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As the end of the financial year approaches and measures are underway to finalise next year’s budgets, HR professionals will be asked to contribute figures, justify figures or independently prepare an HR budget. This webinar explored areas that need to be considered in terms of what costs you should be expecting and whether there are ways to make savings within your area to utilise available funds in more effective ways.

This webinar explored:

  • where the HR budget sits within the organisation and the Board’s and Executives’ expectations of HR costs
  • line items of an HR budget
  • likely financial increases eg National Minimum Wage, EBA or contractual pay review increases
  • what are unexpected costs and how do you account for and justify them
  • how to learn from the previous budget and how those lessons impact on the current/proposed
  • where can HR make savings?
  • where should HR deploy its finances?
  • How do you explain to the Executives and the Board that sometimes short term spending is actually longer term saving?

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Baby out with the bath water?

Earlier this week as part of the budget rollout, Ministers announced the potential end of “double dipping” from the federal government’s paid parental leave (“PPL”) scheme. The legislation currently allows new mothers to receive PPL from the Commonwealth in addition to any entitlements from their employers. Starting on 1 July 2016 women whose employer’s paid parental leave benefits amount to more than $11,500 will be ineligible for any taxpayer-funded PPL. Employees who receive benefits less than this will be entitled to “top up” to $11,500. Women who do not receive any PPL from their employers will continue to receive their current entitlement. This policy amendment is expected to affect up to 79,000 women around the country.

A change such as this will have ramifications for employees and employers alike. For companies, a generous PPL benefit can attract top talent and encourages a culture which values families and flexible work arrangements. For employees, paid parental leave can be a vital step towards achieving equality in the workplace. Many who have entered into employment contracts or voted on enterprise agreements under the current scheme may be looking for alternative compensation or supplementary benefits.

While employers should be conscious of the impact on employees if the budget is passed in its current form, the answer may not necessarily be more cash. Creative solutions will allow businesses to manage costs while continuing to recruit and retain an elite workforce. For example, employers may look to allowing leave to be taken in a more flexible manner as opposed to immediately after the birth or adoption of a child.

Although the future of the PPL scheme is uncertain, it is clear from the response to the announcement that the government faces an uphill battle.

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One of the most frequent issues we are asked as workplace lawyers to advise our clients on is that of termination of employment. The concerns around termination generally arise from the relative ease with which unfair dismissal applications can be brought and the consequences of having to compensate or reinstate an employee where the dismissal is found to be harsh unjust or unreasonable.

The case law in the Federal Fair Work Commission (“FWC”) reveals that the unfairness in any given termination can arise in a number of ways and so risks can be minimised by understanding the deficiencies and avoiding these same mistakes. Recent cases from 2014 illustrate that a dismissal can be unfair as a result of poor management, for example where:

  • an employer fails to have a substantively fair basis (reason) to terminate employment;
  • an employee is not provided with procedural fairness in relation to the dismissal; and/or
  • the dismissal is unduly harsh in relation to the effect it has on the employee.

Unfortunately it would appear all too common that employers focus on the reason for the dismissal rather than the other issues which are also relevant in terms of fairness, such as whether it is harsh to dismiss an employee in particular circumstances.

For example, in the case of Harbour City Ferries Pty Ltd v Christopher Toms [2014] FWCFB 6249 (“Toms”), the employee was operating a ferry that crashed into a wharf at Sydney Harbour. The employee was drug tested which proved positive for marijuana. The employee confessed that 16 hours earlier, he had smoked a marijuana cigarette at home to relieve shoulder pain. Despite there being a clear breach of the company’s drug and alcohol policy, which stated that employees must be free from the presence of drugs while working, the FWC found that the employee’s dismissal was harsh due to the employee’s unblemished record with the company for 17 years and that rendered the dismissal unfair. The employee was reinstated, given that the company had not raised any issues about the employee’s record or capacity to carry out his duties in future. However, an award for lost wages was not awarded as a penalty for the policy breach.

The decision was subsequently overturned on appeal by the FWC Full Bench, who found that the employee’s serious misconduct, being “deliberate disobedience, as a senior employee, of a significant policy” was not adequately mitigated by the matters dealt with in the first instance decision, reversed the reinstatement and dismissed the employee’s application.

Similar to the first instance decision in Toms, in Anderson v Thiess Pty Ltd [2014] FWC 6568, the dismissal of an employee who sent offensive emails in clear breach of a company’s policy, which also had the potential to cause significant reputational damage was found to be harsh and unreasonable, when taking in factors such as his age and difficulty in obtaining other employment. FWC found that while there was a valid reason for dismissal, the termination was harsh and unreasonable given his age being 65 years and likelihood he would not find another job. The FWC denied reinstatement but compensation was reduced by a further 50% due to the misconduct of the employee.

These cases clearly demonstrate that while there may be a valid reason to dismiss, this will not always justify a termination, and that other factors must be considered. This said, as was found in the Toms appeal, a sufficiently serious breach of a policy, where not adequately mitigated by other relevant considerations, may defeat an unfair dismissal application.

In the case of Chris Conlon v Asciano Services Pty Ltd T/A Pacific National Pty Ltd [2014] FWC 2127, the FWC found that it was not unfair to dismiss a 63 year old train driver who failed to see and respond to two train signals and was 120 seconds away from colliding with another train. Looking out for signals and adjusting the speed of the train were fundamental aspects of his duties and he clearly breached company policy and safety procedures by failing to do so (all of which meant that there was a valid reason for dismissal and the facts were proven in terms of the acts alleged against him). Given the opportunity to respond in writing, the driver stated that there had been no information given to him to indicate other trains might be crossing at that particular intersection the day of the near collision.

He admitted he was disappointed in himself and asked Pacific National to take into account his long and loyal service of 20 years. The FWC heard that Pacific National considered placing the driver in a suitable non-driving position, however, no such roles were available.

The FWC took into account the driver’s age and experience when determining the matter, however, it could not find the dismissal unfair.

Not providing an employee procedural fairness is another example which may taint an otherwise “fair” dismissal as it may be considered unjust or unreasonable to terminate where this occurs. This quite commonly happens during the investigation process. For example, although there may be a valid reason for termination, a mishandled investigation may deem a dismissal unfair, as seen in the case of Cowan v Sargeant Transport Pty Ltd [2014] FWC 5330. The FWC found that the lack of systematic approach to investigating the driver’s actions of urinating outside the entrance to a Woolworths warehouse meant that it failed to make the employee aware of the allegations and evidence against himself or provide him with sufficient opportunity to respond or have a support person present. The company’s failure to meet the driver in person denied the employee an opportunity to ensure that the HR manager and others were aware of his medical condition and the urinary urgency which he sometimes suffered as a result.

Similarly in Farmer v KDR Victoria Pty Ltd T/A Yarra Trams [2014] FWC 6539 a tram driver was found to be wrongly accused of using his mobile phone while operating a tram after a flawed investigation into the incident, therefore there was no substantive and valid reason for dismissal. In contrast, providing warnings before dismissal can protect an employer from reinstatement of a dismissed employee as seen in the case of Scott Wilson v Leighton Contractors Pty Ltd [2014] FWC 5503.

Procedural fairness may also be breached where there has been significant delay in dealing with the inappropriate conduct of employees. In Camilleri v IBM Australia Limited [2014] FWC 5894, the application of a “zero tolerance” policy in relation to business conduct was overridden by the FWC and the dismissal found to be unfair due to significant delays of almost three years between the first instance of inappropriate behaviour and the termination of the employment, as well as a substantial delay in notifying the employee of the termination after the decision to terminate was made. A similar situation occurred in Cannan and Fuller v Nyrstar Hobart Pty Ltd [2014] FWC 5072, whereby the failure of Nyrstar to deal with the bullying behaviour of two workers contemporaneously and the delay in putting specific allegations to them led to a finding that the dismissals were unfair.

In the case of Sheldrick v Hazeldene’s Chicken Farm Pty Ltd [2014] FWC 5820, the FWC found that a requirement that an employee work additional unpaid hours and enter an on-call roster (after an employee refused to accept phone calls during his annual leave period and to sign a contract requiring him to do so which led to his dismissal) was unfair and unreasonable. The FWC stated that the company had no legal right to compel the employee to accept significantly changed terms of employment and the denial of procedural fairness were factors which led the FWC to award nearly $8,000 in compensation for lost remuneration.

In Kirsch v ThyssenKrupp Polysius Australia Pty Ltd [2014] FWC 8640, deliberate and manipulative actions by an employee in discussing her impending redundancy were factors that the FWC found were relevant in deciding not to grant an extension of time for filing her unfair dismissal claim (claims must be filed within 21 days of the termination taking effect). The employee was informed of her impending redundancy and was asked to attend a meeting to discuss redeployment options. On the day of the planned meeting, the employee sent a text message saying she would not be at work and sent a further email attaching a medical certificate indicating that she would not return to work for another seven days after which she was on approved annual leave. The company advised the employee that they would make their final decision about her employment on the day before her annual leave and that dismissal was the likely result. The company sent her an email and also a letter advising her of her redundancy the day before her annual leave; however the employee had left the country and did not read these emails until her return. The FWC found that the evidence established that the employee was aware that it was highly likely she was to be retrenched and did not inform the company of her travel plans. In doing so, the FWC found that the approach of the employee was wilful blindness to try and establish a right to lodge an unfair dismissal application that did not exist, and her dismissal came after the company had made every feasible effort to engage her in discussions about her redundancy to mitigate its effects.

It is evident from these cases that a termination may be unfair for a number of reasons, even if the reason to terminate is valid. Given this, employers need to carefully assess not just the reason for dismissal but whether it will be harsh, unjust or unreasonable. This includes an obligation on employers to ensure that they provide procedural fairness to an employee during any investigation into the conduct of the employee and throughout the termination process. This will minimise the chance that a dismissal that is valid is not deemed by the FWC to be unfair due to procedural or other defects.

Key Takeaways

  1. Unfair dismissals can be upheld where terminations are substantively unfair, that is where there is no valid reason to terminate employment.
  2. Procedural fairness is also an important consideration in determining whether are dismissal is unfair.
  3. The FWC also takes into consideration whether the termination is otherwise unduly harsh in relation to the effect on the dismissed employee.
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State and Territory work health and safety (“WHS”) laws which govern work health and safety attract criminal sanctions, not the least of which are the significant penalties which may be imposed and they also confer broad powers on various persons to enter workplaces and investigate “risks” to health or safety. These laws often operate in conjunction with various other workplace laws and these “5 Fast Facts” explore the relationships as well as the various powers.

FACT 1: Did you know that applications for bullying orders can lead to referrals to WHS regulators and the two proceedings are not mutually exclusive?

The introduction of the anti-bullying jurisdiction under the Fair Work Act 2009 (Cth) (“the FW Act”) has raised potential dangers for employers where anti-bullying orders are made by the Fair Work Commission (“FWC”). The dangers are now an increased exposure to orders under the FW Act at the same time as, prior or subsequent to investigations and prosecutions under WHS laws. The WHS laws do not allow individuals to bring civil action, however, the FW Act expressly allows prosecutions to be brought under WHS laws notwithstanding an anti-bullying application. The exposure of an employer and its employees is now significantly increased and this exposure is amplified by the ability of the FWC to refer matters to the WHS regulator.

Under the FW Act, a worker in a constitutionally covered business, who reasonably believes that he or she has been bullied at work, may apply to the FWC for an order to stop the bullying conduct. The FW Act adopts the same broad definition of worker included in the WHS Act which extends the scope of the provision to include a-typical workers such as sub-contractors, interns and labour hire workers. The FWC is required to consider specified matters, and any other matters that the FWC deems relevant in considering the terms of the order. This can extend to the FWC having regard for whether the application raises issues that might be more effectively dealt with by the WHS regulator and as such, the FWC has the additional power to disclose information to the WHS regulator. The interaction of these laws create a symbiotic relationship that facilitates the flow of information and referral of matters between the FWC and the relevant statutory WHS authority in each jurisdiction.

FACT 2: Did you know that organisation officials (such as union officials) do not have the power of right of entry for WHS purposes under the new FW Act?

The FW Act gives organisation officials who are “permit holders” (and federally registered) a statutory right of entry to premises for the specific purposes outlined in the FW Act. Employers should be aware that the scope of the FW Act does not extend to the right of entry of organisation officials into a workplace for work health and safety purposes. This right can be found in specific WHS laws and so it is those laws which will dictate whether there is the basis for a right of entry, what permits the person seeking to enter must have and other prescribed requirements to allow for lawful entry.

What the FW Act does impose, are further restrictions on an organisation official that wishes to enter a workplace for the purposes of work health and safety audit and compliance. An organisation official that has a statutory right under a WHS law, and thus holds a WHS entry permit as outlined by WHS law, who wishes to exercises their Federal right of entry must also hold a permit under the FW Act or a State or Territory industrial relations entry permit before entering a workplace.

It is important that employers are aware of the obligations that arise out of the interaction of the WHS Act and the FW Act and ask to see both permits in the event that an organisation official asks for access to your workplace for the purposes of work health and safety. Additionally employers should have no reservations about ensuring the purposes of the visit are lawful nor enforcing the requirements in terms of the entry itself, notice, and where the officials may visit and whom they may visit. Given that union officials may in New South Wales bring prosecutions for breaches of WHS laws, it is imperative the employers are familiar with their obligations and entitlements in relation to the various types of right of entry.

FACT 3: Did you know that workcover inspectors have a broad scope of power to enter premises under WHS legislation?

Under the WHS Act, an inspector may at any time, with or without consent, enter a place that is, or that inspector reasonably suspects is a workplace. An inspector who enters a workplace may do any or all of the following:

  • inspect, examine and make inquiries
  • take measurements, conduct tests and make sketches or recordings
  • take and remove samples for analysis
  • require the production of documents
  • ask questions and conduct interviews
  • seize anything as evidence
  • request a person’s name and address
  • take affidavits or other witness statements
  • exercise any other power that is reasonably necessary for the purposes of the WHS Act.

While inspectors are granted a broad scope of powers under the WHS Act, employers, who are a “person conducting a business or undertaking” (“PCBU”) retain certain rights when dealing with inspectors that may wish to gain entry to their workplace. This is particularly important in the event of an investigation into a fatality or serious injury.

Firstly, upon arrival at the workplace, a PCBU has the ability to direct an inspector to undertake any relevant site induction, wear appropriate personal protective equipment or be accompanied by a management representative at all times during their visit. If an inspector wishes to inspect, examine or seize anything in the workplace, including documents, PCBUs have the right to claim legal professional privilege over documents subject to the privilege. In circumstances of a fatality or serious injury or where an employer is unsure of their obligations, it is advisable that employers appoint a lawyer to assist with interviews and investigations given the criminal consequences which may flow from any WHS risk. PCBUs should be aware that it is an offence to hinder or obstruct, impersonate, assault, threaten or intimidate an inspector and must keep this in mind when directing an inspector within their workplace.

The requirement to answer WHS inspectors’ questions differ depending on the jurisdiction that the workplace is in. In New South Wales, a person must answer all questions asked by a WHS inspector, even if the answer may be self-incriminating. If a person is required to answer a question or provide information or a document, the inspector must first identify themselves, warn the person that failure to comply with the requirement to answer or produce without a reasonable excuse constitutes an offence, warn the person that they are not excused on the ground that they may incriminate themselves and advise that legal professional privilege can be claimed. It is not an offence to refuse to cooperate if this warning is not given. It is important
for PCBUs to remember that the answers to these questions or any document or information produced cannot be used as evidence against the individual themselves after this warning has been given, but can still be used as evidence in the prosecution of another. Again the assistance of lawyers with this process have a multitude of benefits including becoming familiar with rights during an interview, clarification of the purposes of the investigation, protection as is permitted and prior to any investigation ensuring that as far as possible the process and any documents produced and advice given is protected by legal professional privilege.

FACT 4: Did you know that you can ask for a review of an improvement and prohibition notices if they are not ‘reasonably practicable’?

Inspectors have the authority to issue improvement notices and prohibition notices as a result of enforcing compliance with WHS laws. While improvement and prohibition notices are an important enforcement mechanism, PCBUs should be aware that inspectors may sometimes go further in expected compliance measures than may be reasonable or lawful. If a PCBU knows they cannot comply with a notice, the WHS Act provides a right of appeal mechanism to have the notice reviewed andre-issued. There are also mandatory requirements of notices; the failure by the inspector to comply with them can also lead to a technical challenge of the notice.

Improvement notices are a statutory notice issued by an inspector that requires a person to carry out certain actions within a certain time. This is generally issued when an inspector believes or knows that someone is breaching, or has breached, a provision of the WHS Act or Regulations. A prohibition notice is a notice that prohibits an activity or an activity being carried out in a particular way that an inspector believes involves, or will involve a serious or immediate threat to the health and safety of any person. This may involve stopping an activity from happening or the use of an item or workplace instrument or machine. A prohibition notice stays in place until an inspector is satisfied adequate action has been taken to remove the threat.

Firstly, a PCBU must review the statutory notice and determine whether the measures are reasonably practicable to be implemented into the workplace. It may be advisable to seek advice as to whether your organisation is able to comply with the terms of the notice. If your organisation cannot meet the terms of the notice as they are not reasonably practicable, it may be appropriate to seek review of the notice by the WHS regulator. It is important not to ignore the notice as a failure to comply constitutes an offence and may result in significant penalties. “Reasonably practicable” means that which is, or was at a particular time, reasonably able to be done to ensure health and safety, taking into account and weighing up all relevant matters including the likelihood of the hazard or risk occurring, the degree of harm that might result, the availability and suitability of ways to eliminate and minimise the risk and the costs associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.

Fact 5: Did you know that there are codes of practice that offer guidance for PCBUs and can be used as evidence in a WHS prosecution for prosecution and defence?

WHS Codes of Practice (“Codes”) offer practical guidance to achieve the standards of health, safety and welfare required by the WHS Act and Regulations. These Codes are admissible in Court and can be relied on by either the prosecution or defence in proving compliance or non-compliance in a breach of WHS law. There are 24 Codes that came into effect in the Commonwealth in 2012, relating to various risks and hazards within the workplace. The Codes apply to anyone who has a duty of care in the circumstances detailed in the Code.

The current Codes which may be of most application in workplaces include:

  • First aid in the workplace
  • Hazardous manual tasks
  • How to manage work health and safety risks
  • Managing electrical risks in the workplace
  • Managing the risk of falls at workplaces
  • Managing the work environment and facilities
  • Work health and safety consultation, coordination and cooperation

Employers must be aware that an inspector can refer to a Code when issuing an improvement or prohibition notice. PCBUs should refer to the Code that is relevant to their organisation’s various activities when implementing systems into their workplace to make sure they are compliant with the legislation. The admissibility of the Codes allow the Courts to refer to the guidance as evidence of what is known about a hazard, risk or control and rely on it to determine what is ‘reasonably practicable’ in the circumstances to which the Code relates. Therefore, the Codes can also be used as a defence by PCBUs in WHS prosecutions to show that they mitigated a risk or hazard by following the guidance set out in the Codes. However, it is possible that regardless of compliance, if other measures were reasonably practicable and not taken, a breach may still have occurred and PCBUs should maintain up-to-date records of their compliance with the Codes.

Conclusion

There is significant overlap in the operation of WHS laws and the FW Act particularly as regards bullying and rights of entry. Employers need to be aware of both their obligations and exposure to applications and prosecutions and ideally prevent these risks but if they occur then act to best mitigate any damage in the way they respond to complaints/grievances, notifications of incidents, WHS notices and exercises of right of entry.