PTSD, a “bodily injury” or not?

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. 

Relocation of Employees: The Risks and How to Manage Those Risks

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.

Minding Your Own Business

Leave your personal problems at home. It’s one of those commonsense sayings that we assume everybody abides by. But what if there’s an employee in your organisation that just can’t help wheeling their cabin sized emotional baggage to work?

How badly can personal issues affect an Employer? 

In a recent unfair dismissal case[1], a manager going through a divorce was justifiably terminated after his circumstances began to adversely affect his work performance. Not only would the manager bring his own laptop to work so that he could prepare his divorce case during business hours, but he allowed his personal issues to impact his employer through his:

  • unresponsiveness to his clients and colleagues; 
  • lack of leadership and guidance as a manager;
  • threatening and erratic behaviour;
  • poor and tardy attendance to work; and
  • bullying claim which was lodged after his manager attempted to discuss performance concerns with him.

The manager took things a step further by drawing the employer into his personal issues by sending his ex-wife abusive messages from his Linkedin account bearing his employer’s name. The messages came to the employer’s attention when the ex-wife called head office to complain about the threatening messages.

The manager’s employment was terminated upon the advice of an independent investigator that concluded his conduct had caused an irreparable breakdown in the employment relationship. The manager made an application for unfair dismissal, however the Fair Work Commission sided with the employer that his poor conduct justified termination.

But it’s none of my business

As demonstrated in the above case, an employee whose focus is disrupted by personal problems can have an impact on an employer that is greater than a just a downturn in productivity. Whether or not the allegations were proven, the Applicant, as a manager, failed to conduct himself in a “cooperative and civil way” or show the “desired suite of managerial traits”. 

Employers should not be afraid to take control in circumstances where someone’s private life interferes with their work. Sometimes an employee’s personal circumstances will necessitate leniency but there is a limit on conduct that an employer is expected to ignore.

What can you do?

Mismanaging employees that are dealing with personal issues can increase the risk of an employer facing an adverse action, bullying or unfair dismissal claim. Here are our top five tips for striking the balance between being a compassionate but fair employer:

  • Take preventative action: If you notice someone struggling in the workplace, see if you can point them in direction of the help they might need. Provide your employees with a safe outlet to address their personal challenges by offering Employee Assistance Programs.
  • Speak up: Don’t let your silence be construed as tolerance if an employee engages in behaviour that is inconsistent with the expectations of your organisation. Convene a meeting as a matter of urgency to bring the concerns to a head and propose a resolution.
  • Take a breather: Perhaps the employee and the organisation may benefit from some time apart to deal with the issues at hand. Noting that only in particular circumstances can an employee be directed not to attend work, consider granting a period of leave to the employee if they request it. 
  • Investigate where necessary: Lack of procedural fairness can be an employer’s undoing in termination disputes. Investigate grievances that involve the troubled employee, ensuring each party has the opportunity to have any mitigating circumstances heard. Consider using an independent third party for guaranteed impartiality.
  • Set the scene: If an employee is commits serious breaches of their obligations to their employer, a written warning or dismissal may be warranted. Make sure you include sufficient detail and context in your warning or termination letter to make clear to the employee (and potentially the Fair Work Commission) why you have taken disciplinary action.

Go Home! Managing Sick Employees

With the weather cooling down, the number of sicknesses in the workplace is increasing. When an employee presents at work sick, not only are they more likely to spread their illness, but they are also costing the employer money. In 2009/2010, the total cost of presenteeism (an employee coming to work sick) to the Australian economy was estimated to be $34.1 billion. On average, 6.5 working days of productivity are lost per employee annually as a result of presenteeism.

So what can an employer do in the circumstances when an employee comes to work sick? These Q+A’s look at how to manage sick employees and some of the key issues that employers must watch out for.

How much sick leave are employees legally allowed?

Under the National Employment Standards in the Fair Work Act 2009 (Cth) (“FW Act”), full time employees are entitled to 10 days’ paid personal leave and part-time employees are entitled to pro rata of 10 days’ each year depending on their hours of work. Casual employees are excluded from paid personal leave. Employees may be awarded more generous sick leave entitlements under their award, enterprise agreement or employment contract. 

What are the notice requirements in taking that sick leave?

If a permanent employee wishes to take personal leave, the FW Act provides that notice must be provided as soon as practicable setting out the expected period of leave. Notice can be given before or after the taking of the leave. When an employee takes personal leave, an employer can request evidence that would satisfy a reasonable person, such as a medical certificate or statutory declaration that sets out the reason for the leave taken. Awards and enterprise agreements may contain provisions about the type of evidence required.

Do employers have any obligations under any Work Health and Safety legislation?

Employers have a duty of care under the Work Health and Safety Act 2011 (NSW) (“WHS Act”) to ensure, so far as reasonably practicable, the health and safety of workers. Similar provisions can be found in corresponding work health and safety legislation around Australia. Conversely, workers under the WHS Act have a duty to take reasonable care for their own health and safety, and take reasonable care that their acts and omissions do not adversely affect the health and safety of other persons. They must also comply with reasonable instructions and cooperate with policies and procedures given by their employer that have been notified to the employee. 

In these circumstances, if an employer reasonably suspects that the employee is posing a health risk to other employees, for example, if the employee has signs of a contagious disease such as chicken pox, the employer may consider it necessary to ask the employee to obtain a medical certificate indicating whether or not the employee is fit for work.

Best Practice Tips for Employers

  • Setting up an organisational culture which supports employees in the taking of personal leave in appropriate circumstances will avoid the spread of sickness to other employees.
  • Creating a workplace sick leave policy and establishing expectations around the taking of sick leave. Employees must be aware of any notice requirements around the taking of sick leave and any expectations that employers have regarding coming to work sick or leaving work early due to sickness. This will avoid employees coming to work sick due to any confusion about who to speak to, what they need to do and what they are entitled to in the event that they are sick.
  • Including a clause in an employee’s employment contract acknowledging that they may be required to attend a medical examination in relation to their fitness for work.
  • Focusing on health and well-being in the workplace, including offering wellness programs, such as subsidised gym memberships and flu vaccinations.

Discretionary bonus not so discretionary

Employers have to be very careful when implementing their discretionary performance based bonus systems if they do not want them to become an entitlement. Even when a matrix of employment documents “have been prepared with a high degree of technical drafting skill and diligence”, it is possible that aspects which are intended to be absolutely discretionary will be found to be contractually binding.

In the recent case of Russo v Westpac Banking Corporation [2015] FCCA 1086, the Federal Circuit Court of Australia (the “Court”) determined that Mr Russo (the “Plaintiff”) was entitled to a “discretionary” bonus as Westpac (the “Defendant”) breached a term in his contract which read:

“If your employment with Westpac is terminated on the basis of redundancy, your entitlements will be determined in accordance with the more favourable to you of any applicable industrial instrument or a relevant Westpac policy or procedure in accordance with the terms and conditions of that industrial instrument or policy.”

The Plaintiff had participated in a “discretionary” bonus scheme in which the payment of bonuses was tied to a performance appraisal scheme. In 2008/2009 and 2009/2010 the Plaintiff was awarded a bonus, being $70,000 in 2009/2010. In September 2011, the Plaintiff’s position was made redundant. He was not paid a bonus.

The Plaintiff argued that the Defendant had breached express and/or implied terms of his employment contract by failing to pay the bonus and also claimed under the Competition and Consumer Act 2010  (Cth) for misleading and deceptive conduct. The Defendant argued that the Plaintiff was not entitled to a bonus on his retrenchment because it was discretionary and non-contractual, and in any case, in the preceding year his performance had been downgraded to “needs development”. This was despite the Plaintiff ranking as “effective” for 70% of his overall performance up to his review.

In its decision the Court accepted that policies did not generally form part of the Plaintiff’s contract (due to a general term excluding them), the redundancy term had to be given effect as a contractual term for determining termination entitlements.

After giving consideration to the Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357 decision, which requires that discretion not to award a bonus must not be exercised capriciously, arbitrarily or unreasonably, the Court determined that the Plaintiff was in fact entitled to a bonus on his redundancy. This was because evidence showed that the Plaintiff’s manager had “confidently, and in some respects arrogantly” departed from the objectives of and policy behind the bonus plan. He had taken irrelevant considerations into account and failed to properly apply the policy.

The Plaintiff was awarded a $70,000 bonus based on the bonus he had received in the preceding year.

Lessons for Employers

Contract is king! If employers wish not to be bound by their discretionary bonus schemes, this must be made clear in the contract with no exceptions. Care must be taken that a specific term does not override a more general exclusionary term.

Silverbrook remains good law–contractual discretions can be exercised arbitrarily, capriciously or unreasonably.

If a policy requires particular factors to be considered, they should be.

Whether discretion is exercised arbitrarily will depend on how it is framed. The broader the discretion, the broader the range of decisions that may validly be made within it.

National minimum wage to increase by a “modest” $16 per week

Moments ago, the Fair Work Commission (the “FWC”) handed down the decision in its annual wage review.

From 1 July 2015, the national minimum wage will be $656.90 per week (or $17.89 per hour). This represents an increase of $16 per week from the current national minimum wage of $640.90 per week.

The decision follows months of submissions from and consultations with government, employer and employee stakeholders, as well as research and reports by the FWC’s Expert Panel.

Following the decision, minimum wage rates in modern awards will be increased by 2.5% and a new national minimum wage order will be made with respect to award free employees.

What does this mean for employers?

  • Subject to the requirements of relevant modern awards, enterprise agreements and employment contracts, from 1 July 2015, employers must ensure that their employees are paid at least $656.90 per week (or $17.89 per hour).
  • Employers must be aware of the award or agreement (if any) that applies to their employees and ensure wages are paid pursuant to it, noting that minimum wage rates in modern awards will be increased by 2.5%.
  • An employer who fails to pay wages in accordance with the national minimum wage order or requirements of a relevant award or agreement will be exposed to liability for breach of the Fair Work Act 2009 (Cth).

Termination process doesn’t “stack” up, leading to extension of time to lodge unfair dismissal application

Merlino v Coles Supermarkets Australia Pty Ltd [2015] FWC 1185

A Coles employee was granted an extension of time to lodge his unfair dismissal claim after two Coles HR managers were found to have misled the employee into believing that his dismissal was being investigated with the possibility of his dismissal being reversed. The employee, who was on a final warning, was dismissed for breaching safety standards by standing on a number of pallets. The employee did not accept the termination of his employment and asked for an investigation into the circumstances surrounding his dismissal and his prior first and final warning. 

The first problem with the process undertaken by Coles was that its HR Manager informed the employee that the termination of his employment may be reversed.

The second problem was that Coles proceeded on that basis and provided the employee with a process to formalise and escalate his concerns to a senior manager. 

These conversations were found by the Fair Work Commission (“the Commission”) to have led the employee to believe that his dismissal would be “stayed” during any internal investigation by Coles and the employee delayed the lodgment of his unfair dismissal application. The employee followed the advice of the HR manager and raised his concerns with the State HR Advisory Manager where he was invited to provide submissions and evidence in relation to a number of complaints he had identified that he considered relevant to his dismissal. 

The Commission found that whilst the Coles HR managers did not set out deliberately to mislead the employee to delay the lodgment of his unfair dismissal application, the statements made to the employee by the HR managers lead to a series of miscommunications and misunderstandings. The Commission was of the view that even though the employee became aware of the dismissal on the day, he had a genuine belief that his dismissal was being reviewed and could be overturned. The ultimate problem with the dismissal process was that at no point did Coles make it clear to the employee that the review process did not relate to his dismissal and would not encompass the termination of his employment and as such there was no prospect that it could be overturned. Rather to the contrary, the HR manager left open the possibility that the dismissal might be reversed.

The Commission decided that these circumstances were exceptional circumstances and made an order for an extension of time.

Lessons for Employers

Employers and HR managers who are involved in dismissals must ensure they clearly state that the employee is dismissed and not provide any false hope to the employee as to the possibility that the dismissal may be reversed. 

HR managers are expected to take reasonable steps to ensure employees are not misled in these types of situations.

Workplace Investigations | Five steps to best practice

When it comes to workplace investigations, an employer’s good intention sometimes isn’t enough. In a recent decision, the Fair Work Commission held that an employer’s otherwise well handled investigation into complaints made against an employee was unfair because the employee (who was the subject of the complaint) was only interviewed after findings in the investigation had been made. Although the employee had an opportunity to respond to the findings before a disciplinary decision was made, this opportunity was not “genuine” because the employee wasn’t given a chance to explain his conduct.

To ensure workplace investigations meet best practice standards, and to protect themselves from liability in a range of areas, employers should:

  • Be thorough: plan the investigation. Particularise allegations made by the complainant.
  • Communicate with fairness in mind: don’t make assumptions. Listen, put allegations to the accused, and give all parties an opportunity to respond before a finding is made
  • Report on your decision: detail the steps you have taken and why.
  • Use findings proactively: could the findings uncovered in the investigation be indicative of a wider problem in the workplace? Could they be used to inform behaviour and culture training to prevent future incidents?
  • Maintain confidentiality and an open, non-victimising culture: this is important from both a legal perspective and to ensure trust in the investigation process.

Handled properly, workplace investigations not only ensure employers are prepared should a worker pursue a legal claim arising out of the investigated conduct, but have the potential to prevent workplace issues from becoming legal issues in the first place.

Bargain for your brand: Enterprise Agreements that protect your brand inside and out

As a business you invest a considerable amount of time, money and effort in order to build a strong brand and maintain its status. Commercial reputation takes years to develop but can be destroyed with a few poor decisions and bad luck. Enterprise bargaining presents a situation that can at worst damage your brand beyond repair and at best offer a chance to solidify the hard work put into creating goodwill. Most businesses recognise the possible risks associated with enterprise bargaining and work to merely manage it throughout the process. Others avoid them altogether and rely solely on modern awards and individual contracts to govern their employment relationships. Instead, we encourage businesses to embrace the opportunity of entering into an enterprise agreement as a way to strengthen and protect their brand.

For example, an enterprise agreement can form an important part of the recruitment, selection and retention strategy by showcasing the terms and conditions of employment offered by your business, especially if it contains innovative clauses. Not only do such terms potentially attract talented employees to come and work for your business, they also provide a competitive advantage over competitors who may be seeking to entice your employees away from your business. 

While enterprise agreements do offer an opportunity for creativity, the Fair Work Commission (“FWC”) must approve them before they become operational. The FWC’s annual report shows that while only a relatively small number of enterprise agreement were not approved last year, there was still a two-thirds increase in the number of applications that were not approved. This highlights the need to understand all of the requirements under the Fair Work Act 2009 (Cth) (“FW Act”) before beginning negotiations. 

In addition to the stipulations around the content of an enterprise agreement contained in the FW Act there are several important rules that must be adhered to during the bargaining process. There is nothing more potentially detrimental to a business’ brand than when it appears that the employer does not, or is perceived to not, understand their own rights and obligations or respect the rights and obligations of other bargaining parties in that process. Issues such as employers giving employees notice of their representational rights, following good faith bargaining requirements and providing a proper access period and voting procedure can stall negotiations and reflect poorly on the employer even after an agreement is reached. 

If bargaining does hit a standstill, employers face the further risk of industrial action being taken by the employees which can be very public and very costly to the organisation, particularly if that industrial action is ongoing. Preventing protected industrial action largely depends on effectively managing the stakeholders involved in the process. 

The best way to ensure that your business is in a position to appropriately manage the stakeholders throughout the process is to know and understand your own position inside and out. There are a number of practical mechanisms that your business can also adopt, including through establishing bargaining protocols at the outset of the bargaining processes. These protocols are particularly important if there are a number of bargaining parties at the negotiating table. 

We often advise clients to consider and document their expectations about how negotiations will progress, including whether the parties are to exchange written logs of claims setting out their respective positions, whether draft enterprise agreements will be prepared from which the parties are to work from, how matters discussed at meetings are to be recorded (notes and/or transcription), expectations around timeliness of responses and how responses will be delivered. A further way of managing stakeholders is to develop an expansive communications strategy that is flexible, precise, concise and transparent. 

Enterprise agreements not only reduce administrative complexity and add commercial certainty to a business. They also represent a clear strategy for a business to improve its brand and to differentiate itself from its competitors. At PCS we work everyday to achieve these goals for our clients, and we would be happy to assist your business with implementing an enterprise agreement.