, as soon as practicable after receiving the request, make the copy available at the premises or post a copy of the employee record to the employee or former employee.

Information concerning a record An employer who has been asked by an employee or former employee to make a copy of an employee record available for inspection, must tell the employee or former employee, on request, where employee records relating to the employee or former employee are kept. The employee or former employee may interview the employer, or a representative of the employer, at any time during ordinary working hours, about an employee record that the employer has made or will make.

Accuracy An employer must ensure that a record that the employer is required to keep under the FW Act or the FW Regulations is: • not false or misleading to the employer’s knowledge • corrected as soon as the employer becomes aware that it contains an error, and • not altered, except to any extent otherwise permitted by the FW Act or the FW Regulations. A person must also not make use of an entry in an employee record made and kept by an employer, if the person does so knowing that the entry is false or misleading.

Prosecutions and penalties for non-compliance Set out below are some examples of cases where employers have been prosecuted for contravention of the obligations with respect to record-keeping and the issuing of payslips. Civil penalties may be imposed under Part 4-1 of the FW Act, as well as under other Federal, State, and Territory legislation, depending on the nature of the contravention. Under Federal legislation, a “penalty unit” is a monetary measure derived from s 4AA of the Crimes Act 1914 (Cth). Each State and Territory also has its own penalty regime. Case examples Bartlett v Signostics Ltd (In Liq) [2019] FCCA 2989 Background The employee had worked at the company for 12 years and at the time of his resignation, he was the Chief Operating Officer. The employee alleged that the company refused to pay him his accrued annual leave entitlement of $33,627.91. The contravention of a NES is a civil remedy provision. The company also failed to keep annual leave records, contrary to s 535 of the FW Act. Findings While the court found that the company only committed one contravention, it was deliberate and the complaints made by the employee were completely ignored. The judge noted that the penalty must act as a deterrent. The court imposed a penalty of $110,000 for the contravention which was to be paid to the employee. Fair Work Ombudsman v Invivo [2015] FCCA 1914 Background The FWO claimed that there had been an underpayment of $35,408.45 by the first respondent to the employees. The company had been wound up but the second respondent admitted to failing to keep records for each employee (contravention of s 535(1) of the FW Act). The second respondent also admitted to failing to give each employee a payslip within one working day of payment (contravention of s 536(1)). The second and third respondents were responsible for ensuring payslips were issued to employees, and knew that no payslips were issued. Findings It was found that the severity of the underpayments was aggravated by the respondents’ poor record-keeping practices. When Invivo did make payments, it did not issue employees written payslips. The other key considerations included: the extent of loss, whether the respondents exhibited contrition for its actions and the need for future deterrence. Taking into account these and other matters, the judge considered the appropriate penalty for the second and third respondents was 90% of the maximum penalty for contraventions of the FW Act. “The failure to keep proper records and promptly provide payslips

are significant breaches because they make it harder for workers’ proper entitlements to be ascertained and provided.” Penalties In considering penalties, the court decided that if two or more contraventions had common elements, that a respondent should not be penalised more than once for the same conduct. The court also considered the “totality principle” — that the total penalty was an appropriate response to the conduct which resulted in breaches. The second and third respondents were both ordered to pay pecuniary penalties of $11,880 each to the applicant, for distribution between the relevant individuals. Fair Work Ombudsman v Abdul Wahid and Sons Pty Ltd [2019] FCCA 297 Background The company operated two Caltex service stations at Dural and Ermington. The 15 employees were engaged as console operators, on a casual, part-time or full-time basis. Mr Rana was a director and was responsible for the company’s payroll practices. Following compliance concerns, Fair Work Inspectors investigated the Dural and Ermington Caltex outlets in December 2016 when conducting audits of 25 Caltex service stations nationally. During the audit, it transpired that the payroll software system had been set up to falsify the records. Mr Rana and the company admitted they knowingly provided Fair Work Inspectors with false and misleading payroll records. Findings The company was ordered to pay pecuniary penalties in the sum of $66,168 under s 546(1) of the FW Act for its contravention. Mr Rana was ordered to pay pecuniary penalties of $11,540 under s 546(1) of the FW Act for his involvement in the contraventions. Fair Work Ombudsman v Gaura Nitai Pty Ltd & Anor [2017] FCCA 1242 Background Saandeep Chokhani and his wife were the owners of a Coffee Club franchise in Brisbane. Mr Chokhani required an overseas worker to repay $18,000 of his wages by threatening to cancel the worker’s 457 Skilled Worker Visa if he refused. On the basis of this threat, the worker withdrew the cash and paid it to Mr Chokhani. The worker’s employment was terminated without notice and a FWO investigation revealed the unlawful cash-back payment, an underpayment of minimum hourly rates, casual loading, annual leave entitlements, overtime rates, payment in lieu of notice of termination, and penalty rates for weekend and public holiday work. Findings It was found that the worker was underpaid $23,546 between September 2013 and November 2015. The contraventions were “an inappropriate and grotesque exploitation of the power imbalance that existed between (Chokhani) and (the worker)”. Mr Chokhani did not record the number of overtime hours worked by the worker, nor any records about his annual leave. Mr Chokhani was required to give a payslip to the worker within one working day of paying him and on some occasions he did not pay him, thereby contravening s 536(1) of the FW Act. Penalties The total penalty for the first respondent was $150,900 and $30,000 for the second respondent, reflecting the seriousness of the circumstances surrounding the contraventions. Fair Work Ombudsman v NoBrace Centre Pty Ltd & Anor (No 2) [2019] FCCA 2144 Background Dr Masters operated a dental clinic in the Melbourne CBD. The employee, a Chinese national on a 457 visa, was employed as a dental technician. Fair Work Inspectors discovered that the employee was paid a flat rate of $15 per hour over the course of his employment. This amount was below the base hourly, Saturday, overtime and public holiday rates required under the Health Professionals and Support Services Award 2010. A Compliance Notice was issued requiring payment of back-pay to the employee. The company ignored the Compliance Notice. The FWO brought a claim against the clinic and Dr Masters. Findings The court found that Dr Masters knew about the Compliance Notice and deliberately disregarded his obligations. The court imposed a pecuniary penalty of $5,355 under s 546(1) of the FW Act and ordered back-pay to the employee of $32,889 plus interest under s 545(1) of the FW Act. The Federal Circuit Court imposed the penalty and back-payment order against Dr Masters, who had showed no remorse. Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623 Background Each of the corporate respondents — collectively referred to as the Han entities — operated licensed cafes and restaurants in Perth. In 2014, the FWO conducted an audit and raised concerns about the respondents’ non-compliance with record keeping and penalty rate payments. Findings It was found that the respondents failed to keep records required by s 535(1) of the FW Act for 150 employees. The applicant could only estimate a total underpayment of $30,440.06. The amount could have been higher had appropriate records been kept. The following three factors were taken into consideration in assessing the appropriate penalties: • relevant records were only kept for a short and a limited number of periods • no records were kept for significant periods of time, and • there was a failure to record overtime worked. The second respondent was liable as an accessory with respect to the engagement and the method of payment of the employees. The court observed that:

“Unless an employer complies with the law, and makes and keeps employment records, an effective safety net for employees is difficult to maintain. The result is that employees are more vulnerable to exploitation.” “The failure to maintain records truly strikes at the very foundation of the regulatory scheme which is designed to ensure that employees are paid their legal entitlements.” Penalties The first respondent was ordered to pay a pecuniary penalty of $15,000. The second respondent was ordered to pay a pecuniary penalty of $2,500.