by Jack Bristed and Annie Smeaton Cooper Grace Ward

Following a flood of high profile ‘wage theft’ cases, including George Colambaris’s Made Establishment, Woolworths, 7Eleven and Qantas, Queensland has followed in the footsteps of the ACT and Victoria by criminalising wage theft.

The new laws focus on penalising employers who intentionally steal from their employees by failing to provide them with their full entitlements.

The new laws also set up a small claims process in the Industrial Magistrates Court for both state and federal jurisdiction employees to quickly recover underpayments of up to $20,000.

Criminal offence of ‘wage theft’

Part 1 of the Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Wage Theft Act) commenced on 14 September 2020 and amends the Criminal Code to include new section 391(6A), which provides that employee entitlements are a thing capable of being stolen. Employee entitlements that can be stolen include:

• unpaid hours or underpayment of hours
• unpaid penalty rates
• unreasonable deductions
• unpaid superannuation
• withholding entitlements
• underpayment through intentionally misclassifying a worker including wrong award, wrong classification or by ‘sham contracting’ and the misuse of Australian Business Numbers
• authorised deductions that have not been applied as agreed.

The Wage Theft Act also amends section 398 of the Criminal Code to include:

16 Stealing by employers

If the offender is or was an employer and the thing stolen is the property of a person who is or was the offender’s employee, the offender is liable to imprisonment for 10 years.

Additionally, where an employer commits fraud against an employee, the employer will be liable to imprisonment for up to 14 years.

The Queensland Police Service (QPS) have been given jurisdiction to investigate claims of wage theft. Importantly, the QPS would need to prove that the employer had intentionally stolen wages from an employee or had intentionally sought to deprive the employee of their entitlements. The legislation will not apply to employers who have accidentally underpaid staff and seek to rectify any underpayment when it is identified. At this stage it is unclear how the QPS will resource and conduct investigations into wage theft.

Wage recovery in the Industrial Magistrate Court

The Wage Theft Act also amends the Industrial Relations Act 2016 (Qld) (IR Act) to introduce a process for fair work claims and wage recovery claims in the Industrial Magistrates Court up to $20,000.

The registrar managing the case may refer the parties to conciliation before the Court will hear the claim. The QIRC Industrial Commissioners will be the conciliators for any conciliation conferences.

The Wage Theft Act also amends the IR Act to provide that an employer must (with the employee’s consent) share employee information to a registered employee organisation. An employer will be liable for up to 27 penalty units for failing to provide the employee information.

Conclusion

In a constantly evolving and complex industrial system, wage mistakes will occur. It is more important than ever for employers to ensure that they are correctly paying employees all their entitlements.

Employers should be conducting annual audits of each employee’s pay to ensure that they have been paid correctly and immediately rectify any shortfalls. Employers may wish to engage legal advice when conducting payroll audits as an additional layer of protection.

Employers should also ensure that employment agreements have appropriately drafted set-off clauses to protect employers from underpayment claims, particularly where an employee is paid an all-inclusive salary.

By Aaron Goonrey and Luke Scandrett

22 September, 2020

Here’s how what might have seemed like a minor administrative task cost an employer more than $1.1m.

An ASX 100-listed company is paying the price for not ensuring an employee signed her employment agreement, after the Supreme Court of NSW ordered it to pay more than $1.1 million in damages plus legal costs to its former finance director following her termination from employment.

The lesson for employers from this case is to ensure you have proper documentation recording the current terms and conditions of employment for employees, and that such documentation has been signed by employees.

The background

In 2006, the employee in question was hired by Washington H Soul Pattinson (WHSP), initially as its CFO. At this time, she signed a short-form employment agreement, which included an express term requiring WHSP to give three months’ notice of termination.

In 2014, WHSP offered the employee a new position of finance director, which included her former duties as CFO as well as executive director duties and general governance responsibilities for the entire business, including in relation to work health and safety matters.

In early 2015, the employee was provided with a new draft executive employment agreement, which was much more extensive than her original 2006 employment agreement. It included a termination clause allowing WHSP to give six months’ notice of termination. The employee didn’t sign this agreement. Instead, she made handwritten comments on the document, and approached WHSP’s Remuneration Committee Head on at least two occasions to arrange a meeting regarding her suggested amendments and comments, but no meeting ever eventuated. The employee accordingly never signed the new employment agreement.

The employee’s employment with WHSP continued, now in the position of finance director, despite having not signed the new employment agreement. WHSP’s 2015 annual report announced that she had been appointed to the position of finance director from 1 November 2014.

From 2016 to 2018, her employment continued without incident, and she received performance assessments during this time which ranged from “Minimum level of performance” to “Outstanding level of performance” regarding different parts of her role. At no time was she graded as having underperformed, and she was never informed that WHSP had any concerns with her performance. If anything, her performance assessment grades were improving over time.

The dismissal and court case

On 12 April 2018, the employee’s employment was terminated by WHSP without notice or pay in lieu of notice. Her termination letter did not make any reference to poor performance. The only reason given for the termination in the letter was that “she was not the right fit”. WHSP would, during the proceedings, assert that her employment was terminated due to her underperforming in her role, but the Court found that there was little evidence for this being the case.

On 3 July 2018, the employee commenced proceedings in the Supreme Court of NSW seeking compensation for lost salary and incentive benefits. Ten days later, WHSP paid her three months’ pay, which it characterised as being paid in lieu of notice in accordance with her original 2006 employment agreement.

Which employment agreement applied, if any?

One of the main questions arising during proceedings was whether the 2006 or 2015 employment agreement applied to the employee’s employment, or whether none did at all.

WHSP contended that the 2006 employment agreement applied, as it was never expressly rejected by the parties.

The employee asserted that, upon her becoming finance director, her role and duties had changed to such an extent that the 2006 employment agreement should be taken as being discharged, meaning that no written employment agreement applied to her employment.

Neither WHSP or the employee claimed that the 2015 employment agreement applied, as she had not signed it, and had clearly indicated that she had some suggested changes to it, which WHSP had not responded to.

The Court considered the evidence and made the following findings.

1. WHSP’s conduct suggested that it viewed the 2006 employment agreement being insufficient upon the employee becoming finance director, as evidenced by its provision of the more thorough 2015 employment agreement;
2. as WHSP did not give the employee three months’ pay in lieu of notice at the time of her termination, this indicated that WHSP did not consider that the 2006 employment agreement applied at this time; and
3. The employee’s duties, role and reporting line changed immediately on her appointment as finance director, and her salary and responsibilities increased. WHSP submitted that these changes were not significant. However, the Court found otherwise. The Court also observed that the 2006 employment agreement did not include a term specifying that it would remain in force even after a change in the employee’s duties.

When considering these findings together, the Court determined that “all of these matters point to a change in the contractual landscape”, and that on the employee’s appointment as finance director, the parties intended that the terms and conditions of her employment would no longer be as set out in the 2006 employment agreement, but instead be governed by a new employment agreement.

As the 2006 employment agreement had been discharged, and the employee had not agreed to the 2015 employment agreement, the Court accordingly found that no written employment agreement applied to her employment at the time of her termination of employment.

As there was no written termination clause governing the employee’s employment, she was entitled to “reasonable notice of termination”. Reasonable notice of termination is a period of time that Courts will determine on a case by case basis.

For the employee, the Court considered factors including:

• her age
• her 14 years’ service
• her senior position as finance director
• her being an executive director of a very large public company
• her being the second most senior employee in that very large company (and being so senior that she reported to the Board)
• her being a Board member
• the low number of females being in senior executive roles such as the employee’s role
• there being no evidence she had engaged in misconduct or improper behaviour justifying her dismissal
• her being left by WHSP in the position of being unable to explain her abrupt termination to any future employers.

The above factors led the Court to the conclusion that the employee would have great difficulty in obtaining comparable employment to her former role at WHSP. Indeed, she had not obtained further employment from the time of her termination to the time of the hearing, almost two years later.

In the circumstances, the Court found that 12 months was a reasonable period of notice. Accordingly, for the purposes of damages, WHSP was required to pay her an additional nine months’ notice (having paid her three months’ pay in lieu of notice previously).

Having found that WHSP had breached the employee’s unwritten employment agreement by giving her insufficient notice of termination, the Court also found that her claims for unpaid incentive payments were also valid, and ultimately awarded her a total of more than $1.1 million, as well as her legal costs.

Lessons for employers

1. A robust administrative procedure should be implemented within an employer’s organisation to ensure that all employees have signed employment agreements on file which reflect their current employment and position.
2. If an employee refuses to sign an employment agreement provided to them (and a negotiated middle ground does not appear possible), the employer should carefully consider its position and next steps, including, whether the terms of, for example, the offer of employment, a new position or promotion, or pay increase will be fulfilled.
3. It should not be assumed that an employee will return a signed agreement eventually, or that simply because a signed agreement can’t be found on file that one must exist somewhere else. It also should not be assumed that simply because the employee continues to report for duty after being presented with a new employment agreement that the terms of such agreement have been agreed by the employee. WHSP learned to its disadvantage, that when an employee changes position or duties, the former employment agreement may not continue to apply.

Following up people for signed employment agreements (especially from current employees) can feel like an administrative hassle, but this case emphasises the potential consequences when an employment agreement is not signed.

Aaron Goonrey is a Partner and Luke Scandrett is a Lawyer in Lander & Rogers’ Workplace Relations & Safety practice.

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The Fair Work Ombudsman (FWO) has recovered $25,292 in unpaid wages for 270 employees after investigating companies contracted to clean some of the nation’s leading stadiums.

Fair Work Inspectors investigated nine cleaning companies following surprise site visits to Sydney’s ANZ Stadium, Perth’s Optus Stadium, the Adelaide Oval, Brisbane’s Gabba, Melbourne’s AAMI Park and Canberra’s GIO Stadium in September and October last year.

This was in response to general intelligence that cleaning companies in the stadiums sector may not have been compliant with workplace laws, including concerns about possible sham contracting.

Inspectors interviewed cleaners and supervisors about the work that cleaners were required to do, photographed venues to better understand the employment conditions, and inspected records.

The FWO found that seven of the nine cleaning companies (78 per cent) were non-compliant with workplace laws. Seven companies were found to have underpaid their employees and three had breached pay slip obligations. Breaches included failures to correctly pay the minimum hourly rate, casual loading, and penalty rates for weekend, public holiday and overtime hours.

While the stadium operators were not found to be involved in contraventions of workplace laws, inspectors found layers of sub-contracting operating without appropriate checks and balances to ensure workplace relations compliance.

Inspectors also found poor record-keeping practices at the bottom of sub-contracting supply chains. No sham contracting or misclassification of employment was found.

Fair Work Ombudsman Sandra Parker said the regulator has engaged with stadium operators and recommended governance improvements, including the need to review existing contracts.

“The FWO’s investigations identified opportunities for stadium operators, as heads of supply chains, to increase their level of involvement in how cleaning contractors operated,” Ms Parker said.

“We expect all cleaning employers to comply with workplace laws. The heads of all supply chains should be aware that they can be held responsible if they are found to be involved in any breaches by their contractors. Any workers with concerns about their pay should contact us,” Ms Parker said.

In total, there were recoveries of $20,961 for 139 workers from three businesses contracted to clean ANZ Stadium. There were recoveries of $3,473 for 78 workers from one cleaning business at the Adelaide Oval, with the same cleaning business operating at the Gabba back-paying $743 for 51 workers. There was also $114 recovered for two cleaners from one business at GIO Stadium. Records reviewed showed no breaches at AAMI Park.

In response to the breaches, inspectors issued five Compliance Notices requiring employers to rectify failings. There were also two Infringement Notices issued for pay slip breaches (total fines of $4,200) as well as two contravention letters and two formal cautions.

Businesses can apply for certification of employment sites through the industry-led Cleaning Accountability Framework. The FWO’s online resources help businesses monitor their supply chains.

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Major pharmacy franchise CW Retail Services Pty Ltd (Chemist Warehouse) has back-paid employees and improved its payroll practices following a three-year compliance partnership with the Fair Work Ombudsman.

Chemist Warehouse voluntarily entered into a Compliance Deed in 2016 to improve workplace compliance across its franchise network of retail pharmacy businesses that now employ over 14,200 staff nationwide at more than 400 stores.

This followed both FWO audits and the company’s own review finding non-compliance with workplace laws across the network, related to the non-payment of staff for training.

The partnership committed Chemist Warehouse to take steps including improving resources, training and processes, setting up an employment relations hotline and email service for staff within the franchise network to enable them to raise concerns, and arranging independent audits to assess franchisee compliance with Australian workplace laws and applicable fair work instruments.

The company conducted workplace law training for more than 560 owners, supervisors and managers of franchisee businesses. It also updated its staff on-boarding system and put in place a new payroll system.

Chemist Warehouse resolved 342 individual queries or complaints from employees, with $99,062.98 paid to 118 employees across the three-year partnership. Most of these matters – 88 per cent – were raised in the first year and 69 per cent of all matters related to the training payment issue.

In addition, Chemist Warehouse engaged an independent law firm to complete the annual audits of its franchise network to ensure staff were correctly paid. These audits identified underpayments of $11,539 for 820 out of 2,521 employees audited, with most underpaid workers across each audit owed less than $1. All workers have been back-paid.

The largest underpayments (85 per cent of the total recovered) were identified in the first of the three audits, with just $459 needing to be back-paid as a result of last year’s final audit of more than 300 Chemist Warehouse stores.

Fair Work Ombudsman Sandra Parker said the compliance partnership demonstrated the franchisor’s commitment to supporting current and future Chemist Warehouse employees.

“Chemist Warehouse has implemented processes to resolve workplace disputes efficiently across its network and educated franchisees on their lawful obligations under the Fair Work Act. The company will continue to work with its independent auditor post the expiry of the deed with the FWO,” Ms Parker said.

“Franchises are a priority sector for the FWO and we urge all franchisor head offices to prioritise compliance with workplace laws or risk breaches that impact their brand and workers. Franchisors should be aware that they can now be held responsible for their franchisees’ conduct and may be subject to enforcement action, court proceedings and penalties if their franchisees have breached the law.”

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The Fair Work Ombudsman has recovered $161,551 in unpaid wages for 284 workers after a national proactive investigation of 51 fast food outlets, restaurants and cafés employing Korean workers.

Fair Work Inspectors investigated food businesses in Brisbane (13), Sydney (12), Perth (11), Melbourne (10) and Canberra (five) between August and December last year.

These audits occurred due to previous food sector investigations raising concerns about the exploitation of workers from Korea, including students. The FWO also received intelligence from young and migrant employees indicating exploitation. The Fair Work Ombudsman considers such workers potentially vulnerable due to their age and visa status.

Inspectors interviewed employees, managers and storeowners during site visits and checked employment records and pay slips.

The regulator found that 71 per cent of the 51 audited outlets were non-compliant with workplace laws. Of these 36 businesses in breach, 61 per cent had underpaid employees and 75 per cent had not met pay slip and record-keeping obligations. The most common breaches found were underpaying penalty rates (26 per cent) and failing to issue pay slips (22 per cent).

Korean migrants made up a significant number of the affected employees of businesses in breach, particularly student visa holders. Migrant workers from a range of other countries were also impacted.

Fair Work Ombudsman Sandra Parker said the underpayment of migrant workers, including young students, was unacceptable.

“Australian workplace laws protect all workers, regardless of nationality or age. As this investigation shows, the Fair Work Ombudsman prioritises matters involving migrant workers, who may be particularly vulnerable due to visa status and have limited knowledge of their rights,” Ms Parker said.

“While this investigation commenced prior to the pandemic, the FWO continues to enforce workplace laws in the food sector as a priority. We do so in a proportionate manner, knowing that COVID-19 has had a significant impact on many businesses in the fast food, restaurant and café sector.”

Total recoveries were $95,984 for 65 workers at five Melbourne businesses; $31,376 for 139 workers at six Brisbane businesses; $22,827 for 31 workers at four Sydney businesses; $8,259 for 24 workers at three Canberra businesses; and $3,105 for 24 workers from four Perth outlets.

Recoveries from individual businesses ranged from $18 for four employees in a Perth business to $56,688 for 11 employees of a Melbourne business.

In response to the breaches, inspectors issued 20 Compliance Notices requiring employers to rectify breaches of the law, resulting in the full back-payments of $161,551. There were also 34 Infringement Notices (total penalties of $39,480) for pay slip and record-keeping breaches, and two formal cautions.

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Introduction

This is Full Bench decision of the Fair Work Commission is a perfect example where things can get well out of hand, ending in a lot of frustration (for all parties) and huge costs to a business. The problem being that he was achieved the outcome he sought! All this before we even kick off the case in proper.

The “litigant” or “applicant” in this matter was described as a lawyer. Whether his legal skills were required by the applicant was unclear. However, put this was one determined person, who was determined to get his own way…and did (to a point).

As I noted in the headline, this matter is still to be determined despite at least (by my count and set out at the end of this report) 50 separate actions, involving:

• The Fair Work Commission.
• The Full Bench of the FWC (2 appeals).
• The Federal Court of Australia (5 applications).
• Allegations by the applicant, including letters to the President of the FWC and Commonwealth Attorney General that the DP hearing the matter was unfit to hold office.
• Disputing the right of the respondent to be legally represented and objecting to the legal firm they chose.

Background

The applicant was engaged to perform work by the respondent, on 19 November 2018. There is a dispute about whether he was engaged in the capacity of employee or independent contractor. The engagement was terminated effective from 31 January 2020. The applicant filed an unfair dismissal application in respect of the termination.

Cutting to the “last step” (ie beyond the 50 previous actions) the FB found somewhat in favour of the applicant (the “squeaky wheel” does indeed get the oil), finding that in the first instance there was no proper process that clearly identified that the DP had formally allowed the respondent to be legally represented (a matter the FB allowed in the appeals hearting). As a consequence of allowing the appeal and finding in the applicant’s favour, the matter was to be heard by another member of the FWC. The FB stating:

“The two errors we have identified – namely allowing [the respondent] to be represented by [law firm] without having decided to grant permission for legal representation pursuant to s 596, and denying the applicant procedural fairness in relation to the genuine redundancy issue – are significant matters. At least the latter, and arguably the former, constitutes jurisdictional error, and both involve manifest injustice to [the applicant]. In the circumstances, we consider that it would be in the public interest to grant permission to appeal…

“We consider that the appropriate course, having regard to the history of this litigation, is to remit [the applicant’s] unfair dismissal application to a member of this Full Bench for further consideration (including the determination of any application for permission for legal representation) on the basis of the evidence admitted to date and such further evidence as the member may decide to admit.

“It is not necessary in the circumstances to deal with the other matters raised by the first appeal. In relation to the various allegations made against [legal firm], it is sufficient to say that we are not satisfied that [legal firm] did anything other than to act bona fide on the basis of the instructions provided by its client…[the applicant] largely conceded at the appeal hearing that he could not provide evidence of any deliberate malfeasance on the part of [legal firm]. Certainly, the record of the proceedings before the Deputy President does not provide any indication to us that [legal firm] has acted in any improper way”.

With the FB side-stepping the second appeal by:

“The grounds for Mr McKerlie’s second appeal, including the grounds for the grant of permission to appeal, were as follows:

‘1. Deputy President Boyce is unfit to hold judicial office.

2. Deputy President Boyce has demonstrated egregious and deliberate bias against the Applicant in the conduct of the proceedings to date including in his decision on the application for disqualification.
3. It is contrary to the obligation of the members of the Fair Work Commission to allow Deputy President Boyce to continue to preside over these proceedings or any other proceedings as his widely publicised conduct since his appointment to the Fair Work Commission is calculated to diminish public confidence in the Fair Work Commission’.

“The first ground is not reasonably arguable. The Commission is not invested with power to rule on the fitness for office of its own members. In relation to the second and third grounds, the relief which [the applicant] could expect to obtain if he is granted permission to appeal and his second appeal is upheld is that his matter is remitted for further consideration by a different member of the Commission. Having regard to our disposition of the first appeal, there would be no utility in us considering the second and third grounds of the second appeal. For these reasons, we refuse permission to appeal in relation to the second appeal”.

After all this effort and expense, the applicant is effectively back to square one: he still needs to provide that he was an employee (not a contractor) and that his redundancy amounted to an unfair dismissal. I suspect the FWC will find that if the applicant had put his energies to finding another job, all the trouble he has gone to is for naught.

Litigation leading up to and including two appeal in the Fair Work Commission

As mentioned earlier, before setting out the list of legal challenges by the applicant, let me summarise that the applicant was not happy with the way the Deputy President addressed his case (calling for “his head”) or the respondent’s lawyers who he also made unflattering observations.

The history of the applicant’s litigations are dot-pointed as follows:

1.       The applicant was engaged to perform work by the respondent on 19 November 2018.

2.       There is a dispute about whether he was engaged in the capacity of employee or independent contractor.

3.       The engagement was terminated effective from 31 January 2020.

4.       The applicant filed an unfair dismissal application 5 February 2020.

5.       The matter was listed for a telephone conciliation to be held on 6 March 2020.

6.       However, on 21 February 2020, the applicant wrote to the Commission alleging that he had received an “extortionate letter” from lawyers acting for the respondent. He requested that a hearing be organised so that he could seek orders including that the respondent’s lawyers be barred from further participation in the proceedings and that the Commission appoint lawyers to act on the respondent’s behalf.

7.       The conciliation conference was cancelled and the matter given over to Deputy President Boyce (the “DP”) for a formal arbitration 27 February 2020.

8.       [By this stage neither the respondent nor its lawyers had submitted the appropriate forms required by the FWC].

9.       2 March 2020 the applicant complains to the DP’s chamber (by email) that the respondent’s legal representatives had “flouted, without reason, a clear direction made by the Commission … could undermine the respondent’s application to be legal[ly] represented…”. The DP responding by ordering that the lawyers provide the appropriate forms within 7 days.

10.   The matter was listed for a mention and directions hearing, by telephone, to be conducted on 6 March 2020.

11.   The respondent’s legal representatives filed the appropriate forms on 4 March 2020, raising two jurisdictional objections, namely:

• The Applicant was not an employee; and
• The dismissal was a case of genuine redundancy.

12.   Also on 4 March 2020, the applicant filed a submission with a number of accompanying documents in which he alleged that respondent’s lawyers had engaged in conduct which was “misleading and deceptive” and which “amounted to an attempt to extort the Applicant’s compliance with demands made by the Respondent’s solicitors and an act of contempt of the jurisdiction of the Commission”. The applicant went on to say in his submission:

“The Applicant seeks orders to redress the conduct of the Respondent’s solicitors including but not limited to an order that the Respondent instruct new solicitors drawn from a list provided by the Fair Work Commission”

13.   The DP conducted the directions hearing on 6 March 2020.

14.   16 March 2020, at the request of the parties, the matter was listed for a conciliation conference before a different member of the Commission to occur on 25 March 2020.

15.   This conference was not successful in resolving the matter, which was then allocated back to the DP.

16.   The respondent’s lawyers then raised its jurisdictional objections (by email 27 and 30 March 2020) with the DP’s chambers.

17.   On 30 March 2020, the applicant sent an email to the DP’s chambers:

“I write to request clarification of the issues which are to be the subject of the hearing on 8 May.

The matter was escalated to a hearing without conciliation on my request for consideration of the conduct of the Respondent’s solicitors in the matter.

I can understand that this would translate to a hearing on the Respondent’s request for legal representation but I am unsure of the ambit of the hearing regarding jurisdiction.

Is this hearing intended to be solely in regard to those two issues or is it intended that all issues between the parties are to be determined in this hearing?

I understand that the jurisdictional issue may be determinative, but I am not sure if it is intended to address the substantive issues between the parties if it is decided the Applicant has jurisdiction.

Could you please advise by return, thank you”

18.   The DP’s Associate sent the following reply that afternoon:

“I refer to your email below.

The matter is programmed for a hearing on the jurisdictional objections only. The hearing is not intended to address the “substantive issues” between the parties.”

19.   On 8 April 2020, the applicant filed an application for an order for the production of documents. The same day, the respondent sent the Commission an email indicating that it opposed the order sought and wished to make submissions about it.

20.   On 9 April 2020, directions were issued by the DP’s chambers for the parties to file outlines of submissions about the issue, and it was listed for an interlocutory telephone hearing to be held on 21 April 2020.

21.   On 17 April 2020, the applicant filed a document entitled “Applicant’s Amended Outline of Submissions on Legal Representation”, which addressed at length the applicant’s contention that the respondent ought not be permitted to be represented by its current lawyers. He also filed a witness statement made by himself, which was entitled “Applicant’s Statement Regarding the Issues of Representation, Jurisdiction and Notice for Production of Documents”. This statement addressed the issue of the basis of the applicant’s engagement (whether he was an employee or independent contractor) but did not deal with the circumstances of the termination of his engagement or the issue of whether he had genuinely been made redundant. The statement also briefly dealt with the issues of legal representation and the production of documents.

22.   At the interlocutory hearing on 21 April 2020, a solicitor employed by the respondent’s lawyers, appeared for the respondent. The transcript of the hearing shows that the respondent’s lawyer neither sought nor was granted permission to appear for the respondent, albeit no objection was made by the applicant.

23.   On 24 April 2020, the respondent filed two further witness statements, in response to the applicant’s submissions, which dealt with the basis of his engagement and the question of whether he was covered by an award.

24.   Up until this point, there was no communication from the DP’s chambers to suggest that the respondent had been granted permission for legal representation.

25.   However, at the hearing on 8 May 2020, the DP (mistakenly) stated that: “Okay. I note permission has already been granted for [name] to appear today as the legal representative for the respondent”. The DP pressing:

“And as I’ve said, I’ve already determined under section 596 of the Act, that it would be more efficient, given the complexity of some of the arguments and issues being raised, to go to jurisdictional questions for the respondent to be represented. And I note that they have some evidence in their evidence that was already filed going to the capacity for the respondent to represent itself”.

26.   The DP also (in conjunction with a technical issue which required resolution) allowed the applicant a 40-minute adjournment “to do any further preparation or collect your thoughts in relation to the issue of genuine redundancy…”.

27.   There was insufficient time for the respondent’s lawyer to undertake his cross-examination, so the matter was set down for further on 15 May 2020.

28.   12 May 2020, the applicant filed written submissions on the issue of genuine redundancy and, in addition, a further witness statement made by himself with a number of annexed documents in relation to that issue. Upon being copied into this material when it was filed by email, the respondent immediately sent an email to the Deputy President’s chambers which, omitting formal parts, stated:

“The respondent opposes the tendering of the additional statement as the applicant has already finished his examination in chief and therefore cannot tender new statements.

“Could the Commission advise whether this statement will be accepted as that will increase our time to prepare for cross-examination on Friday.”

29.   The Deputy President’s chambers sent the following email (omitting formal parts) to the applicant later the same day:

“I refer to the matter above, and the Applicant’s email below (and the attachments therein).

Leave has neither been requested nor granted for the Applicant to tender (or otherwise rely upon) further evidence in these proceedings.

Leave has only been granted to the Applicant for him to make further submissions on the jurisdictional issue of genuine redundancy. I note that he has filed those submissions.

In view of the foregoing, the Deputy President advises that the parties should proceed on the basis of the evidence filed as at the 8 May 2020 (i.e. the time that the Respondent’s evidentiary case in these proceedings closed).”

30.   In response to this email, the applicant sent an email in reply stating that he would seek leave to tender the evidence he had filed when the hearing of the matter resumed.

31.   On 13 May 2020 the applicant sent a complaint to the President of the Commission, Ross J, about the Deputy President’s conduct. In this complaint, the applicant contended that the Deputy President was unfit to hold judicial office, had displayed incompetence, ignorance and disinterest in the conduct of his case, and was personally biased against him. He requested that the President intervene in the matter to vacate the hearing listed for 15 May 2020, declare the proceedings in the case to date null and void, and allow the matter to be relitigated. The applicant sent a complaint raising similar matters to the Commonwealth Attorney-General on 14 May 2020.

32.   At 6.16 pm on 14 May 2020, the applicant sent an email to the Deputy President’s chambers giving notice that, at the commencement of the hearing on 15 May 2020, he would make an application for the Deputy President to recuse himself from further involvement in the proceedings and that, should the Deputy President decline to recuse himself, he would seek an adjournment to enable him to file an appeal against that decision.

33.   At 7.41 pm that evening, the Deputy President’s chambers issued directions requiring the applicant and the respondent to file any written submissions and evidence in respect of the recusal application by 11.30 am on 15 May 2020 (i.e. the following day). The parties were notified in the same email that at the conclusion of the hearing, the matter would be adjourned for a date to be fixed after any decision and written reasons in relation to the recusal application had been issued. Neither party filed submissions in response to these directions. the applicant sent an email that simply outlined the matters he intended to raise at the hearing, and the redone declined to file any submissions at all.

34.   At the hearing on 15 May 2020, the applicant re-agitated the matters he raised in his complaint to the President and the Attorney-General and handed up copies of both complaints. At the conclusion of the hearing, the Deputy President reserved his decision.

35.   On 25 June 2020, the Deputy President invited submissions concerning whether s 16 of the Parliamentary Privileges Act 1987 (Cth) applied such as to preclude the admission into evidence of the applicant’s complaints to the President and the Attorney-General and, if so, whether there was any utility in determining the issue of the alleged apprehension of bias. the applicant (on 30 June 2020) filed a submission in which he rejected the proposition that the Parliamentary Privileges Act applied, denied that he had tendered into evidence the two complaints, and said it was not necessary for him to prove facts which were within the personal knowledge of the Deputy President.

36.   On 26 May 2020, the applicant filed an application in the Federal Court of Australia (Court), seeking that the following relief:

(1) A writ of prohibition prohibiting the Deputy President from further involvement in the applicant’s unfair dismissal application.

(2) A declaration that the Deputy President is not a fit and proper person to hold judicial office, particularly the office of Deputy President of the Commission.

(3) An order that the applicant’s unfair dismissal application be transferred to the Federal Court to be heard together with other matters arising.

(4) An interlocutory injunction against the Deputy President from taking any further action or having any further involvement in the applicant’s unfair dismissal application pending the determination of Mr the applicant’s application before the Court.

37.   The applicant lodged the first appeal on 29 May 2020. His notice of appeal included an application for a stay pursuant to s 606 of the FW Act. The presiding member of this Full Bench heard and dismissed the applicant’s stay application on 2 June 2020.

38.   Following the stay decision, the applicant wrote to the presiding member’s chambers on 3 June 2020 inquiring as to the procedure for the determination of whether the respondent has permission to be legally represented at the appeal hearing. The presiding member’s chambers responded stating that when the matter is listed and directions are issued, the parties will be directed to file and serve submissions should they wish to seek permission to be legally represented at the appeal hearing and that it is at the discretion of the Full Bench when the issue of permission to be legally represented is to be determined. The applicant was informed that he would be given an opportunity to respond prior to any such determination being made.

39.   On 9 and 26 June 2020, the applicant filed two further applications in the Federal Court. The application filed on 9 June 2020 sought, among other things, an injunction preventing the Commission from further proceeding in any manner in respect of the unfair dismissal application or the first appeal. The application filed on 26 June 2020 sought an order that the respondent’s lawyers be restrained from acting in respect of that application, the unfair dismissal application and any other legal proceedings in which the applicant is a party.

40.   On 3 July 2020, the Deputy President issued a document entitled “the applicant Decision” which set out the Deputy President’s reasons for a decision which was said to have been earlier made by him granting the respondent’s permission to be legally represented in the proceedings (representation reasons). In the representation reasons, the Deputy President stated that the recusal application would be determined in due course.

41.   On 6 and 8 July 2020, the applicant filed two more applications in the Federal Court. The application filed on 6 July 2020 sought an order restraining the Commission from taking any further action in respect of the unfair dismissal application and the first appeal until further order. The application filed on 8 July 2020 sought a suppression order prohibiting the publication or disclosure of the identity of the applicant in respect of that proceeding and any proceedings currently before the Commission.

42.   On 15 July 2020, the Deputy President issued the recusal decision, in which he dismissed the applicant’s recusal application.

43.   The applicant’s unfair dismissal application was then listed for mention/ directions on 16 July 2020, and also listed for a further jurisdictional hearing on 3 August 2020 before the Deputy President.

44.   The respondent filed an application for costs on 24 July 2020.

45.   On 28 July 2020, the applicant lodged the second appeal and sought a stay of the whole of the proceedings before the Deputy President, specifically before the hearing of the unfair dismissal application which was to resume on 3 August 2020. That same day, the Deputy President’s chambers sent an email to the parties noting the multiple appeal proceedings pending before the Commission and the application for interlocutory relief pending before the Court. The email advised that the listing in that matter was vacated to a date to be fixed, being a date subsequent to the resolution of the appeals before the Full Bench of the Commission and the matter before the Court.

46.   On 5 August 2020, the Court dismissed the applicant various applications for interlocutory relief.

47.   The same day, the presiding member of the Full Bench issued directions and both appeals the applicant has lodged two appeals, application lodged by the applicant relating to the termination of his engagement with the respondent.

48.   The first appeal filed on 29 May 2020 relates to a number of decisions interlocutory and procedural decisions (or purported decisions) made by the Deputy President, which are characterised by the applicant as follows:

• the decision not to take any action in regard to the applicant’s complaint that the respondent’s solicitors had committed extortion by sending a letter to the applicant demanding the performance of various demands before the respondent company would pay him monies already owed to him;
• the decision not to take any action in regard to the applicant’s complaint that the respondent and/ or the respondent’s solicitors had committed conspiracy to defeat justice in order to put before the Commission a document that had been obtained by fraud;
• the decision not to take any action in regard to the applicant’s complaint that the respondent’s solicitors had sought to mislead the Commission by submitting a document purporting to be the applicant’s resume, constituted a “representation” by the applicant to the respondent relevant to the proceedings before the Commission;
• the decision to give the respondent permission to have legal representation in the proceedings;
• the decision to allow the respondent’s lawyers to represent the respondent in the proceedings;
• the decision that the issue of “genuine redundancy” is a “jurisdictional objection”;
• the decision to refuse to grant the applicant an adjournment to prepare submissions and evidence in regard to the issue of “genuine redundancy”;
• the decision of the Deputy President on 12 May 2020 not to allow the applicant to file a statement and annexures relevant to his submissions regarding the issue of “genuine redundancy” ; and
• the decision of the Deputy President on 14 May 2020 to compel the applicant to prepare and file submissions on the issue of his application that the Deputy President recuse himself from further proceedings on the basis of his not being fit to hold judicial office, his demonstration of active prejudice and the apprehension of bias against the applicant both as a member of a class of persons, unrepresented workers, and personally.

49.   The second appeal, filed on 28 July 2020, relates to a decision issued by the Deputy President on 15 July 2020  in which he dismissed the applicant’s application for the Deputy President to recuse or otherwise disqualify himself from further involvement in the proceedings.

50.   At the commencement of the hearing of the appeals on 4 September 2020 and over the opposition of the applicant, the Full Bench granted permission for the respondent to be legally represented in the proceedings for reasons that it was considered that legal representation would permit the matter to be dealt with more efficiently, having regard to the complexity of the matter. The FB (ironically) finding: “…[The applicant’s] unfair dismissal application has been the subject of a significant degree of procedural complexity…”

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Introduction

This decision is about whether a member and former employee of the Transport Workers Union of Australia for more than 14 years, was unfairly dismissed.

Background

The applicant found employment with the Union through her mother, who at the time was its Office Manager. From 14 March 2006, she worked primarily in the Union’s Industrial section until 26 March 2020, when she was dismissed on the grounds of redundancy.

The applicant disputes that the dismissal was a case of genuine redundancy. She is protected from unfair dismissal because her period of employment with the Union was longer than the minimum employment period and her annual remuneration of $90,675 plus superannuation and a mobile phone was less than the high-income threshold.

Was the dismissal a genuine redundancy?

On the one hand the applicant put that her duties were that of “Industrial Administrator”, preparing and filing applications to the Commission dealing with disputes, enterprise agreements, protected action ballots, right of entry notifications, permits and returns. Also assisting in drafting enterprise agreements, updating annual wage sheets for six or seven modern awards and advising members about rates of pay.

On the other hand, the union claimed that the applicant’s role had effectively been redundant for years, as her substantive role was that of assistance to a researcher who had resigned four years previously, which resulted in a large proportion of her duties ceasing or reduced.

The Commission found that it was not plausible that the applicant would have been retained for such a long period without meaningful work to perform.

COVID-19 brings industrial peace

In early March 2020, the Union’s National Committee of Management resolved to suspend an industrial campaign which had been planned since 2017 and was due to crystallise in 2020. The “2020 Fight Campaign” was aimed at improving industry rates and conditions by enterprise agreements with approximately 200 aviation and road transport employers. It relied on a range of enterprise agreements expiring at the same time in 2020.

The Commission:

“Nobody could have foreseen that this timing would coincide with a global pandemic, with serious economic consequences for both the aviation and transport industries. Social distancing measures and limits on movement made campaign logistics practically impossible. Instead, the Committee moved to delay the campaign until at least September 2021. It also resolved to defer enterprise agreement negotiations in favour of Memorandums of Understanding where appropriate”.

Less money coming in

These resolutions, together with the prospect of COVID-19 pandemic-related work and movement restrictions, gave the union cause to consider the likely effect of reduced labour demand on membership levels – and membership fees. He formed the view that drastic action was required to secure its financial position, including the redundancy of two positions.

Failure to consult under the Award

In a manner that could be described as “do as I say, not what I do” that union failed to consult.

A dismissal is not a genuine redundancy under the Act unless the employer has complied with relevant applicable modern award consultation obligations. In this case, the Clerks – Private Sector Award 2010.

The Commission finding:

“At its highest, the Union’s consultation process amounted to [the union secretary] asking [the applicant] if she had ‘anything to say’ after she had been told her position was redundant. It was not a fair question in the circumstances. [The applicant] had no advance warning of the meeting or its subject matter. She was not in a position to respond in any meaningful way. She was still absorbing the news that she had just lost her job after 14 years’ service and that it was to take effect immediately”.

The Commission finding that because the Union did not comply with its consultation obligations under the Award the dismissal was not a case of genuine redundancy.

Union should have known better

The Commission:

“As a key stakeholder in the development of modern awards, the Union’s failure to consult with [the applicant] about the redundancy cannot be the product of its size, ignorance or unsophistication. Both the Union and [the secretary] must be taken to be familiar with award consultation obligations and their purposes – including in providing an opportunity for meaningful consideration of alternatives and in promoting the dignity of those affected by decisions about which consultation is required. Indeed, these are matters that often lie at the heart of the Union’s work.

“Inexplicably, these purposes seem to have been completely put aside so far as [the applicant] was concerned”.

The union argued that consultation about redundancy would not have made any difference to the outcome. The Commission’s response: “And perhaps the redundancy of [the applicant’s] position was inevitable in the circumstances, but what was the haste in carrying it out?”

Should the union be held more accountable?

The applicant argued, given the union should be held to a higher standard in relation to award contraventions because of its special role in the advocacy and protection of industrial terms and conditions of employment. The Commission disagreed:

“I do not consider that the Union should be held to a higher standard than any other employer defending an unfair dismissal case. The law applies equally to all”.

Alleged intimidation of witnesses:

The applicant makes the following allegation:

“It has been stated to the Applicant by several employees of the respondent that remarks have been made to them that if they spoke to, or assisted the applicant in any capacity even if Orders were granted by the Commission to appear, that their employment with the TWU would be in jeopardy.”

The commission responding:

“These are serious allegations. I am not in a position to test their veracity. They are matters that should be referred to the Fair Work Ombudsman for investigation. As the allegations are both unsourced and untested, I have given them no weight in my assessment of the fairness or otherwise of [the applicant’s] dismissal”.

Conclusion

On balance, the Commission, was satisfied the applicant’s dismissal was harsh and unreasonable and unfair.

Remedy

The parties both agreed that reinstatement would be inappropriate.

The Commission determined that had the union followed the consultation requirements, the applicant would have been employed for a further five weeks, and so awarded $8718.75 plus superannuation.

Commentary

The Fair Work Commission is a tribunal and has no legal powers as such. Both the applicant’s allegations and the award breach would need to be prosecuted by the Fair Work Ombudsman.

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Introduction

This is an appeal to the full court of the Federal Court of Australia by a former employer (the “company”) against a decision by a primary judge of the same court that awarded $75,000 (being six months’ pay) to the company’s former employee for reasons that amounted to the company dismissing the former employee because he refused to sign a new contract of employment.

The former employee also lodged a “cross appeal” stating that he should have been awarded 12 months’ pay of $150,000.

Both the appeal and cross appeal were dismissed, reinforcing the primary judge’s decision that the former employee was dismissed because he wished to seek legal advice prior to signing (a reduced) contract of employment and in the words of the court:

“In addition or in the alternative, [the former employee] alleged that [the company] repudiated or breached his contract by failing to give him reasonable notice of termination”.

Background

The company is a family-owned investment services firm.

The former employee is a martial arts champion who worked as a bodyguard since about 1989 and has held senior security positions in the Philippines and Australia. Between 2009 and 2015 he operated his own business providing security services. He holds an Advanced Diploma in Security Risk Management and a Diploma in Business Management.

The company employed the former employee from May 2016 until November 2016, under an oral contract. His annual salary was $150,000, plus superannuation, and he was provided with a company car, first a Mercedes S-Class, then a 2015 Maserati. Part of his job involved driving the vehicle to pick up and drop off his manager. Between May and October 2016, the former employee was given wide-ranging additional responsibility; fundamentality all administration of the business that did not involve financial trading. He was given the title “Chief Operations Officer”.

The dismissal

In the period leading up to that fateful event, the former employee had a discussion with his employer about implementing new employment contracts for all of the company’s employees. To this end, he engaged lawyers from a top tier law firm to prepare two types of employment contracts, one for award employees and the other for non-award employees.

Late in the afternoon of 11 November 2016, with no prior notice, Mr Tran was told that that his presence was required in the boardroom.

In the boardroom the former employee was presented with a new contract. The former employee recognised it as a contract in the same form he had issued to staff during the week. He told the company it was “for normal staff, not for me”. The former employee was not happy, either with the terms of the contract or, as the primary judge put it, “its applicability to him and the position he had occupied”. Although the former employee’s salary would not change, his status was reduced. He would no longer be employed as Chief Operations Officer, reporting directly to the owner. Rather, his new title would be “Risk Manager” and he would be reporting to the owner’s son. His duties were reduced and there was no mention of a company vehicle. The contract also included a 12-month probationary period.

According to the former employee’s affidavid:

“I was feeling very nervous and uncomfortable about the contract, especially considering how I was recently being treated. It was also clear that there were lots of details in there that I couldn’t be across on such short notice. Although I had been handing these out earlier in the week to other employees (since this was a contract designed for normal employees), I wasn’t across all the details of the contents and would not be comfortable signing it without having at least an opportunity to read it through. I was also conscious this version was probably tweaked by Justin Le Blond who had recently promised, when winking, to make it a lot stronger. I said:

Me: “I will take it to a lawyer to review.”

[The owner son’s] face changed, his voice became angry and he raised his voice when he said:

[OS]: “It’s your contract!”

[OS] was yelling at me at this point:

“I will not pay you if you don’t sign it now. If you don’t sign now, it shows you are not loyal”.

At some point, [the OS] said to me:

“What value do you bring to the company when we pay you $150,000, car, no fringe benefits tax, nearly $200,000?”

Soon afterwards, the owner entered the boardroom and at some point, the former employee signed the contract “under enormous pressure” from the company. He later regretted his action and tore the contract in half.

The former employee then left the building in the company Maserati.

This led to the company calling the police to retrieve the company vehicle and three mobile phones belonging to the company, having determined that the former employee had resigned (a point which the former employee denied). These issues were the subject of text messages.

The primary judge finding

The primary judge found that the former employee did not resign from his employment at the meeting. Rather, his Honour found that his employment was terminated after he left the meeting because he had sought to exercise his workplace right to seek legal advice about the new contract. The effect of his Honour’s findings is that, by arranging for the police to contact the former employee after he had sent the text message reasserting his workplace right to obtain legal advice about the new contract and retrieve its property, the company “had repudiated his contract of employment” and, by returning the Maserati with its keys and three mobile phone handsets, the former employee “had accepted the repudiation”.

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Introduction

This decision has a lot of “wow” factor – not only in terms of the financial cost to the company, but the importance of dealing with issues front-on, including complaints of bullying (in this case 7), the exacerbation of an (unknown to company) mental health condition, monitoring workloads, and the importance of the contract of employment being right first time.

Remembering that the onus is on the employer (within reason) to prove it did nothing wrong (ie the “reverse onus of proof”).Further the “bully” was personally fined $8,000.

Please also note that I have “glossed over” a number of issues due the length of the decision.

Further noting that there is NO income limit for an adverse action claim (and whilst not pertaining to this case, no minimum employment period).

The penalty

To get this out of the way first, the penalties were made up of:

• Fines of $40,000 to the company and $7,000 for the “bully”.
• The company was ordered to pay the applicant:
  • $756,410.00 as compensation in respect of his forgone share options;
  • $2,825,000.00 as compensation for his future economic loss.
  • $10,000.00 for general damages.
  • Damages for breach of contract of $1,590,000.00.

The Fair Work Act 2009 provides for the maximum penalty for a single contravention by the company is $54,000.00 and for the boss $10,800.00. The seven contraventions involving the making of complaints must be grouped together as one contravention for the purpose of assessing penalties.

Background

The applicant in this matter was employed at a publicly listed enterprise software company as State Manager for Victoria on 3 July 2006 until his dismissal 18 May 2016.

At the time of employment, the company was very small and became “very large” due (in part) the good efforts of the applicant.

The company’s reason provided for the dismissal (which was rejected by the court) was poor performance.

However, the applicant (via his QC and assisting counsel) that he was dismissed unlawfully for “making a workplace a complaint”, contrary to s 340 of the Fair Work Act:

• Seven instances of his exercising his workplace rights by making complaints in relation to his employment: in particular, complaints as to his having been bullied (ie marginalising him, stopping him from attending meetings with clients and preventing him from doing his job);
• His proposed exercise of his right to bring legal proceedings under a workplace law;
• His proposed exercise of a safety net contractual entitlement; and
• His having a safety net contractual entitlement.

The court noting that the applicant’s legal team did not press claims that he had been dismissed for other reasons (being his taking sick leave; being temporarily absent from work; and having a mental disability).

Show me the money

With the growth of the company, so was the applicant’s salary with his gross income increasing from $208,932.00 in the 2006/07 financial year to $845,128.00 in the 2015/16 financial year. Most of that increase was attributable to incentive payments; with his base salary increase only from $165,000.00 to $192,000.00 during the same period. He was also provided with share options in 2013, 2014 and 2015.

Personal crisis and ongoing Depression (work/life balance)

Whilst financially things were going very well, in the background he was working very long hours to the detriment of his home life: in September 2010, his 14-year-old daughter became ill with Kawasaki disease, requiring open-heart surgery in January 2011. He did not go to the hospital with her at that time. He had thought it vital to finalise an important deal on behalf of the company before the end of the company’s financial year. This not only left the applicant with feelings of guilt, but directly attributed to chronic depression.

Ironically, the applicant found solace in attending work to “escape the pain”. This also made worse his relationships with his family. In the words of the court:

“[The applicant] identified his feelings of guilt as stemming from his inappropriately having prioritised his work for [the company] over his daughter’s life and health. It is therefore perhaps cruelly ironic that [the applicant’s] evidence is that in order to avoid that distress, work became the one safe place where he could “escape”. He therefore increased his already long working hours.

“Outside of work however, [the applicant] could not escape his grief. He became emotionally closed off from his wife. Predictably, that gave rise to tensions within their marriage. [the applicant] gave evidence [as did an expert witness], which I accept, that at various times the marital relationship had been on the verge of breaking down. The applicant] also experienced repeated thoughts of suicide. On at least one occasion he had taken steps, ultimately not implemented, directed towards that end”.

The company was unaware of the extent of the applicant’s distress

Apart from confirming to his work colleagues from time to time that he remained concerned about his daughter’s health, the applicant was careful not to reveal to anyone at the company the depth of his private turmoil. Being able to focus on the practical problems of work without anyone at the company knowing about his damaged condition allowed him to hide in his safe place, numb to his grief and pain.

Also causing the applicant distress, was separate legal proceedings that he and his daughter were then bringing in which each had claimed damages on the basis that certain medical practitioners who were alleged to have misdiagnosed her had been negligent.

4 November 2015, the applicant saw a psychiatrist, who testified that the applicant confided:

“They [the company] don’t know about my suicidal tendencies but I’ve been told in the past four years that I could have done better. I haven’t been performance managed yet but I have to work longer hours because I get absolutely distracted about my daughter. I’m not efficient. Severe concentration problems. I forget things and I send the wrong emails to people, repeatedly getting into trouble with my boss because I misjudge situations”.

…

“As a result of his dismissal he suffered a profound mental breakdown. Whether his dismissal caused that breakdown, or whether it was merely a manifestation of his earlier depressive disorder from which he had continued to suffer after his daughter’s illness, is the subject of contested expert evidence to be discussed later. It is however not in dispute that after he was dismissed [the applicant] became, and remains, incapable of ever working again”. [My emphasis].

The applicant’s performance at work does not materially decline notwithstanding his (later diagnosed) depressive disorder

The court did not accept that the applicant’s long established, and only later diagnosed, depressive disorder caused a material decline in his performance at work, citing the performance bonuses provided to the applicant. He also received the “Chairman’s Award” in of 2012, 2013 and 2014.

Serial Complainer = exercising a workplace right

He was always astute to ensure that his contribution to the success of the company be rewarded in monetary terms; to the extent that his boss describing the applicant as being a constant complainer:

“[The applicant] complained from the day he started at [the company]. He complained from day one that the salary that we had offered him and that he had agreed was not enough and I had to change it. He complained about options. He complained about staff. He complained so much. You will see it through all the papers, and the last three or four months … I couldn’t care less about a complaint. All I cared about is his ability to perform, number 1, and number 2, that his behaviours were acceptable. But his complaints were totally irrelevant to the whole thing. And if Behnam had been the right person, he would still be there”.

The court commenting:

“As [the applicant’s boss] evidence implies, I am entitled to be satisfied that had [the applicant] not been a strong performer he would have been given very short shrift. Instead, I infer that [his boss] yielded to [the applicant’s] demands for additional financial rewards because he was a strong performer whose services he wished to retain”.

…

“I am satisfied that [the company’s] “Open Door Policy” and its “Workplace Bullying Policy” …are not disputed to have been applicable at the relevant time. They provide an explicit basis for the Court to be satisfied that [the applicant] was “able to make a complaint” as he claims he did, inter-alia, about his having been bullied in relation to his employment”.

The court adding:

“The same applies with respect to any complaint [the applicant] made in good faith regarding his contractual entitlements…I respectfully adopt the reasoning of Rangiah and Charlesworth JJ in PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15 at [19]-[20]:

‘Under the general law, an employee has a right to sue his or her employer for an alleged breach of the contract of employment. A suit may be regarded as the ultimate form of complaint. Accordingly, in our opinion, an employee is “able to make a complaint” about his or her employer’s alleged breach of the contract of employment. That ability is “underpinned by” (to use Dodds-Streeton J’s expression in Shea) the right to sue, and extends to making a verbal or written complaint to the employer about an alleged breach of the contract.

‘Further, an employee who alleges that his or her employer has contravened a statutory provision relating to the employment is “able to make a complaint” within s 341(1)(c)(ii) of the FW Act. That right or entitlement derives from the statutory provision alleged to have been contravened. The ability encompasses making a complaint to the employer or an appropriate authority about the alleged contravention, whether or not the statute directly provides a right to sue or make a complaint’”.

The court ultimately finding that the applicant did exercise a workplace right by complaining about his being bullied by one or more other employees of the company or about his safety net contractual entitlements.

Bullying

The applicant had complained of bullying to the HR department, however the fact that he did not formalise the complaint, it was telling that the HR person who met with the applicant “conceded in their conversation that the conduct he had described to her was unacceptable”.

Pecuniary penalties

The court, as previously mentioned, was satisfied that it can make orders compensating the Applicant for loss that he has suffered because of the Respondents’ contravention of the Fair Work Act, finding that there was a clear “causal connection” between that contravention and the various forms of loss suffered by the applicant. These being described in detail as:

• Forgone share options;
• Future economic loss:

“At common law, damages are payable to compensate a person for a loss of future earning capacity where that loss of capacity is caused by reason of an injury which in turn has been caused by the wrongdoer’s negligent act or omission, and the diminution of earning capacity is or may be productive of financial loss: Graham v Baker [1961] HCA 48; 106 CLR 340 at 347.

“Also at common law, the fact that a plaintiff may be predisposed to an injury caused by tortious conduct does not reduce his damages; the tortfeasor must take an injured person as he finds him or her. As Dixon CJ put it in Watts v Rake [1960] HCA 58; 108 CLR 158 at 160:

‘If the injury proves more serious in its incidents and its consequences because of the injured man’s condition, that does nothing but increase the damages the defendant must pay. To sever the remaining leg of a one-legged man or put out the eye of a one-eyed man is to do a far more serious injury than it would have been had the injured man possessed two legs or two eyes. But for the seriousness of the injury the defendant must pay’.

…

“I am satisfied…that in circumstances in which:

• a person’s capacity to have continued in remunerative employment has been demonstrated over approximately half a decade, notwithstanding their suffering from a depressive disorder; and
• where expert psychiatrists uniformly opine that the person’s dismissal for a prohibited reason has caused a significant aggravation of their pre-existing depressive disorder, with the consequence that they have lost their capacity to work and have a poor prognosis of ever regaining any capacity for remunerative employment in a position for which they would be otherwise qualified;
• the Court is entitled, within the meaning of s 545 of the Fair Work Act, to consider it appropriate to make an order compensating that person for the economic loss he or she has suffered: without any reduction by reason of the person having the pre-existing condition which their unlawful dismissal has aggravated.
• General damages

“At common law damages are payable for pain and suffering, which includes physical pain; mental illness or anguish; loss of enjoyment of life; and loss of the amenities of life.

“Loss of amenities” refers to the destruction or diminution of a faculty or skill that causes “the deprivation of the ability to participate in normal activities and thus to enjoy life to the full and to take full advantage of the opportunities that otherwise it might offer”: Teubner v Humble [1963] HCA 11; 108 CLR 491 at 506 per Windeyer J. Such damages are awarded once and for all. If the damage is or may be permanent, then it has to be assessed for the duration of the applicant’s life. While it is “impossible precisely to translate pain and suffering and the loss of enjoyment of life into money values”, and no amount of money will restore an applicant to her pre-injury position, that is the purpose of an award of such damages. That means that an attempt must be made to assess a reasonable sum, having regard as far as possible to the prevailing standards of the community: O’Brien v Dunsdon (1965) 39 ALJR 78.

“Notwithstanding, there is no “tariff” on damages for pain and suffering. In Planet Fisheries Pty Ltd v La Rosa [1968] HCA 62; 119 CLR 118 (Planet Fisheries) per Barwick CJ, Kitto and Menzies JJ observed at 125:

‘The judgment of a Court awarding damages is not to be overborne by what other minds have judged right and proper for other situations. It may be granted that a judge who is making such an assessment will be aware of and give weight to current general ideas of fairness and moderation. But …[t]he awareness must be a product of general experience and not formed ad hoc by a process of considering particular cases and endeavouring, necessarily unsuccessfully, to allow for differences between the circumstances of those cases and the circumstances of the case in hand’.

[The “ambush”…]

“However, I am satisfied [the applicant] is entitled to more than a nominal award in that regard. His dismissal for a prohibited reason was effected only after when, against his doctor’s advice, the applicant] had accepted [his boss’s] request that he to travel to Brisbane in order to attend a meeting for which [his boss]…”

“[His boss’s] representations to [the applicant] to that effect were knowingly false and deceptive. [The applicant’s] termination as then followed in consequence was accompanied within the hour by a company-wide announcement. [The applicant] was instructed not to go back to his office to collect his personal possessions; they would be sent on to him. I am satisfied that those unfortunate events added a not insignificant quantum of humiliation to the predictable shock and hurt that [the applicant] would have suffered simply by reason of the fact of his unlawful termination. I am satisfied that such humiliation became an element in his suicidal ideation immediately following that event.

“I will award [the applicant] $10,000.00 as compensation in the nature of general damages, having regard to the hurt and humiliation he was forced to suffer in consequence of the manner of his unlawful dismissal”.

• Special damages

“…[the applicant] seeks compensation for incurred and future medical expenses from May 2016 to September 2020. He claims $50,000.00 as an approximation of that loss. However, [the applicant] has led no evidence which would entitle me to make any findings as to such claimed special damages. For that reason, I decline to make an order for compensation in those regards”.

Contract claim

This is VERY instructive for practitioners of IR/ER/HR.

The court then turned its attention to the breach of (employment) contract claim:

“In Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471, Gleeson CJ, McHugh, Kirby Hayne and Callinan JJ stated (at [34]) “the ‘general test of objectivity [that] is of pervasive influence in the law of contract’” dictates that “[t]he legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions”.

“That conclusion was restated in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [38], per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ . In referring to Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 (at [25]), their Honours said:

‘Although the word ‘intention’ is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties’.

“Their Honours continued (at [40]):

This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) 218 CLR 451], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement”. (Emphasis added)

Costs

“Neither party has advanced submissions as to costs. That may simply be because s 570 of the Fair Work Act precludes, save in limited instances, a Court awarding costs in a matter litigated pursuant to that Act. The cases – to which I have only given limited attention – suggest that it is also at least arguable that that prohibition extends to an award of costs with respect to any associated claims, such as the applicant brought in contract in these proceedings (Stanley v Service to Youth Council Inc (No 3) [2014] FCA 716; 225 FCR 357, Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 229 FCR 221, Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2016] FCA 987).

“Having regard to the above, I will make no order as to costs but will provide for the opportunity for the parties to file submissions if they are advised that they should be entitled to an award of costs”.

By Stefan Russell-Uren

Employers mustn’t forget their legal obligations when they are forced to make quick and important changes in the coming months.

COVID-19 has made our lives more volatile. This volatility has been met with unprecedented government intervention and economic assistance – assistance that’s soon coming to an end.

In late September, the moratorium on creditor’s petitions and statutory demands will be lifted, causing a sharp spike in corporate and personal insolvencies. At around the same time,

JobKeeper payments and the Commonwealth Small and Medium Enterprises Guarantee Scheme is scheduled to cease.

The termination of these programs will magnify the pressure placed on businesses, and there’s no doubt that in many workplaces significant and unpalatable changes will be required. And time will be of the essence.

In a situation where changes have to be implemented quickly, it’s worth revisiting the rules around an employer’s duty to consult the workforce about major changes.

This volatility has been met with unprecedented government intervention and economic assistance – assistance that’s soon coming to an end.

Three preconditions

Any employer for whom a modern award or enterprise agreement applies is obliged to consult with employees about any definite decisions to make major changes to productions, programs, organisations, structures or technologies that are likely to have a significant impact on employees. The consultation duty has three preconditions, each of which must be satisfied before the duty to consult employees is enlivened.

First, the employer must make a definite decision to implement the change. Whether it has been made is a question of fact and determines when the duty to consult arises.

Second, the decision must pertain to implementation of “major changes”. Whether something is a major change depends on:

•  The seniority and importance of the employees in the employer’s operations.
•  The extent to which the affected employees work in an integrated or disconnected manner.
•  The consequences for the continuing employees.
•  The number of employees affected.

Third, the changes must have “significant effects” on impacted staff. These are usually defined by the award or agreement and typically include termination, loss of job opportunities, alteration of hours of work or the need for transfer of employment or retraining.

If the duty to consult arises, employers are required to do more than merely notify employees of the changes. They must hold discussions with the employees (and, if applicable, their union) about the effect on employees and the measures that need to be taken to avoid any adverse effects. Remember, such discussions are not a one-way street.

Employers must also provide written information about the changes, their nature and their effect on employees. While this does not require production of confidential information, it does require more than provision of an abridged summary.

Implementing change

A ‘failure to consult’ is often disputed by unions in an endeavour to hold off terminations of employment or to obtain leverage in negotiations about the changes. Recently, the Federal Circuit Court of Australia dealt with such a dispute in Health Services Union v Healthscope Operations Pty Ltd.

Healthscope decided to outsource laundry operations at Newcastle Private Hospital, which resulted in 12 redundancies. It implemented the decision one week after making it, did not consult the employees and terminated employment on the same day employees were told of the decision. The Health Services Union (HSU) made an application for civil penalties, alleging Healthscope failed to consult.

The HSU submitted that outsourcing was a major change because Healthscope analysed the decision, made transitional arrangements, saved capital expenditure and was party to an anterior agreement with a labour hire company which would take over the operations.

If the duty to consult arises, employers are required to do more than merely notify employees of the changes.

The court rejected the HSU’s submissions, concluding the analysis conducted by Healthscope was simply an exercise of due diligence, and the capital expenditure, while not insignificant, paled in comparison to Healthscope’s overall budget. Crucially, the court gave weight to the number of employees affected (12) relative to Healthscope’s total workforce (2,884).

The court reiterated that when determining whether a change is a major change, it is necessary to consider the factors outlined previously. It is simply not enough to contend the change is “a major change and distressing for the employees themselves”.

While employers can expect the Fair Work Commission and federal courts to give some latitude around consultation disputes during the COVID-19 recovery phase, it is unrealistic to expect carte blanche. Accordingly, HR advisors are well advised to:

•  Actively participate in the development of workplace changes.
•  Determine whether the workplace change is a “major change” as soon as possible.
•  Properly document the date at which the employer decides to make the change.
•  Identify how the change will affect the employees.
•  Identify each employee who will experience the effects of the change.
•  If necessary, commence consultation.

This article originally appeared in the August 2020 edition of HRM magazine.