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An academic has recently been ordered to pay $900,000 in indemnity costs after she failed to convince the Federal Court that she had been subject to 53 instances of sex discrimination and sexual harassment by two fellow academic staff members at Monash University over the last two years of her five year employment at the University. Her complaints were only made after she failed in her bid for a promotion and she believed the department head had set out to sabotage her career.

The Federal Court found that while the allegations were serious and advanced with “great passion”, they were “without foundation” and many were not supported by the evidence put to the Court. There were certain allegations that even if they were supported by evidence, they would not have amounted to discrimination or harassment under section 5 of the Sex Discrimination Act 1984 (Cth). The application was dismissed with costs.

At a later hearing on 5 June 2015, Dr Chen was ordered to pay $900,000 in costs on an indemnity basis. The Court found that in May 2013, the respondents made Dr Chen an offer of compromise of $30,000. The solicitors for the respondent’s ensured that Dr Chen was aware of the implications of making such an offer, including the consequences of a failure to accept a reasonable offer, as Dr Chen was not legally represented at the time the offer was made. Dr Chen did not accept the respondent’s offer. Her reasons for rejecting the offer included that the offer did not address the “real dispute”, which, at the time, did not relate to her desire for monetary compensation. 

When deciding the reasonableness of an applicant’s failure to accept an offer of compromise, all the relevant circumstances at the time the failure occurred and the knowledge the applicant had are taken into consideration. Dr Chen’s submissions at the hearing included a continued argument about the merits of her case, including her persistence that certain claims constituted sexual harassment despite the adverse findings made by the Court in rejecting her claims. The Court took into account written advice received by Dr Chen in January 2013 from a senior lawyer at Victoria Legal Aid that much of the conduct which she complained did not constitute sexual harassment. 

The Court looked unfavourably on Dr Chen’s rejection of a generous offer before any substantial costs had been incurred and upheld the respondent’s submission that Dr Chen pay costs in a lump sum stating that the Court did not have confidence that Dr Chen would abide by any other orders as she continued to press her claims.

Lessons for Employers

  • Courts are prepared and willing to award costs in employment matters including those arising from the Fair Work Act;
  • In any employment litigation, employers should always consider making a settlement offer even in circumstances where the employee’s claim are unsubstantiated – this may avoid costly litigation, possible reputational damage and potentially lead to a quick resolution. This will need to be balanced against potentially opening the floodgates to unfounded claims made in the hope of being offered a settlement;
  • Employers should also carefully consider any offer of settlement to minimise the risk of a potential costs award against them following the hearing; and
  • Employers should, where a reasonable offer of settlement has been made in the proceedings by it, consider an application for costs following the hearing. 
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The Supreme Court of New South Wales recently gave a landmark decision in the case of Casey v Pel-Air Aviation Pty Ltd  [2015] NSWSC 566 which has changed the dynamics of workers compensation as employees can now potentially pursue compensation for Post Traumatic Stress Disorder (“PTSD”) as a “bodily injury”.

A doctor and a nurse, Mr Helm and Ms Casey, were sent to help transport a seriously ill patient from Samoa to Melbourne. During the course of their journey, the pilot was unable to land the plane after four attempts and crashed the plane into the ocean. Although there were no deaths, Ms Casey suffered physical and psychological injuries. 

Ms Casey commenced proceedings in the New South Wales Supreme Court against Pel-Air Aviation Pty Ltd (“Pel-Air”) and claimed damages. Pel-Air accepted that the crash had been caused by the negligence of the pilot and co pilot, for which they had vicarious liability. An agreed sum of worker’s compensation was made to Ms Casey.

Ms Casey had suffered from a complex pain syndrome, a major depressive disorder, an anxiety disorder and PTSD. She argued that these were caused by the injuries and were compensable under the Civil Aviation (Carriers Liability) Act 1959 (Cth) (the “Act”). Pel-Air argued that PTSD was a psychiatric disorder and had been not been caused by the trauma during the crash itself and was not a “bodily injury”.

Justice Schmidt found that the PTSD which Ms Casey suffered from was caused by damage to her brain and to other bodily processes. Justice Schmidt also stated that the prospects for Ms Casey’s future were very poor. It was therefore concluded that the PTSD was a bodily injury and compensable under the Montreal Convention and the Act and was to be included in the damages awarded. 

What do employers need to be aware of as result of this landmark case?

  • Employees who have PTSD due to an injury while working can potentially claim for compensation.
  • Employers need to ensure they have all the necessary health and safety policies and procedures in place to minimize the risks of any claim. 
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A worker at BHP Pty Ltd (“BHP”) has had his Workers’ Compensation claim denied, after his employment was terminated because his weight posed a safety risk to himself and other employees.


Mr Bray commenced employment with BHP as a shift worker in 1994.Most recently he held the position of Shift Supervisor and was responsible for supervising up to 30 operators.As part of his role, Mr Bray was required to cover between 25-30 kilometres of the pit.He was also required to, amongst other things, hitch up lighting plants and climb equipment. 

For two years prior to the termination of his employment, Mr Bray was absent from work on paid sick leave due to a non work related stress issue.Mr Bray faced a number of barriers as part of his return to work, including:

  • mobility issues due to his weight (he was 176 centimetres tall and weighed 160 kilograms);
  • alcohol and other dependency issues; and
  • anger management and behavioural issues.

To assist Mr Bray with his return to work BHP paid up to $40,000 for Mr Bray to meet with a number of Medical practitioners.

In a report dated 9 March 2013, Psychologist Dr Sarkar noted that Mr Bray had challenges associated with physical weight gain and mobility and referred him to Dr McCartney, an Occupational Physician, to determine his suitability to undertake his supervisory duties.Mr Bray saw Dr McCartney over a period of nine months during which Dr McCartney provided various reports to BHP in respect of Mr Bray’s fitness for work and ability to undertake the physical aspects of his role (including kneeling and squatting, walking on uneven ground, climbing up ladders and entering machinery and other vehicles). 

Dr McCartney’s final report, dated 17 November 2013 stated that although there had been improvement in terms of Mr Bray's prior knee and psychological injuries there were on-going concerns about Mr Brays’ ability to perform specific tasks safely, namely:

  • “tasks that require Mr Bray to undertake repeated kneeling, squatting or climbing ladders pose a significant and foreseeable risk of the aggravation of the underlying degenerative condition affecting his knee; 
  • his frame is likely to have considerable difficulty fitting into a light vehicle … without significant and foreseeable impact on safely controlling the vehicle;
  • Mr Bray's obesity places him at a significant and foreseeable risk of slips, trips and falls; and
  • should Mr Bray become incapacitated, he is likely to significantly impact the safety of his colleagues should they attempt to move him". 

Following this, BHP met with Mr Bray on 29 January 2014 and offered him two choices; he enter into a performance plan in respect of his weight loss (given there had been little improvement over an extended period of time) or he and the company agree to a mutual separation. Mr Bray rejected the separation offer and requested to return to work.

BHP had a number of concerns. In particular Mr Bray’s supervisor, Mr Iliffe expressed concerns that Mr Bray’s return to work could possibly contravene BHP’s obligations under the Coal Mining Safety and Health Act 1999 Qld which contains obligations for workers to ensure they are not exposing themselves or others to risk.

Mr Iliffe discussed these concerns about Mr Bray’s return to work with Mr Milful, the Senior Site Executive, including concerns about Mr Bray’s ability to: 

  • walk on uneven ground
  • walk a reasonable distance
  • get on a machine; and
  • act and assist in an emergency situation. 

After considering all of the facts, Mr Iliffe and Mr Milful determined that Mr Bray presented an “unacceptable risk to himself and other employees on the site” and as a consequence a decision was made to terminate his employment.

On 12 February 2014 Mr Iliffe met with Mr Bray and communicated the decision to terminate his employment.On 24 February 2014 Mr Bray lodged an application for compensation with BHP for a psychiatric/psychological injury. 

The primary decision

On 20 May 2014, BHP (who is a self insured) rejected the worker’s compensation application made by Mr Bray on the basis that his psychological issue arouse out of reasonable management action taken by BHP and therefore he did not suffer a compensable “injury” under section 32 of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (‘Act’).

Mr Bray sought a review of the decision by the Workers’ Compensation Regulator who set aside the rejection of the claim on the grounds that it objected to the way BHP terminated Mr Bray’s employment by not giving Mr Bray prior notice that they were considering termination of his employment.

BHP appealed this decision to the Queensland Industrial Relations Commission. 

The appeal

The issue for determination was not whether Mr Bray suffered a workplace injury but whether that psychiatric/psychological injury was a compensable injury.

Section 32(5) of the Act provides:

“5) Despite subsections (1) and (3), injury does not include a psychiatric or psychological disorder arising out of, or in the course of, any of the following circumstances— 

(a)  reasonable management action taken in a reasonable way by the employer in connection with the worker’s employment

(b) the worker’s expectation or perception of reasonable management action being taken against the worker; 

(c) action by the Regulator or an insurer in connection with the workers application for compensation.”

The decision

Commissioner Minna Knight found that Mr Bray’s psychological injuries were a result of reasonable workplace management action.

The Commissioner held that BHP had provided support to Mr Bray’s to improve his health over a long period of time and in making the decision to terminate his employment, considered the safety risk to Mr Bray and his colleagues of his return to work.

The Commissioner further stated that the “reality of the situation was that Mr Iliffe was faced with the prospect of returning Mr Bray to work while there remained significant risk factors involved with doing this. Mr Iliffe had been unable to see any progression in Mr Bray’s attempts to improve his health and mostly his weight over a long period of time”. 

While the Commissioner acknowledged that there might have been a better way for BHP to give Mr Bray an indication that termination of his employment was a possibility, it was not unreasonable to effect the dismissal when considering the “long history of the matter and prior conversations that had been held in respect of the termination of Mr Bray's employment”.

What does this mean for employers?

  • A decision to terminate an employee’s employment will be hard to displace if it is based on legitimate OH&S concerns: given the obligations of employers under OH&S legislation, employers will generally be in a strong position to defend against claims brought in relation to termination of employment (i.e. workers compensation, unfair dismissal, adverse action etc.) where it can be established that the reason for the decision was due to safety concerns and their corresponding obligations under OH&S legislation. 
  • Employers should act quickly: given the significant financial costs associated with workers compensation claims, if employers are concerned as to the legitimacy of a workers compensation claim they should act quickly to challenge and/or influence the investigation of a claim before an insurer makes a determination to accept the claim.
  • Keep detailed notes and evidence: in this case Mr Ilife’s notes and that of the medical advisors supported the reasonableness of the decision to terminate Mr Bray’s employment and ultimately influenced the Commission in its findings.
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A team leader whose employment was terminated after he verbally abused and sexually harassed colleagues on the night of his office Christmas party has successfully challenged his dismissal. Vice President Hatcher of the Fair Work Commission found the dismissal harsh for the purposes of section 394 of the Fair Work Act 2009 (Cth).

Following the end of year Christmas party an employee of Leighton Boral Amey NSW Pty Ltd (‘Leighton Boral’), Mr Keenan, acted inappropriately towards a number of his Leighton Boral colleagues. At the official Christmas party the conduct included:

  • repeatedly asking a female colleague for her number;
  • telling the company director and senior project manager to “F&*kOff”; and
  • speaking to a junior employee in a threatening and bullying manner, including by saying “who the F&!k are you? What do you even do here?

The inappropriate conduct continued following the official Christmas party at a separate private bar and included:

  • trying to touch the dimple on a female employee’s chin and remarking “I used to think you were a stuck up bitch”;
  • kissing a female colleague on the mouth and telling her “I’m going to go home and dream about you tonight”; and 
  • saying to a female colleague “my mission tonight is to find out what colour knickers you have on”.

Following an investigation into the incident, Leighton Boral terminated Mr Keenan’s employment.

The decision 

In determining that the dismissal was unfair, Vice President Hatcher delineated between the conduct at the official Christmas party and the conduct at the private bar, ultimately ruling that the conduct at the private bar could not be considered for the purposes of assessing the fairness of the dismissal. 

Accordingly, while acknowledging that some of the conduct at the after party constituted sexual harassment under the Sexual Discrimination Act 1984 (Cth), the Vice President was not prepared to take it into account because it was not “in connection” with Mr Keenan’s employment. 

Having regard to only the conduct that occurred at the official Christmas Party VP Hatcher held that the dismissal was harsh for a number of reasons including:

  • his prior good employment record;
  • the isolated and aberrant nature of the conduct;
  • the fact that Mr Keenan was intoxicated as a result of alcohol consumption at a Christmas function where Leighton Boral had failed to monitor the responsible service of alcohol; 
  • the availability of alternatives to dismissal which were proportionate to the conduct involved; and
  • the severity of the penalty compared to Leighton Boral’s treatment of other employees with similar records.

Although Hatcher VP acknowledged that Mr Kennan’s conduct toward the younger employee who he bullied by saying “who the F&!K are you? What do you even do here?” constituted a valid reason for dismissal, Leighton Boral could not rely on this as they did not properly communicate this allegation to Mr Kennan, and give him an opportunity to respond.

What does this mean for employers?

  • Don’t cherry pick allegations of misconduct: employers should put all allegations of misconduct to an employee and provide an opportunity to respond. If there are multiple valid reasons for termination of employment, employers will be in a much better positon to defend their decision if the employee is afforded procedural fairness in respect of each allegation. 
  • Employers should act consistently with their legal obligations and polices: employers have an obligation under OH&S laws to provide a safe work environment for all employees at all work related activities (including Christmas parties). Accordingly, prior to such events, employers should remind employees of applicable polices and procedures, the types of behaviours that will not be tolerated and encourage responsible consumption of alcohol. During such events employers should also monitor compliance with these policies by ensuring responsible service of alcohol and where possible addressing instances of misconduct.
  • The delineation between work and private lives remains grey: the law with respect to misconduct out of hours is not black and white. If in doubt seek professional advice.
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Employers occasionally have cause to relocate employees from one business premises to another. Whether this is due to structural changes in the organisation, the end of a lease on a property or wanting to consolidate or expand operations, it is important that employers consider the potential risks involved in relocating employees and how to manage those risks to ensure a smooth move.

When an employee enters into an employment contract, the location at which the employment is performed is a critical factor affecting the decision to apply and take the job. However, structural changes in organisations including consolidation or expanding operations of a business can sometimes lead to business needing to move all or parts of their business elsewhere. Although an employer is not restricted as to any decision to relocate its business to new premises, an employer does not have an unfettered right to relocate the employees who usually work from those premises.

Potential Risks

The Courts will not usually allow an employer to change an essential term of the employment contract where the change was not originally agreed by the parties, particularly in circumstances where the contract expressly mentions the location of where the employment is to be performed. If there is no express term in the contract, it is likely that an implied term exists regarding the location of the employment being the location that is agreed between the parties at the time the contract was made. Therefore, employers must be wary that relocation may constitute a potential breach of contract if the employer fails to comply with any express or implied contractual provisions.

While it might be undoubtedly necessary to relocate employees at the time of relocating premises, even if it is the same role at the same rate of pay, the requirement to relocate may give rise to an alleged termination of an individual employee’s employment on the basis of redundancy in that their role at the first location no longer exists and this constitutes a termination of their employment. Employees with at least 12 months continuous service with an employer have a statutory right under the National Employment Standards to redundancy pay if their positions are no longer required to be performed by anyone. Employers do not have to pay redundancy pay in situations where the employer has offered other acceptable employment to the employee and the employee has refused this alternative employment. The role at the new location may be deemed by the Court to be other acceptable employment for this purpose.

In determining the reasonableness of the relocation, the Court will consider a number of factors with a particular focus on the employee’s personal circumstances and the effect of the relocation on their personal and financial situation especially any additional travel time, distance and additional costs in travel.

Managing the Risks

  • Employers should ensure that they incorporate a clause in their contracts of employment that expressly allows the employer to relocate an employee’s place of work and review and vary any existing contracts that do not contain an express clause relating to relocation;
  • Employers should consult with affected employees to try to get the employees to consent to the role at the new location;
  • In any event for employees covered by an industrial instrument, the employer must ensure that they follow any consultation requirements set out in the industrial instrument such as an enterprise agreement or modern award governing the affected employee’s employment; and
  • Employers should also, notwithstanding a contractual right to relocate, consider whether the relocation will result in an entitlement to redundancy pay under the National Employment Standards.