End of year wrap up and looking ahead to 2017

Adriana Reina, Senior Associate

2016 has once again provided a number of significant developments and challenges in labour and employment law that will have implications for employers. A tussle over labour laws in fact triggered the 2016 Federal election and changes in this area continue to be contested.

Courts and tribunals have handed down a series of important decisions in relation to a broad range of issues including sham contracting, reasonable notice and damages in racial discrimination matters. The Fair Work Commission (“FWC”) has continued with its four yearly review of modern awards, finalising its review of a number of important issues such as annual leave, with other award variations still to come.

This article provides insight for employers into these and a range of other developments. This includes changes to the law that will impact on their businesses, their relationship with their employees and the lessons that can be learnt from the experiences of other employers. It also looks at what lies ahead for labour and employment law in the next 12 months.

What do the cases tell us? Significant case law developments

Set out below is a selection of cases from the past year that demonstrate the type of matters that are being litigated and the approach of the courts and tribunals to the issues raised.

(i) Sham contracting provisions – representations about work conducted for third parties

In Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd,1 Quest and Contracting Solutions purported to enter into a “triangular contracting” arrangement, in which Contracting Solutions engaged two workers as independent contractors and had them provide housekeeping services for Quest. Quest, who was previously the employer of the workers in question, represented to the workers that under this new arrangement they were performing work as independent contractors, despite continuing to “perform precisely the same work for Quest in precisely the same manner as they had always done”.

The Federal Court found, at first instance, that section 357(1) of the Fair Work Act 2009 (Cth) (the “FW Act”) would only be contravened by an employer’s representation to an employee if it mischaracterised the contract that existed between the employee and the employer, and not the contract between the employee and a third party. However, the High Court held unanimously that Quest’s actions amounted to sham contracting under s357(1) of the FW Act, focusing on the primary purpose of the provisions, being to prohibit the misrepresentation of the true nature of an individual’s employment status.

(ii) Contracts of employment and implied terms

The concept of “reasonable notice” was explored recently in Westpac Banking v Wittenberg & Ors2 in which a claim for reasonable notice was made despite the employment contracts of the affected employees containing express terms relating to notice of termination.

The employees contended that the express term regarding notice did not apply because, at the time of their termination, they were performing duties which were materially different to the duties they were originally engaged to perform. Hence, they argued that an implied term of reasonable notice could co-exist with a provision giving rights of termination based on specified periods of notice.

The Federal Court found that a term of reasonable notice could not be implied in these circumstances, as it would interfere with existing contractual rights and would be inconsistent with the express terms in the contract. Despite the lack of success in this particular case, contractual claims remain an important feature of litigated employment law matters.

(iii) Unfair dismissal update

The 2015-2016 Annual Report of the FWC shows that unfair dismissal applications constitute more than 40 per cent of applications made to it. Over the past five years unfair dismissal applications have been consistently around 14,700 annually.

Employees and illicit substance abuse

Unfair dismissal claims often involve questions of misconduct and/or breach of an employer’s policies regarding appropriate behaviour. In Gregory v Qantas Ltd,3 the Applicant was a Qantas pilot who made an unfair dismissal application following the termination of his employment that brought into question his behaviour while he was on a layover in Chile, including conduct that amounted to sexual harassment. Prior to the termination of the Applicant’s employment he had undergone a drug test that revealed the presence of cannabinoids.

The Applicant lodged an unfair dismissal application, claiming he had not ingested or smoked cannabis, but that his drink had been spiked. On this basis he asserted that there was no valid reason for his dismissal, but he did not deny the incident of sexual harassment.

The FWC accepted Qantas’ evidence and took the view that the Applicant had separated himself from his co-workers deliberately to ingest the illicit substance. The FWC also accepted that he was responsible for the sexual harassment as he made a conscious decision to ingest the substance that caused him to act in a reckless manner.

(iv) The anti-bullying jurisdiction

The anti-bullying jurisdiction has displayed a consistent trend since its introduction in January 2014, with fewer claims than initially anticipated and high settlement and withdrawal rates.

In the 2015 – 2016 reporting year, the FWC received 734 application for orders to stop bulling at work.

The overriding intent of the anti-bullying jurisdiction is to address the presence of behaviour that constitutes bullying. On this basis, it stands to reason that proactive steps taken by employers to address bullying may obviate the need for the FWC to make an order. For example, this year the FWC has refused to issue an anti-bullying order in the below circumstances:

  • on the basis that there was no longer any risk of bullying, because the alleged perpetrators had since resigned; and
  • against a high profile restaurant because management had implemented positive measures specifically to address the unreasonable behaviour in question.

(v) Damages awarded for racial discrimination

The highly publicised case of Murugesu v Australia Post & Anor4 saw an Australia Post employee awarded $40,000 in general damages as compensation for contraventions of the Racial Discrimination Act 1975 (Cth). The Applicant was subject to harsh racial taunts by a co-worker over a significant period of time.

The Applicant pursued a claim for general damages for pain, suffering, distress and humiliation in the sum of $100,000 and aggravated damages of $100,000 and/or exemplary damages.

The Applicant was awarded $40,000 in general damages, but no order for aggravated or exemplary damages was made despite the Court’s acknowledgment that the conduct would have been lessened (and so too the damage to the Applicant) had Australia Post acted more promptly in addressing the Applicant’s grievance.

The general damages awarded in this case are not of the magnitude awarded in the landmark case of Richardson v Oracle Corporation Australia Pty Ltd,5 which suggests that case is not as yet having the impact on the assessment of damages in discrimination and harassment matters that was anticipated. The decision also confirms that aggravated and/or exemplary damages are rarely awarded with respect to discrimination claims.

(vi) Immigration – foreign-national employees working on vessels in offshore activities

In the migration space, this year saw an end to the longstanding dispute between the Federal Government and the Maritime Union of Australia (“MUA”) relating to the visa status that should apply to offshore workers in the oil and gas industries. The issue arose due to uncertainty regarding the extent of the “Migration Zone” as defined by the Migration Act 1958 (Cth) (“Migration Act”) and its application to offshore resources industries, a question that has been in contention since 1982.

In 2012, the Federal Court ruled6 that non-citizens employed on two offshore pipe-laying vessels were not within the “Migration Zone”, thereby allowing the industries to continue to employ foreign nationals without visas.

Following this decision the former Labor Government introduced a Bill to amend the Migration Act and extend the definition of the “Migration Zone” to include any “offshore resource activity”. This change would have the effect of imposing the requirement of a permanent visa, or a visa for this prescribed purpose, on foreign-national workers. This was not well-received and widely perceived as introducing a regulatory burden on the resources industry.

The Coalition government has sought to reverse this change in a number of ways. The latest of these has been via a determination made by Senator Michaela Cash under section 9A(6) of the Migration Act to remove the defined content of “offshore resource activity” from the definition of “Migration Zone”. In response, the MUA and the Maritime Officers Union commenced proceedings challenging the validity of the determination.

The High Court unanimously found that the determination did exceed the limits of the Government’s powers. The High Court ruled that the Migration Act only permits such exceptions for certain activities or operations, which did not apply to these circumstances. Further it found that the determination was made to undermine the intention of the 2013 amendments to the Migration Act, rendering it invalid.

As a result, non-citizens working in the offshore, oil and gas industries will be required to hold a permanent visa, or a visa prescribed for such work. To date, the visas used for such purposes are the Short Work (Skilled) (Subclass 457) visa (which provides up to four years of working rights), and, for short-term, one-off projects involving highly specialised workers, the Temporary (Short-Stay) (Subclass 400) visa.

The Modern Award Review

As part of the Modern Award Review that takes place every four years, the FWC has determined, or is in the process of determining, new award provisions on a range of common issues. The range of issues include:

  • annual leave;
  • annualised salaries;
  • award flexibility;
  • casual employment;
  • family and domestic violence clause;
  • family friendly work arrangements;
  • part-time employment;
  • payment of wages; and
  • public holidays.

In addition to the above, the FWC is also reviewing penalty rates in a number of awards in the hospitality and retail sectors. Below we have outlined the new award provisions in a number of key areas.

Annual leave

The provisions with respect to annual leave have been varied in a number of awards. The changes include terms relating to excessive annual leave and cashing out annual leave.

Among other things:

  • employees will now be permitted to request accrued annual leave to be paid out subject to certain eligibility requirements;
  • employers are able to “direct” employees who have an excessive leave balance accrued to take annual leave, subject to certain requirements;
  • employees may now request annual leave prior to accruing the balance required for the requested leave period; and
  • employers are entitled to deduct an amount of annual leave taken but not yet accrued on termination of employment.

The majority of the variations to the annual leave clauses in the affected modern awards have been incorporated into the “current” version of the awards on the FWC website and took effect from 29 July 2016 (with other changes deferred until 29 July 2017). The FWC has developed template agreements for employers and employees to use in respect of cashing out agreements and agreements to grant annual leave in advance.

Time off in lieu

The FWC has reviewed the time-off-in-lieu (“TOIL”) terms in a range of modern awards following applications to vary or insert TOIL terms in various modern awards as part of the Modern Award Review.

A decision of the Full Bench on 8 July 2016 determined a redrafted model term for providing time off instead of payment for overtime. A decision of the Full Bench on 11 July 2016 varied awards which either provided for overtime but did not give employees the option of taking time off instead of payment for working overtime and those that provided TOIL at “ordinary rates” (i.e. an hour off for an hour of overtime worked). On 22 August 2016 the FWC published a schedule of determinations varying 72 modern awards further to the 8 July 2016 and 11 July 2016 decisions.

A decision of the Full Bench of 31 August 2016 determined TOIL provisions in another 13 awards, including those in the maritime industry and the resources sector. On 16 September 2016 the FWC published a schedule of determinations varying a further 8 modern awards further to the 31 August 2016 decision.

Looking ahead: what’s on the horizon for 2017?

While we have seen a number of changes flow through this calendar year, we have also seen a variety of proposed changes that may proceed in 2017. Some of the anticipated areas of change are set out below.

Further variations to model award provisions

  • Family violence: The Modern Award Review has included submissions from the ACTU requesting 10 days of paid domestic and family violence leave across all modern awards. The Ai Group, in response, has requested that the proposed wording make more specific reference to the benefit for the victim in a domestic violence dispute. This is due to concerns that the domestic violence leave clause, as currently proposed, could result in the provision of entitlements to perpetrators as well as victims. The application for this amendment is listed for hearing from 14 November 2016 to 2 December 2016.
  • Family friendly working arrangements: The Modern Award Review has included deliberations over the common issue of family friendly work arrangements, including claims relating to the right to return to part-time work or reduced hours following periods of parental or antenatal leave. A timetable for preparation of evidence and submissions has been issued by the Full Bench with a view to conducting a hearing into the matter in mid August 2017.
  • Annualised salary: The FWC intends to review all annualised salary terms in modern awards following applications to vary or insert annualised salary terms in various awards as part of the Modern Award Review. The applications were referred to a Full Bench on 31 May 2016 and are listed for hearing from 5 December 2016 to 7 December 2016.
  • Casual and part-time employment: The FWC is also reviewing the terms of modern awards relating to casual and part-time employment following applications to vary or insert relevant terms in various modern awards as part of the Modern Award Review. There are a number of common and award-specific claims to be reviewed and determined by the Full Bench, and these claims are at varying stages of the review process. Specific terms under review include those in relation to:
    • part-time minimum engagement;
    • part-time rostering provisions and patterns of hours;
    • part-time overtime provisions;
    • casual minimum engagement;
    • casual conversion; and
    • restrictions on casual engagement.
  • Penalty rates: The FWC’s review of penalty rates in the retail and hospitality sectors has been the subject of much public debate and a determination is likely to proceed in the New Year.

Other legislative developments

Bills to re-establish the Australian Building Construction Commission and to set up a Registered Organisations Commission have been introduced into Federal Parliament and will be on the legislative agenda in future parliamentary sittings. Strengthening the powers and the resources of the Fair Work Ombudsman has also been flagged as a priority. Additionally, changes to parental leave arrangements and further protections for vulnerable workers, including migrant workers, may also re-emerge as the subject of legislative change over the next 12 months.

As part of the Modern Award Review, the FWC has determined, or is in the process of determining, new award provisions on a range of common issues.


1 [2015] HCA 45. 

2 [2016] FCAFC 33.

3 [2016] FCAFC 7.

4 [2016] FCCA 2852.

5 [2014] FCAFC 82.

6 Allseas Construction SA v Minister for Immigration and Citizenship [2012] FCA 529.

Online trolling and the workplace

 

The use of social media in the workplace is not only tolerated by employers, but is now often actively encouraged. With employees increasingly required to engage with social media platforms during the course of their duties, the risks associated with social media have also become a challenge for employers, including the presence of online trolls.

Online trolling is when someone posts inflammatory, extraneous or off topic messages in an online community with the intention of provoking readers into an emotional response or of otherwise disrupting normal on-topic discussion. Online trolling can also go as far as targeting individuals with explicit content or in extreme circumstances may even involve death threats to the individual.

Some commentators have suggested that employers offer social media “self-defence training” in light of online trolling. Other employers have implemented strategies to minimise the risks associated with online trolling through their policies and procedures.

What obligations does an employer have to protect their staff from trolling?

Employers have obligations under work health and safety legislation to ensure, so far as is reasonably practicable, the health and safety of workers, including their mental health. Online trolling poses a significant risk to employees in this respect if they work primarily or exclusively on social media platforms. Online trolling, by its very nature, is aimed at causing offence or provoking emotional responses. If an employee is exposed to these sorts of provocative messages and images without having the necessary support or training to deal with them, an employer may find that it is at risk of being in breach its obligations where an employee’s health or welfare is adversely affected by the trolling.

Steps to counter the effects of trolling 

Employers need to be aware of ways in which they can help minimise the risk of harm to an employee arising from online trolling, particularly for employees who are expected to use social media as part of their everyday duties. Some examples include:

  1. implementing social media self defence training [the Australian Broadcasting Commission is an example of an organisation that has rolled out social media training after a number of employees were trolled online];
  2. amending their social media policies to include the steps an employee should take to manage online trolls and an escalation process for dealing with threatening and abusive messages; and
  3. ensuring that employees understand when and how to respond to online trolls, particularly where representing the employer in their online interactions.

What if your employee is the online troll?

There have been some reports about victims of online trolling notifying the employer of the person engaged in the trolling about these activities. A recent high profile example was a hotel worker being terminated from his employment after Fairfax Media columnist Clementine Ford screenshot the abusive and offensive messages that he had sent to her and forwarded these on to his employer, Meriton. Meriton responded by conducting an investigation into the employee’s behaviour and subsequently terminating his employment.

If you would like assistance with reviewing or preparing social media and electronic communications policies, procedures or training, please contact a member of the PCS Legal Team on (02) 8094 3100.

Is this a redundancy? Emerging themes in redundancies

Erin Lynch, Associate Director and David Weiler, Associate

report produced by the Organisation for Economic Co-operation and Development this year found that “workers who involuntarily lose their jobs can face substantial economic and non-economic costs. On average, each year around 2.3% of Australian workers with at least one year of tenure experience job loss due to economic reasons such as corporate downsizing or firm closure. In an international comparison, Australia has been rather successful at providing new jobs relatively quickly to these workers, as 70% become re-employed within one year and almost 80% within two years, even if new jobs are sometimes of poorer quality”.

Effective change management in these circumstances requires employers to implement a strategic approach to what roles are still required within an organisation, whether the obligation to pay redundancy is in fact triggered, and what options may exist for redeployment. In this article, we have distilled some emerging themes arising from recent decisions in relation to redundancies. These include:

  • when employers are (and when they are not) required to make redundancy payments;
  • what types of employment count towards continuous service;
  • how employers should approach redeployment in the redundancy context; and
  • the impact of specific obligations under a modern award or enterprise agreement.

Redundancy as we know it

Under the Fair Work Act 2009 (Cth) (“FW Act”) a redundancy occurs if an employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.

Redundancy pay: not automatic

Often employees will perceive a situation where their role is no longer required as meaning that they are automatically entitled to redundancy pay (an outcome which can be more attractive than continuing employment in another position). However, employers should remember that the FW Act requires there to be a termination of employment before the entitlement to a redundancy payment arises.

The redundancy of a job or position does not necessarily amount to a termination of employment. Where the evidence demonstrates that, after identifying that a role is longer required, an employer has attempted to retain the employee’s services by offering an alternate position, there may be no termination of employment and, therefore, no entitlement to redundancy pay.

Whether making a particular position redundant and offering a new role amounts to repudiation of the contract of employment (which may lead to a termination of employment if the repudiation is accepted by the employee) will be determined by the terms of the relevant contract and the terms and conditions of the new role. For example, it is common (and in fact recommended) that employment contracts are subject to a condition that employees may be required to perform other duties that an employer may direct them to perform, having regard to their skills, training and experience, and that the employer may relocate them if the operational needs of the business require it.

In a recent case, an employee’s role was no longer required but the employer proceeded to offer various alternative roles. After turning down all of the roles offered, the employee alleged that he was entitled to redundancy pay, and when the employer refused to terminate his employment, he resigned. The employee then brought a claim for redundancy pay on the basis that he was constructively dismissed. The Court rejected this argument, in part, on the basis that the employer still required the employee’s services.1

When dealing with organisational change it is important for employers to consider whether the changes proposed are such that they are relatively minor and within the scope of duties that the employer can direct the employee to perform, as opposed to changes that amount to a termination (or repudiation) of employment.

How much do I need to pay?

If an employer determines that a redundancy payment is due, it then needs to undertake the task of determining the amount payable based on the employee’s period of continuous service with the employer.

The National Employment Standards (“NES”) contain the minimum redundancy entitlement that an employee will receive. An employee may be entitled to a more generous redundancy entitlement in accordance with their contract of employment, a policy, enterprise agreement or award.

In a recent decision2 the Fair Work Commission (“FWC”) determined that periods of “regular and systematic” casual employment will be counted towards redundancy entitlements in circumstances where an employee transitions from casual employment to permanent employment (and is not a casual employee at the time of the termination of their employment).

The effect of this decision is, so long as the period of casual employment was “regular and systematic” and was part of the period of employment from which the employee is being made redundant, there will be no break in service between the period of casual employment and the transition to permanent employment for the purpose of calculating redundancy pay.

Other acceptable employment

If an employee is entitled to be paid an amount of redundancy pay and the employer obtains “other acceptable employment” for that employee, the employer can apply to the FWC for an order to reduce the amount of redundancy pay, including to nil.

What constitutes “acceptable alternative employment” is a matter to be determined on an objective basis. The use of the qualification “acceptable” is a clear indication that it is not any employment which complies, but that which meets the relevant standard. There are core elements of such a standard, including that the work is of a like nature, the location is not unreasonably distant, and the pay arrangements comply with award requirements. This relevant standard will be dependent on the “entire factual matrix” and an “objective assessment of acceptability”.3 For example, where the alternative employment requires a change of location, the FWC will look at the additional travelling time and distance involved, and any consequential disruption to the employee’s personal life and circumstances.

Obtaining that alternative employment

In a recent case the question was whether the former employer had “obtained” the alternative employment. At first instance the FWC decided to vary the redundancy pay owed by an employer to 48 employees from their full entitlement to nil, on the basis that it had facilitated suitable alternative employment with a new employer. However, the decision was overturned on the basis that the former employer did no more than facilitate contact between the new employer and the employees. This simply led to an invitation being extended to those employees to apply for a position and to attend an interview, which may or may not have resulted in an offer of employment. The Full Bench of the Federal Court upheld this decision on appeal4, stating that:

“to obtain employment for an individual means to procure another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice. If the employment is not accepted, the question whether that employment was ‘acceptable’ will then arise.”

Know your industrial instruments

In addition to any consultation provisions, employers covered by an enterprise agreement or modern award must be conscious of other obligations that may arise under such instruments. In a recent case following a downsizing at the Port Kembla Coal Terminal, the enterprise agreement in question placed an obligation on the employer to “investigate all avenues to avoid forced redundancies, including the reduction of contractors” where permanent employees could instead adequately perform the duties of contractors. The Federal Court determined that the employer contravened this provision by failing to explore voluntary redundancies and by only considering reducing the use of full-time and permanent contractors (when at the time of the redundancies there were no such contractors). The court upheld an order to reinstate the employees affected by those decisions.5

Key Takeaways 

  • A role may no longer be required, but this does not automatically give rise to an entitlement to redundancy pay. 
  • Consider all periods of continuous service, including prior casual employment where there was a transition to permanent employment before the redundancies transpired. 
  • Identify what may be “acceptable” alternative employment and understand the active role that employers must play in securing it. 
  • Factor into the decision-making and implementation processes any particular obligations binding on your organisation as a consequence of an applicable industrial instrument.

1 Adcock v Blackmores Limited & Ors [2016] FCCA 265

2 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Donau Pty Ltd [2016] FWCFB 3075.

3 Lake Mona Pty Ltd T/A Cambridge Street Child Care Centre [2015] FWC 4098 at [29].

4 FBIS International Protective Services (Aust ) Pty Ltd v MUA and Fair Work Commission [2015] FCAFC 90, at [18].

5 Port Kembla Coal Terminal Ltd v CFMEU [2016] FCAFC 99.

Not an exempt employee privacy activity

Therese MacDermott, Consultant

Employers are often fairly complacent about the fact that personal information that they hold regarding their employees, and the use or disclosure of that information, will automatically come within the terms of the employee records exemption. But a recent case decided by the Australian Privacy Commissioner highlights that while information may initially be collected and used for a legitimate purpose, it may subsequently be accessed for a different, improper purpose, and hence risk a breach of the National Privacy Principles (“NPPs“).

The Australian Privacy Commissioner has found that the Commonwealth Bank of Australia (“CBA”) breached the privacy of one of its customers when it improperly disclosed her personal financial information to her former employer (the Commonwealth Bank Mortgage Innovation Agency) (“MIA”) at a time when Fair Work Commission proceedings in relation to the termination of her employment were on foot.

As her former employer, MIA was a business selling CBA financial products. It was an authorised user for the purpose of accessing CBA customers’ financial information through the bank’s customer management software. The CBA contended that the accessing of her accounts by MIA was not in breach of the NPPs as it was for a legitimate business purpose, that is, it was necessary in order to investigate the propriety of her loan applications. The former employee alleged that the principal of MIA accessed her accounts for the purpose of tracking her financial position during the course of the FWC proceedings and hence obtained an advantage in settling her FWC claim.

On this point the CBA was found to have improperly given access to her personal information for a secondary purpose. The CBA were also found to have failed to take reasonable steps to protect her personal information from misuse in continuing to allow MIA access once it knew of the FWC proceedings and of the potential conflict of interest. The Australian Privacy Commissioner observed that “the principal of an external mortgage agency, with whom the complainant is currently involved in a FWC dispute, would not be an appropriate person to conduct such an investigation. “

In terms of a remedy, the Privacy Commissioner was not satisfied that there was a causal connection between the improper accessing of her accounts and the settlement of her FWC claim to justify an award of economic loss. However compensation for non –economic loss in the sum of $10,000 was awarded for the distress caused to the former employee as a consequence of the manner in which the BCA handled her personal information.

Potentially risky situations for employers include where they have the means to access, for example, a former employee’s financial information, and the employer is in a dispute with that individual, but continues to access their information. Another scenario likely to be problematic is where there is a conflict of interest that should preclude an employer from continuing to access such information, but it maintains its right to access such information, or fails to take steps to prevent potential misuse. Finally contractors fall outside the coverage of the employee records exemption, so care must be exercised to ensure that the collection, use, disclosure and granting access to contractors’ personal information is undertaken for a legitimate purpose at all times.

Absenteeism and unfitness for work: a “clean hands” approach

Planning your response to absenteeism

Chris Oliver, Director and Michael Starkey, Associate

The Australian Human Resources Institute reported in March 2016 that the average Australian worker takes 8.8 days’ personal leave each year, 41 per cent of employers believe unscheduled absences have increased in the last 12 months, and 64 per cent of employers believe unscheduled absences are too high in their workforce.With the cost of unscheduled absences to the Australian economy estimated to be in excess of $44 billion each year (or $578 per employee per absent day),2 the desire of employers to manage absenteeism and unfitness for work is understandable.

The management of these issues requires a measured approach that removes the immediate frustration managers often feel when confronted by an unscheduled absence, but nevertheless remains alive to the detrimental affect that long-term, unresolvable absenteeism can have on a business’ bottom line. By noting the tips outlined in this article, business leaders can ensure their response to absenteeism facilitates getting the employee back to work, while at the same time positioning the business to make difficult decisions in a legally compliant way where this becomes necessary.

An integral part of planning is having a clear objective in mind. In managing workplace absenteeism, there are two distinct potential outcomes – either getting the employee back to work, or a termination of the employment. Our recommendation is to always manage absenteeism with a view to getting the employee back to work. By adopting this approach, managers are far more likely to make instinctively better legal and strategic decisions,and should the time come to move towards a termination of employment, the business will be in a better position to do so without delay.

Legal compliance

In dealing with unfit workers and absenteeism, it is essential that managers understand the minimum entitlements employees have in relation to absences from work for illness or injury (and the related rights of an employer to ensure those entitlements are exercised properly).

  • An employer owes a general duty of care to ensure, so far as is reasonably practicable, the health and safety of employees while they are at work.
  • Full-time and part-time employees are entitled to access any accrued paid personal leave when they are unfit for work due to an illness or injury. An employee seeking to take personal leave must notify his or her employer as soon as practicable that they are taking leave, and must advise the employer of the period, or expected period, of the leave. If required by the employer, the employee must also provide evidence that would satisfy a reasonable person that the leave is being taken for a genuine reason (for example, a medical certificate).
  • It is unlawful for an employer to take any adverse action against an employee because the employee has accessed, or proposes to access, personal leave. However, an employer can require an employee to comply with the notification and evidence requirements outlined above, and, where appropriate, take disciplinary action for any failure to comply.
  • An employer must not dismiss an employee because the employee is temporarily absent from work due to an illness or injury. The temporary absence protection will generally cease to apply to an employee once the employee has been absent from work for more than three months, or a total of three months over a period of 12 months.
  • In circumstances where an employee is eligible to bring an unfair dismissal claim, if the employee’s employment is terminated, an employer will have an obligation to ensure there is a valid reason for the dismissal and that the employee is afforded procedural fairness in relation to the dismissal.
  • An ill or injured employee will usually be regarded as having a “disability” for the purposes of disability discrimination law. Employers have an obligation under disability discrimination law to identify and makereasonable adjustments for employees with a disability. 
  • An employer must not take action against an employee because the employee has a disability, unless the action is taken on the basis that the employee can no longer perform the inherent requirements of the position, and would not be able to do so even with reasonable adjustments.

Getting employees back to work

With the above in mind, let’s take some time to consider the key steps to be undertaken in attempting to get an employee back to work.

Understanding the reason for absence

The key to solving a problem is understanding its cause. Understanding the reasons for an absence will place you in a better position to get an employee back to work, and help proactively prevent absences by eliminating or minimising those reasons if possible (particularly if the cause of the absence is not medical, but related to, for example, poor performance, lack of engagement, workplace stress, or bullying).

Determining what needs to be managed

Despite a worker’s absence, business must go on. Managers need to consider and plan for a number of issues, including the use of temporary resources to manage workloads, how to manage communications (both with the absent worker and internally), and how to manage the cause of the absence. Managing the cause of the absence is likely to include seeking medical certificates, and asking the employee for more information if what is provided is not sufficient.

“The key to solving a problem is understanding its cause.”

Identifying the inherent requirements of the role

Where an absence becomes long term, a business must ultimately turn its mind to whether the absence is likely to impede a worker’s ability to perform his or her role on an ongoing basis. In doing so (and to ensure compliance with a number of legal obligations) reference must be had to the “inherent requirements” of the role.

The inherent requirements of a role are those that are essential (rather than incidental or peripheral) to it. When identifying the inherent requirements of a position, regard should be had to the terms of the employment contract, the tasks performed by the employee, the requirements of the particular employment (including any legal requirements) and the organisation of the employer’s business.

Whether or not an employee can perform the inherent requirements of his or her role should be determined on the basis of the medical evidence. If the employee is unable or unwilling to provide sufficient medical evidence for this purpose, it will usually be appropriate to direct the employee to attend an independent medical examination (with a practitioner who will often be a specialist in the employee’s injury or illness).

Making reasonable adjustments

In determining whether or not an employee can perform the inherent requirements of his or her role, regard must be had to whether the role could be performed if “reasonable adjustments” were made. An adjustment will be considered a “reasonable adjustment” unless making it would impose unjustifiable hardship on the employer (for example, if making the adjustment would be intolerably expensive, impractical or time consuming). Reasonable adjustments may include:

  • providing flexible work hours;
  • providing time off work (including access to unpaid leave) in order for the employee to recover where there is a prognosis that recovery is feasible;
  • providing regular breaks for employees with chronic pain or fatigue; and/or
  • purchasing desks with adjustable heights, installing ramps and modifying toilets. More than one adjustment may be necessary, and more than one option may be available.
“In my opinion, matters such as limited working hours which gradually increase, alterations to supervision arrangements, modifications to face to face meeting requirements, amelioration of deadlines being too tight, changes in the kind of work being performed, minimising conflict situations, avoiding the need to lead teams, where all those matters are envisaged as necessary for a limited period of time of approximately three months, are adjustments which could have been made for [the employee] without imposing unjustifiable hardship on Australia Post.”
Watts v Australian Postal Corporation [2014] FCA 370

Terminations for unfitness for work

In the event that absenteeism is managed with the objective of getting an employee back to work, should a decision ultimately be made that the worker’s employment is no longer tenable, the business will be well-placed to implement that decision quickly, and in a way that minimises legal risks. An employer must be able to demonstrate that any termination of employment based on unfitness for work:

  • is based on sound medical evidence which demonstrates (at least) that the employee will not be able to perform the inherent requirements of his or her role for an extended period of time;
  • has been implemented in circumstances where the employer is able to demonstrate that no reasonable adjustments could be made to allow the employee to perform his or her role (including adjustments which are no longer reasonable, for example, because of their ongoing cost to the business);
  • has been conducted in a manner that is procedurally fair, including because the employer has advised the employee that it is considering terminating his or her employment on the basis of the employee’s inability to perform the inherent requirements of the role and provided the employee with a chance to respond; and
  • complies with any specific requirements under applicable policies or the employee’s contract of employment.

Key Takeaways 

  1. Planning to get an employee back to work will help you make the best decisions, both strategically and legally. 
  2. Employees do not have a right to indefinite absence from work – difficult decisions may need to be made, and, if so, need to be based on sound medical evidence and follow fair procedure. 
  3. Don’t go through the process alone – seek expert medical or legal advice as required.

1 Australian Human Resources Institute, Absence Management (March 2016), <https://www.ahri.com.au/__data/assets/pdf_file/000…>

2 AI Group, Absenteeisn & Presenteeism Survey (2015), <https://www.aigroup.com.au/policy-and-research/ind…>