Is that sexual harassment? Everything you wanted to know about sexual harassment but were too afraid to ask

Erin Lynch, Director

Employers focus a lot on sexual harassment. This is largely due to its prevalence and the impact it can have on an organisation. The Australian Human Rights Commission conducted a national survey in 2012 which found that, over the previous five year period, one in four women and one in six men were sexually harassed in the course of their employment.1

In terms of the impact on an organisation, sexual harassment can lead to:

  • emotional and physical damage;
  • a hostile working environment;
  • criminal liability;
  • vicarious liability; and
  • public scrutiny.

Given the focus on sexual harassment and our knowledge about its impact, what are the questions we have always wanted to ask, but were too afraid?

Appearance, dress and personality, do they lead to sexual harassment?

It is not uncommon in discussions around allegations of sexual harassment to hear phrases such as “did you see what he or she was wearing” or “but they never said they didn’t like it”.

The case law tells us that while a person’s appearance, dress, personality or conduct may be factors that are considered when allegations of sexual harassment arise, they will not ultimately determine whether a finding of sexual harassment is made. What needs to be determined is whether the perpetrator’s conduct amounted to sexual harassment. The legal elements of sexual harassment are not based on how the alleged harasser saw the situation or the factors that influenced his or her views.

For example, in Collins v Smith (Human Rights) [2015] VCAT 1029, an alleged change in the victim’s behaviour, and a suggestion that by continuing to place herself in close proximity to the perpetrator (including requesting meetings with him after hours), the victim had herself engaged in behaviour that was not consistent with the conduct she alleged against the perpetrator, were addressed. While accepted as relevant considerations, it was noted that “it is not appropriate to criticise the employee on the basis that she should have handled the sexual harassment better or should have stormed out of the room or escaped from the harasser earlier”.

Further, in Trolan v WD Gelle Insurance and Finance Brokers Pty Ltd [2014] NSWDC, the defendant’s submissions sought to criticise the plaintiff’s credit and focussed on what the Court considered to be irrelevant matters. These centred around the perpetrator’s after hours visits to the complainant’s home for business purposes and a suggestion that she was shown in photographs (taken at the home) to have been wearing a short dress well above knee height.

Can a customer or client sexually harass an employee?

If you walked into most workplaces today, you would find policies and procedures around discriminatory behaviour and sexual harassment by employees. But you are far less likely to find policies and procedures that address situations and potential liability where a customer or client acts in a discriminatory or harassing manner towards an organisation’s employees.

Under the Sex Discrimination Act 1984 (Cth) (“SD Act”) it is unlawful for any person to sexually harass another in the course of seeking or receiving the provision of goods, services or facilities from another person. This creates an obligation on a customer or client to refrain from sexually harassing employees. Additionally, employers who “cause, instruct, induce, aid or permit” another person to do an act that is unlawful under the SD Act may be found liable for the conduct.

This means that if an employer has knowledge of sexually harassing behaviour by a customer or client that affects their employees and does not take all reasonable steps to stop that behaviour, then it may be “permitting” the person to engage in acts that are unlawful under the SD Act.

Personal relationships at work – how should they be treated?

In recent months we have seen a number of media headlines commenting on office romances, for example, when the Seven Network sought an urgent court order in the New South Wales Supreme Court to stop a former executive assistant disclosing details about her relationship with the company’s CEO, and the QBE CEO forfeiting part of his STI bonus for delaying the disclosure of a personal relationship with an employee.

In the Seven Network proceedings, while much of the media attention (and also the comments on social media by the former executive assistant) centred around the office romance, there was no judicial comment about an employer’s role relating to work colleagues conducting a consensual, personal relationship.

However, what the Fair Work Commission has recently said about an employer’s ability to govern personal relationships at work is as follows:

“Employers cannot stop their employees forming romantic relationships. However, in certain circumstances, such relationships have the potential to create conflicts of interest. This is most obviously the case where a manager forms a romantic relationship with a subordinate especially where the manager directly supervises the subordinate. It is virtually impossible in such circumstances to avoid at the very least the perception that the manager will favour the subordinate with whom they are in a romantic relationship when it comes to issues such as performance appraisals, the allocation of work, and promotional opportunities”.


“Employers have a reasonable expectation that employees will disclose any potential conflicts of interest, so that they can be appropriately managed”.

So, how do organisations ensure that personal relationships are adequately addressed and do not negatively impact upon the organisation and its working relationships?

While unlikely to be adopted in Australia, in the United States, it is common for employers
to require workers to disclose any intimate relationships with colleagues. This often involves entering into a written agreement commonly called a “love contract”. This “love contract” usually contains:

  • an acknowledgment that the relationship is consensual;
  • what happens if the relationship ceases to be consensual;
  • an acknowledgment that the employees are aware of the company’s policies on sexual harassment and workplace ethics; and
  • an understanding of the consequences of failure to follow those policies.

What is more commonplace in the Australian employment environment is a conflict of interest policy or something similar, which details occasions when personal relationships must be disclosed.When considering a conflict of interest policy and addressing personal relationships at work, employers need to address questions such as:

  • what constitutes an “office romance”?;
  • when must an “office romance” be disclosed?;
  • will the policy address “affairs”?;
  • what confidentiality mechanisms will be in place?;
  • what disciplinary action will be enforced (if any) for a failure to disclose?; and
  • is there going to be a blanket rule against “office romance”?

It seems that consideration of personal relationships by employers will become more and more prevalent as survey data shows that almost 85% of 18 – 29 years old would engage in a romantic relationship with a co-worker.2

Do I have an obligation to report?

Under section 316 of the Crimes Act 1900 (NSW) (“Crimes Act”) if a person has committed a “serious indictable offence”, and another person, who knows or believes that the offence has been committed and that he or she has information which might be of material assistance in securing the apprehension, prosecution or conviction of the offender, fails without reasonable excuse to bring that information to the attention of a member of the police force or other appropriate authority, that other person is liable to imprisonment for up to two years.

A serious indictable offence is one for which a person may be imprisoned for five years or more, for example, sexual assault. When considering sexual harassment, consideration must therefore be given to whether the organisation needs to bring findings of sexual harassment (that amount to sexual assault) to the attention of the police or other appropriate authority.

What is key to determining this obligation is having “knowledge or belief” that the offence has been committed. Belief is not defined by the Crimes Act, but has been considered to be
a state of mind which can be reached as the result of a mix of knowledge which an offender has come to possess, as well as suspicions and opinions which he or she has come to hold and conclusions which he or she has reached. It therefore follows that under section 316, what must be established is that the person actually came to hold the alleged belief. The obligation does not apply to mere suspicion of an offence.3

Key takeaways

  1. A person’s appearance, dress, personality or conduct are unlikely to be determining factors in a finding of sexual harassment.
  2. A customer or client has an obligation to refrain from sexually harassing employees.
  3. Employers who “cause, instruct, induce, aid or permit” another person (for example, a customer, client or employee) to do an act that is unlawful under the SD Act may be found liable for the conduct.
  4. Organisations will need to consider how they intend to address personal relationships at work as the prevalence of office romances continues to grow.
  5. When findings of sexual harassment are made, consider whether you may have an obligation to report the conduct to the police or another authority.

  1. Working without fear: Results of the 2012 sexual harassment national telephone survey, Australian Human Rights Commission, 2012
  2. Millennials More Likely to be Smitten with Superiors, Co-Workers, Workplace Options, 2012, http://www. be-smitten-with-superiors-co-workers-2/
  3. Wilson v Department of Public Prosecutions (NSW) [2016] NSWSC 1458

Good Cop and Bad Cop: How the Fair Work Ombudsman might engage with your business and tips for how to respond

Sam Cahill, Associate

The Fair Work Ombudsman (“FWO”) carries out a range of compliance and enforcement activities. In this article, we look at the different ways in which the FWO engages directly with employers and set out our tips for how employers should manage such an engagement.

What are the FWO’s areas of concern?

The FWO is responsible for bringing about compliance with various federal workplace laws. The key areas of concern for the FWO are:

  • the National Employment Standards, which includes entitlements such as annual leave, personal leave, parental leave, notice of termination and redundancy pay;
  • Modern Awards and Enterprise Agreements, which can include entitlements such as minimum rates of pay, penalty rates and rostering requirements; and
  • General Protections issues, including unlawful discrimination, sham contracting and coercion.

The FWO is less likely to be concerned about employment entitlements that are purely contractual, such as performance incentive payments.

What will trigger the attention of the FWO?

A common way for an employer to come to the attention of the FWO is for one of its employees to make a complaint. In the 2015- 16 financial year, the FWO received nearly 30,000 complaints of alleged non-compliance.1 However, it is not necessary for an employee to have made a complaint. The FWO may act on information received from other sources, such as media reports. It may also take an interest in an employer as part of an industry-wide compliance campaign.

Early intervention (FWO as Good Cop)

When a complaint is made to the FWO about an employer, or the FWO otherwise suspects that an employer has engaged in non-compliance, the FWO will generally begin by using an “early intervention” approach to resolve the dispute and/or bring about compliance with the relevant laws. This approach is characterised by an emphasis on education, conciliation and voluntary correction. It usually involves advising the parties on their rights and obligations and offering to act as a mediator where there is a dispute.

During this phase, the FWO relies on the parties to:

  • provide relevant information (records of hours worked, wages etc.);
  • attend discussions and consider options for resolutions (eg, mediation); and
  • take steps to resolve any compliance issues (eg, making backpayment and committing to take steps going forward).

This means that the FWO does not exercise its powers under the Fair Work Act 2009 (Cth) (“FW Act”) and parties are not legally compelled to cooperate or take any action.

The FWO considers that an “early intervention” approach is often successful in resolving workplace disputes and bringing about compliance. In 2015-16, the FWO conducted over 10,000 “early interventions”, resulting in the backpayment of over $4.3 million in wages.2

In the same period, the FWO finalised over 4,500 workplace disputes by mediation, resulting in the backpayment of over $7 million in wages.3


Generally speaking, the FWO may decide to conduct an investigation where the available information suggests there is:

  • exploitation of vulnerable workers;
  • significant public interest or concern (e.g. gender discrimination);
  • blatant disregard for the law; and/or
  • an opportunity to provide an educative or deterrent effect.

The FWO has a range of investigation powers under the FW Act. Importantly, an inspector may enter a workplace without the permission of the employer or the occupant of the premises. While on the premises, the inspector may:

  • inspect any work, process or object;
  • require a person to tell them who has, or who
  • can access, a record or document;
  • require the person with access to a record or document to hand it over while the inspector is on the premises or within a specific timeframe;
  • inspect and make copies of any record or document kept on the premises (hardcopy or on computer); and
  • take samples of any goods or substances after informing the owner or other relevant person in charge of the goods or substances.

The exercise of these powers is subject to certain conditions and limitations. For example:

  • an inspector must not use force to enter the workplace or premises;
  • an inspector must show his or her identity card to the employer or the occupier of the premises;
  • an inspector must only interview a person if the person consents;
  • an inspector must reasonably believe that the FW Act applies to the work performed at the workplace, or that there are records at the premises that are relevant for compliance purposes; and
  • an inspector must enter the workplace or premises during working hours, unless the inspector believes that it is necessary for compliance purposes to enter outside of working hours.

FWO inspectors also have powers to require people to produce documents and provide their name and address.

The FWO expects that, during an investigation, all parties will:

  • always tell the truth;
  • fully disclose all relevant matters from the outset of the investigation;
  • provide relevant information as it comes to hand; and
  • respond in a timely manner to requests.

At the completion of an investigation, the FWO will provide the employer with a letter setting out its findings. This letter will also set out any steps that the FWO would like the parties to take, and any steps that it may intend on taking.

Enforcement (FWO as Bad Cop)

If the FWO is not satisfied with the outcome of the investigation phase, or if the FWO is concerned that the employer may engage in further non-compliance in the future, the FWO can use one of its enforcement options, including prosecution for breach of the FW Act.

(a)  Compliance Notices

A Compliance Notice is a written notice that legally requires a person to take certain steps to remedy a breach of workplace laws. Compliance Notices are typically issued where the FWO suspects that the employer will not voluntarily rectify an alleged breach.

In 2015–16, the FWO issued over 180 compliance notices.4 Failure to comply can result in financial penalties of up to $27,000 for a company and $5,400 for an individual.

(b) Enforceable Undertakings

Enforceable undertakings are legally-binding documents that set out an employer’s commitment to addressing contraventions and preventing future breaches. This can include:

  • back-payment of wages;
  • training sessions for managers;
  • independent wage audits; and
  • announcements to media.

An employer will usually enter an enforceable undertaking under the threat of prosecution. In 2015-16, over 40 employers entered enforceable undertakings with the FWO.

(c) Prosecution

The FWO will generally only take legal action in the most serious instances of non-compliance. Cases typically involve deliberate exploitation of vulnerable workers, refusal of an employer to cooperate with the FWO, or a significant history of non-compliance. In 2015-16, the FWO initiated 50 civil penalty litigations.5

Tips for engaging with the FWO

If the FWO seeks to engage with your business in relation to a compliance issue, we recommend you consider the following tips:

  • Don’t take it personally. It is not uncommon for management to take offence when contact is made by the FWO with the organisation. By not reacting defensively, you will be better able to develop an appropriate strategy for managing the engagement.
  • Ask yourself: Why is the FWO interested in our organisation? This will not only help you to resolve the immediate issue, but will also help you to understand what it was that resulted in the FWO’s interest in the first place.
  • Ask yourself: What is the FWO asking us to do? The FWO may be asking your organisation to take some action voluntarily, in which case there may be some flexibility about how and when these acts are done. However, if the FWO is exercising its powers under the FW Act, you need to be mindful of the consequence of any non-compliance.
  • Don’t be afraid to play by the rules. You should not be afraid to request that the FWO only exercises its powers in accordance with the FW Act. For example, you can request that an FWO inspector present his or her identity card before entering the workplace. At the same time, do not attempt to interfere with or prevent the lawful exercise of powers by the FWO. If you are not sure how the rules apply, you should consider seeking legal advice.
  • Keep the ball rolling. Do not seek to resist or delay when you are required to deal with the FWO. You should develop a strategy early on for managing the engagement, involving planned and active compliance, rather than ad hoc appeasement.
  • Don’t defend the indefensible. If your organisation has issues with compliance, you should move to address these issues as soon as possible. It is clear from the way the FWO exercises its powers that organisations that assist the FWO and rectify any issues are dealt with more favourably in the long term. On the other hand, organisations that attempt to conceal and obfuscate are more likely to end up feeling the full force of the law.

  1. Fair Work Ombudsman, Annual Report 2015-16, at p. 17.
  2. Fair Work Ombudsman, Annual Report 2015-16, at p. 18.
  3. Fair Work Ombudsman, Annual Report 2015-16, at p. 18.
  4. Fair Work Ombudsman, Annual Report 2015-16, at p. 21.
  5. Fair Work Ombudsman, Annual Report 2015-16, at p. 22.

A New Gig for the Fair Work Commission?

David Weiler, Associate

It was recently reported that the gig-economy giant, Airtasker, had agreed to explore the option of a dispute resolution process overseen by the Fair Work Commission (“FWC”). This is an important step in coming to terms with how employment regulation should respond to an industry that allows users to access on-demand the services of individuals whose employment status and the basic conditions under which they work is uncertain.

The details of the proposal are not yet clear, but according to news sources, President Ross and Senior Deputy President Sams of the FWC along with Unions NSW and Airtasker have entered into a heads of agreement with respect to issues being faced in these types of work arrangements.

According to Unions NSW, the agreement commits Airtasker to:

  • ensure that its recommended rates of pay are above award rates;
  • offer workers using the platform an insurance product similar to workers’ compensation to protect against workplace injuries and illnesses;
  • work with Unions NSW and the FWC to introduce a dispute resolution process; and
  • implement “best practice” WHS/OHS standards to protect workers and consumers using the platform.

In response to the announcement by Unions NSW, Airtasker has clarified that it already has an existing dispute resolution process operated by a third party provider, and that the potential involvement of the FWC in such a process is only at a “discussion stage”. Airtasker did however take steps to amend its online pay guide for various tasks to reflect, at a minimum, award rates for such work. This willingness to work with employee associations and address concerns about the pay and conditions of workers is a significant deviation from the practices of other operators in the gig-economy.


Founded in 2012, Airtasker is an Australian based online company that offers a platform for a user (a “Job Poster”) to have various jobs performed by an individual (“Worker”), including specialised tasks performed by tradespeople.

It is free to post on the platform, where the Job Poster describes the task and indicates a budget for the work. Workers then post comments with regards to that task and can “bid” on the work, often indicating their experience and offering such features as “satisfaction guaranteed or free”. Following negotiations between the Job Poster and the Worker, the Job Poster can accept an offer from the Worker and the agreed amount is paid into a trust account held by Airtasker. Upon completion of the task, the Worker can request payment, which prompts the Job Poster to agree to Airtasker “releasing” the funds. If the Job Poster does not accept that the task has been completed in accordance with the agreed terms, it may raise a dispute, which prevents Airtasker from releasing the funds to the Worker. As discussed above, disputes relating to the disbursement of these funds are currently handled by a third party, and both Job Posters and Workers have profiles with ratings and reviews that may affect future work prospects.

The service fee for using the platform is included in the “bid” made by the Worker and is 15% of the value of the task. The Airtasker website boasts that it has created $116 million worth of jobs and that nearly one million Australians use its platform.

Employment relationship

In a Senate inquiry held in April 2017, Airtasker’s CEO, Tim Fung, testified that the people bidding for work (i.e. the Workers) are defined under the site’s terms and conditions as independent contractors and that he “certainly doesn’t think that there’s any form of employment relationship being created.”

The terms and conditions expressly state that if a Job Poster accepts an offer from a Worker, a “Task Contract” is formed between the Worker and the Job Poster (i.e. Airtasker is not a party to this arrangement). The terms also only permit “natural persons” to use the platform, so corporations are excluded from posting jobs or bidding on work, however persons may “represent a business entity.” Not surprisingly, the platform and its terms and conditions have been structured to create a strong argument that no employment relationship is created between Airtasker and the Worker.

Minimum wages

In 2014, Unions NSW published an issues paper that challenged the status of work arrangements in the gig-economy, and specifically questioned the obligations of Airtasker in relation to, among other things, minimum rates of pay. The paper included a comparison between Airtasker’s recommended pay rates for popular tasks like data entry, sales and cleaning and the relevant minimum award rates for such work. In some instances, where the cost of the 15% service fee charged by Airtasker was accounted for, this difference was almost $10/hour.

Importantly, the service fee is built into the value of the bid made by the Worker and accepted by the Job Poster at the time the Task Contract is entered into. As such, the cost of using the platform (which is arguably an equally shared benefit for both the Worker and the Job Poster) is borne entirely by the Worker and remains largely hidden from the Job Poster in relation to determining the value of the task.

Another concern for Workers is the fact that fees are set per task and not per hour. If a task takes longer than anticipated, the Worker can negotiate for an additional payment to complete the task, but this must be agreed between the parties. If the task is not performed in the agreed time, the Job Poster may refuse to pay the Worker at all, which would likely lead to the dispute being brought to the third party (the cost of which the parties must bear).

Dispute resolution

The potential move towards a dispute resolution process overseen by the FWC is certainly welcomed by Unions NSW, but its scope is far from certain. The lack of clarity of the terms of many of these agreements has the potential to disproportionately disadvantage the Workers. One such example is a case study that has been published on Airtasker’s website, which sets out that even after an offer is accepted and a Worker travels to the Job Poster’s location and is willing and able to perform the work, if the Job Poster cancels the Task Contract prior to the Worker commencing the work, unless there is an express term that has been agreed in relation to these circumstances, the Worker will not be entitled to any payment. An important point here is that these relationships are largely governed by comments left on postings and private messages between the parties, which in many (if not most) cases lack the basic terms and conditions around when and how a Job Poster can terminate a Task Contract.

Some important considerations regarding the establishment of an FWC dispute resolution process include:

  • what powers the FWC would be able to exercise (determinative or advisory only); and
  • the type of disputes within its jurisdiction.

The terms and conditions that a party accepts by using the Airtasker platform set out that the current third party provider has the power to arbitrate (that is, to issue a binding determination on the parties). The FWC process could involve similar powers to arbitrate disputes. It is likely that if this method was implemented, the FWC would also require the parties to conciliate prior to arbitration.

The type of disputes that may come within the FWC’s jurisdiction is also uncertain at this point but conceivably, it could include the enforcement of pay rates at the award minimum. It could also be empowered to ensure that certain conditions are met in respect of task contracts (e.g. around cancellation periods).


A further issue relating to these arrangements is the provision of insurance for Workers. An aspect of the recent announcement is that Airtasker is working with a third party provider to develop personal insurance policies for Workers, which would address the concerns raised by Unions NSW around workers currently being excluded from workers’ compensation insurance.


The proposed partnership with the FWC and this collaborative engagement between Unions NSW and Airtasker is certainly a change of pace for observers of the gig-economy. It reflects an interest in finding ways to provide a platform of minimum conditions and a fair dispute resolution process. But it is important to note that neither of these aspects would necessarily make it an employment relationship. The fact that Airtasker is Australian and has grown in a market that has longstanding, strong workers’ rights protections may explain why its approach stands out amongst similar platforms. However, it is still early days for the company and the industry as a whole, and the only certainty is that we need ways to deal with the work undertaken pursuant to such arrangements as technologies develop and the demand for such services increases.

Sign on the pixelated line… e-Mployment contracts in the digital age

David Weiler, Associate

The way individuals, corporations and governments are signing documents is rapidly changing. In the current commercial context, communications are almost entirely undertaken in an electronic form. The challenge for businesses is to ensure that documents are executed in a way that is legally binding, despite the fact that there may not be a hard copy of the document created or returned to them.

A natural extension of these commercial practices is for employers to allow employees to sign their employment contracts using electronic signatures. The question from a compliance point of view is whether this impacts on the binding nature of the employment contracts and the enforcement of obligations contained in these contracts, such as restraints and extended notice periods.

When considering the appropriateness of e-signatures, it is useful to remind ourselves that even the President of the United States can satisfy the Constitutional requirement that he or she must “sign” a bill of Congress to turn the document into law by directing a subordinate to affix the President’s signature using an auto-pen, when he or she unable to be in the same location as the document1

Types of e-signatures

e-signatures fall into two principal categories:2

Electronic Signatures – this is simply an electronic symbol or process used to signify the execution, or acceptance of the terms, of an agreement. This type of e-signature might be a scanned signature or other form of electronic sign-off, or an email confirming acceptance of a document.

Digital Signatures – this term describes a method that uses an encrypted digital certificate to authenticate the identity of the signatory. In contrast to an electronic signature, a digital signature is linked to certain identifying information and provides for greater certainty and security around the circumstances of the e-signature.

The legislative regime

In Australia, the legislative framework makes it clear what requirements are relevant when considering the use of e-signatures. Commonwealth and State/Territory governments have in place legislation designed to provide certainty around electronic transactions in the form of uniform laws, referred to as the Electronic Transactions Act 1999 (“Act”).

The uniform laws provide that where a law (either at the Federal or State/Territory level) requires a handwritten signature, this requirement can be satisfied electronically, (unless the regulations specifically exclude the Act from operating in respect of certain circumstances). For the purpose of the Act, an electronic signature will have the same weight as a handwritten signature, and therefore a digital signature is not necessary. However, there may be circumstances where a business will choose to use a digital signature instead of an electronic signature for greater certainty surrounding the authenticity of a particular transaction.

The requirements for a valid e-signature under these laws are threefold, with each one serving its own purpose. The important take away from these requirements is the idea of capturing a person’s intention to be bound by a particular transaction or to undertake certain obligations.

Identification and intent

The overarching and leading determination of the validity of an e-signature under the Act is that it must use a method for identifying the person as well as indicating that person’s intention with in respect to the information communicated.

For example, a person’s email signature that sets out their contact information can be helpful as part of the method of identifying the person, but it is not helpful in indicating that person’s intention in relation to a particular transaction (such as accepting an employment contract). Instead, there would need to be an acknowledgement from the sender that they are accepting the terms of the agreement, for example, in the body of the email. Another way of confirming a person’s intention is requiring that person to take steps to tick a box electronically in order to accept the terms or indicate their agreement.


The method used to communicate the signature must be appropriately reliable for the purpose for which the electronic communication was generated or communicated. This is viewed in light of all the relevant circumstances, including any indication by the parties themselves as to what is acceptable. For example, if an employment contract provides that an e-signature can be used, this would indicate the parties have deemed it to be reliable in the circumstances.


The final requirement under the Act is that the party receiving it (unless they are a government entity or official) must have consented to the method used to convey the e-signature. If a party requires a signature in a specific way (e.g. a signed original) then the provisions in the Act would be insufficient to establish the validity of the purported e-signature. This final point is crucial with respect to the broader use of e-signatures in relation to employment contracts.

Contractual relations

Given that e-signatures are permitted by law, the question then is whether there are any relevant constraints on using them in the context of employment contracts.

The employment relationship is one that lends itself to using e-signatures for a number of reasons, including:

  • the preference to store documents electronically rather than using hard copies for contracts and policies;
  • for the purpose of training and policy implementation, e-signatures give employers the ability to time-stamp and record when
    an employee has read and accepted a policy document; and
  • drawing employees’ attention to specific and important obligations in the employment relationship, such as a behaviour policy.

Some businesses are now shifting away from hard-copy “wet signatures”, however in doing so there are some aspects to which employers should pay particular attention. For example, where a term of a contract (such as a non-solicit/non-compete restraint) is particularly onerous, it may be helpful for an employer seeking to enforce such a clause that it had drawn the employee’s attention to the particular provision, possibly with a specific acknowledgment of the term. If the terms of an employment contract are contained separately from where an employee accepts the terms electronically, this may also increase the likelihood of the terms of the agreement being challenged. Having an integrated process where the terms of the contract and any relevant polices are accessed prior to any electronic acceptance of the terms will minimise this risk.

Key Takeaways

  1. Have a robust system which is capable of identifying the signatory.
  2. Always draw the terms and conditions of employment to the attention of employees prior to signing.
  3. Ensure that the storage of employment contracts is capable of providing for both e-signatures as well as wet signatures in the event e-signatures cannot be used by the employee.

1 Mark Knoller, Obama uses autopen, again, to sign bill into law, CBS News

Global Guide to Electronic Signature Law

Transgender: a new frontier in workplace diversity

Michael Starkey, Associate

When it comes to the new frontier of workplace diversity, few issues stand out as prominently as the rights of transgender individuals, and the associated practical and cultural challenges for employers in ensuring that those individuals are supported in, and given every opportunity to contribute to, their workplace without risk of harassment, discrimination or victimisation. The need for employers to face up to those challenges was recently highlighted by The Report of the 2015 U.S. Transgender Survey, the largest survey of transgender people ever conducted, involving almost 28,000 individuals, and released in December 2016. It reported that, “in the year prior to completing the survey, 30 per cent of respondents who had a job reported being fired, denied a promotion, or experiencing some other form of mistreatment in the workplace due to their gender identity or expression, such as being verbally harassed or physically or sexually assaulted at work”. This article will explore the ways in which transgender rights at work are evolving (albeit unevenly across the globe), the challenges for employers when it comes to transgender issues, and how employers can capitalise on those challenges in order to create workplace cultures in which diversity and its benefits are embraced.

Evolving legal rights

It is in the realm of anti-discrimination law that the rights of transgender individuals at work are most rapidly evolving. However, the nature and extent of legal protections for transgender individuals in employment varies significantly across the globe.

A global snapshot


At the federal level in Australia, discrimination by employers specifically on the basis of an individual’s gender identity has been unlawful since 2013. All Australian States and Territories, with the exception of the Northern Territory, also explicitly make unlawful discrimination on the basis of gender identity, and in some of these jurisdictions these protections have been in place for some time.

Under federal legislation, employers have a responsibility to take all reasonable steps to prevent such discrimination (which may include harassment or victimisation) in the workplace and may be found vicariously liable for discrimination engaged in by their employees, unless they have taken all such steps. In effect, to avoid liability, Australian employers should have policies on transgender discrimination and harassment, thoroughly implement and train their employees in respect of these policies, and react swiftly to investigate any alleged discrimination or harassment.

On the topical issue of the use of toilets and other facilities, Australian anti-discrimination laws require employers to support transgender employees to use the toilets of the gender with which they identify, and employers run the risk of a discrimination claim by denying transgender employees access to appropriate toilets and facilities. Individuals who believe they have been discriminated against on the basis of their gender identity may complain to the Australian Human Rights Commission (or an equivalent State or Territory agency) in respect of that discrimination, and have the potential to be awarded compensatory damages in the event that such a complaint is ultimately successful in court. The treatment that an individual receives at work may also be the subject of proceedings under national labour laws if that treatment amounts to an unfair dismissal or a form of adverse action.

The United States

In the United States, there is no federal law which explicitly prohibits discrimination on the basis of gender identity. However, federal courts have held that discrimination on the basis of a person being transgender can constitute unlawful discrimination on the basis of sex. A number of States also have laws that prevent discrimination on the basis of gender identity.
However, in certain other States, transgender rights continue to be limited. Perhaps the most high profile situation in 2016 was with respect to North Carolina, where a law was passed to (among other things) prevent transgender people who have not taken surgical and legal steps to change their gender from using public restrooms of the gender with which they identify. While the law does not extend to private companies (which are able to continue to develop their own policies in respect of transgender rights in the workplace), the North Carolina situation highlights a greater degree of uncertainty surrounding transgender rights in the United States than in places such as Australia (particularly given the often robust relationship between State and Federal legislatures in the United States).


In China, there is no specific law or regulation that protects employees against discrimination on the basis of their gender identity.
In 2016, transgender rights in employment were placed under the spotlight in China after a transgender male brought a case before an arbitration panel against his employer on the basis that his employment was terminated on the basis of his gender identity. The complainant produced evidence of a sound recording in which he was told by his manager that wearing male clothing in the workplace would damage his employer’s image, and alleged that he was dismissed on this basis.
The arbitration panel rejected this evidence, holding that the conversation did not represent the employer’s intent because the manager did not work for the company’s personnel department, and accepting that the employer’s reason for dismissal was that the employee did not have the required skills for the job.

Transgender discrimination: what does it look like?

Whether unlawful or not, discrimination against transgender individuals may take many forms, including, but not limited to:
(a) refusing employment, promotion or training opportunities to a transgender employee because of their gender identity;
(b) refusing to work with, ignoring, bullying, harassing or ostracising transgender employees;
(c) refusing to share toilets and other facilities with transgender employees;
(d) invasive, inappropriate questioning about a person’s physical characteristics or their sex life; and
(e) refusing to use the transgender employee’s preferred name or refer to them by the gender with which they identify.
The challenge for employers in eliminating these forms of discrimination is addressing the underlying factors that perpetuate such practices, such as ignorance, lack of understanding, and prejudice.

Challenges for employers

The law is not the limit

In addressing transgender issues, employers should aspire to adopt best practice strategies rather than be guided by the minimum standards set by the law in their jurisdiction. Employers should adopt the mindset that, as well as being a benefit in itself, workplace diversity produces other tangible benefits for businesses in terms of boosting morale, inclusion, motivation, and creativity, and consequently has a positive impact on productivity and innovation.

Understanding the term “transgender”

One challenge confronting employers is the number of ways in which being transgender can be described. One of the broadest and most inclusive definitions being used is that a transgender person is a person whose gender identity is different to the physical sex they were assigned at birth. While legal definitions of what is encompassed by the term “transgender” may vary from jurisdiction to jurisdiction, in terms of best practice, employers should consider viewing transgender issues at work through a broad lens in order to avoid marginalising those who may identify as transgender despite not qualifying in terms of a legally defined threshold.

Challenging unconscious bias

While it is clear that employers need to take appropriate steps to counsel employees who overtly exhibit prejudice against transgender individuals, employers also need to be aware of and respond to unconscious bias that may exist within their organisations and affect their workplace practices in order to ensure that discrimination against transgender employees does not occur.

Recruiters and people managers should be trained on the nature of unconscious bias (that is, that they may make decisions based on judgments they are unaware of and that are influenced by their background and personal experience) and encouraged to question the reasons for which decisions are made with respect to certain employees or prospective employees. All employment related decision making should be based not on a personal attribute such as gender identity, but on the basis of an individual’s merits. In addition, how “merit” is constructed needs to be examined to ensure that this is not affected by preconceived ideas about what capabilities an individual might bring to the job or whether they will be a good “cultural fit” for a workplace.

Gender identifiers and other terminology

As transgender protections are still evolving globally, there are a number of questions that are yet to be answered about how far the protections afforded by the law extend. For example, in Australia, while it is clear that the tangible detriments outlined above constitute unlawful discrimination, it is less clear what employers are required to do with respect to a variety of administrative matters relating to the employment of transgender employees.

For example, it is not entirely clear whether a person who identifies as transgender, but may not have any official documentation from relevant government agency to confirm this, can insist that their employment records be changed to reflect the gender they identify with rather than the physical sex they were assigned at birth.

In terms of creating a culture which embraces transgender individuals, it is important that employers refer to transgender employees (both in the workplace and in official records, wherever possible) using their preferred name and preferred gender pronouns, and that they require (through policies) that their employees do the same. It is also important that the transgender individual is consulted about which name and pronoun they wish to be used and, for individuals who are transitioning, if and when they would like any change to commence.

Developing meaningful policies

While informing employees through policies that discrimination against transgender individuals is unacceptable workplace behaviour (and unlawful, if that is the case) is important, transgender policies should be as much about fostering inclusivity and support for transgender individuals in the workplace as they are about setting appropriate guidelines for behaviour.
For example, best practice policies often include provisions which make employees aware that their employer will work with them to develop a transition plan if this is desired, and include information about what a transition plan might involve (for example, in respect of communications with other employees about the transitioning employee’s gender identity and decision to transition).

Dealing with potential hostility

Employers also need to be prepared to work with the fact that other employees may express some hostility or animosity towards a transgender individual at work. While acknowledging that some employees might find the situation confronting, ultimately employers need to convey a clear message that inclusion and non-discrimination is the required standard of behaviour of all employees.

Implementing best practice

It is clear that there are a number of challenges facing employers as they work to support transgender individuals at work. By giving consideration to the issues below, employers can best position themselves to embrace these challenges through building workplace cultures that foster respect for diversity in all its forms.

  • Does the business have the right framework in place in terms of policies and procedures, including regarding the disclosure by employees of personal information of a highly sensitive nature?
  • Do any administrative changes need to be made in order to reflect a transgender employee’s preferred gender? For example, to existing employment records or recruitment forms (including by giving employees the option to not specify their gender), and in respect of how the employee is to be referred in terms of name and pronouns.
  • Does any training need to be undertaken (for example, on unconscious bias) to ensure that there is strong leadership in terms of transgender issues?
  • Does the business need to make any changes to ensure that the overall culture of the workplace conveys the support that exists for transgender individuals, including those who may not have yet communicated that they are transgender?

Ultimately, employers need to be aware that the legal landscape globally is evolving, and that some jurisdictions require a proactive response on the part of employers to transgender rights at work. While other jurisdictions may lag behind, there are clear benefits from an inclusive approach to diversity which extends to transgender issues. Positive messaging about and effective implementation of an organisation’s diversity and inclusion strategies can not only boost productivity by creating workplaces in which people of all backgrounds are given the support they need to contribute fully, but can also enhance an organisation’s brand in the marketplace. If the history of movements for diversity tells us anything, it is that employers should get on board now, or risk falling behind the pack.

WHS incidents in the workplace: reducing the fallout

Ben Urry, Associate Director

Even where an organisation has implemented “best practice” procedures and training with respect to work health and safety (“WHS”), things can and do go wrong. Where a WHS incident occurs, the important thing for an organisation is how it responds to the incident. Responding in an appropriate and timely fashion can make a significant difference to the level of liability and exposure for an organisation as well as for individual workers, managers and officers who may be involved in the incident.

A common complaint raised by organisations with respect to WHS is that it is “too hard”, “too complex” or “too expensive” to comply. While a proactive and preventive approach (including policies, procedures and training) is the best way to reduce the overall risks to WHS, in the event that an incident occurs, an organisation needs a strategy to frame how it will react. A thorough understanding of the parameters of the obligation to notify a health and safety regulator (“Regulator”), when it may be necessary to seek legal advice, and the rights and obligations of duty holders and the Regulator, can make a considerable impact on the outcome.

Uncertainty over incident management: statistically speaking

In a report published by SafeWork Australia in August 2016 titled “Perceived Levels of Management Safety Empowerment and Justice Among Australian Employers”, small to large businesses were surveyed as to how well they believed they managed WHS. These statistics reveal that, especially among small businesses (which make up over 90% of all Australian businesses), incident management and reporting still has a long way to go. By way of example:

  • 45% of small businesses (having less than 19 employees) do not collect accurate information from incident investigations;
  • approximately 32% of small businesses look for someone to blame rather than the underlying causes when investigating an incident;
  • businesses with young workers tended to be more safety conscious than other businesses; and
  • 10% of businesses in the manufacturing, transport, postal and warehousing industries indicated that fear of negative consequences discourages workers reporting incidents.

It is crucial for businesses of all sizes to understand the basics of incident management.

What is notifiable?

So what if someone is injured or falls ill? Should you be informing the Regulator each time someone gets a paper cut or only where there is a fatality? How soon should you tell the Regulator? Given that the Regulator is often the authority that can bring WHS prosecutions against organisations and individuals, care should be taken in meeting your notification obligations. In jurisdictions which have adopted the model WHS laws (being all States and Territories other than Victoria and Western Australia), it is a requirement that the Regulator be notified immediately if it constitutes a “notifiable incident”. But what does this mean exactly? A “notifiable” incident is defined to include a death, serious illness/injury or dangerous incident.1

A serious illness/injury includes:

  • immediate treatment as an in-patient in hospital;
  • immediate treatment for:
    • amputation;
    • serious head/eye injury, burn or lacerations;
    • separation of skin from underlying tissue (e.g. scalping or degloving);
    • spinal injury;
    • loss of a bodily function;
  • medical treatment within 48 hours of exposure to a substance; and
  • anything prescribed by the Regulations (for example, in NSW this includes such things as infections associated with blood- borne illnesses and occupational zoonoses such as Q-fever or Hendra Virus).2


A dangerous incident includes:

  • an uncontrolled:
    • escape, spillage or leakage of a substance;
    • implosion, explosion or fire;
    • escape of gas, steam or a pressurised substance;
  • electric shock;
  • fall or release from height of any plant, substance or thing;
  • collapse, overturning, failure or malfunction of, or damage to, any plant that is required to be authorised for use under the Regulations;
  • collapse or partial collapse of a structure;
  • collapse or failure of an excavation or of any shoring supports;
  • inrush of water, mud or gas in workings, in an underground excavation or tunnel; and
  • interruption of the main system of ventilation in an underground excavation or tunnel.

While the above definitions appear comprehensive, it can be difficult at times for organisations to determine whether a particular incident falls into one of those categories. For example, if a worker suffers a serious strain or sprain to their foot after colliding with a forklift and is treated at hospital on the same day in an emergency department, does this require notification? The standard reaction of most organisations would be “yes as hospital treatment was involved”, but it is possible to be treated in hospital as an outpatient and not an inpatient. Outpatient treatment for such an injury is not subject to the requirement to notify. Where in doubt external legal advice should be sought as soon as possible to ensure appropriate compliance with the notification requirement.

When an incident occurs, regardless of whether it is notifiable or not, an organisation should conduct an investigation (formal or informal) to determine how to rectify the situation, if at all possible, to avoid further risks to health and safety.

Internal investigations and privilege

Incident investigation is not simply a matter of nominating a person within the organisation to conduct the investigation. Rushing off and investigating a matter without taking time to plan and develop a strategy can increase exposure to liability, especially in circumstances where the incident may be one which could lead to an investigation or prosecution by a Regulator.

One of the biggest issues we see with organisations in this position is failure to consider whether privilege applies.

Legal professional privilege (now referred to as client legal privilege) provides protection for confidential communications between a lawyer and their client where these might otherwise be required to be produced in court or similar proceedings. The key to such privilege is that the dominant purpose of the communication must be for obtaining legal advice or preparing and/or conducting litigation. Speaking to your external legal advisors as soon as possible after an incident occurs and before speaking to the Regulator can assist in determining whether a formal approach covered by privilege is warranted. Importantly, care should be taken when relying on in-house counsel, as the fact that these individuals “wear two hats”, being a commercial and legal one, may result in the privilege being waived.3

A common mistake many organisations make is partially or even fully completing their investigation before speaking to their external legal advisors. An investigation report can contain findings about what the organisation has done wrong and may attribute responsibility for certain failings within the organisation, giving the Regulator a useful outline of possible breaches for its investigation and/or prosecution. As a matter of best practice we recommend taking the time to make contact with your external legal advisors before investigating or notifying the Regulator.

Regulator response: know your rights, but also know theirs

So either through notification or through other means (for example, reporting by a workers’ compensation insurer), the Regulator becomes aware of issues within your organisation. Now what?

The two main functions of the Regulator are to monitor and enforce compliance with WHS legislation and to provide advice and information on WHS to duty holders and the community generally.

The powers of WHS Inspectors are broad and far-reaching. These powers include, without limitation, the ability to:4

  • inspect, examine and make inquiries at the workplace; and
  • bring their own equipment, take measurements, conduct tests and make sketches or recordings (e.g. film, audio, photographs). 

More specifically, upon entering a workplace Inspectors can require a person to:

  • provide details on the whereabouts of a document;
  • produce the document if they have access or control of it; and
  • answer questions put by the Inspector.

Importantly, at least in “harmonised” jurisdictions there are provisions dealing with self-incrimination. Typically, in ordinary criminal matters an individual is not compelled to answer any questions or provide information which may tend to incriminate him or her. Such protection does not apply in WHS matters (other than in South Australia) as individuals are compelled to answer, subject to privilege. At no stage, absent a Court order, should privileged materials be shown or otherwise provided to an Inspector.

The trade-off for the loss of this right is, although a person must provide non-privileged incriminating evidence if asked, such evidence cannot be used against that person in criminal or civil proceedings (unless the evidence provided is misleading or fraudulent). “The catch?” The protection only applies where the information is provided to an Inspector when he or she is exercising their powers under legislation, and not where the information is provided voluntarily.

While cooperating with the Regulator as much as possible is the correct basis for approaching incident management, this cooperation should occur in a context where the Regulator complies with its obligations at law, including allowing legal representation and providing a statutory caution before requiring answers to be provided. This caution should refer to the provisions regarding self-incrimination and the protection afforded by client legal privilege. If the caution is not provided, or individuals are uncertain about whether it is necessary, there is no restriction on seeking a short break to obtain legal advice before embarking on answering questions or providing documents.

Key Takeaways

  1. Notify a notifiable incident. If in doubt, seek legal assistance from your external legal advisors.
  2. Speak to external legal advisors as soon as an incident occurs to determine the best approach to an investigation and privilege.
  3. Understand that the Regulator is never really “off the record” when conducting an investigation and avoid giving opinions or speculation – stick to the facts.
  4. Remember to obtain the caution and respond only to the specific question(s) asked.
  5. Check the applicable local laws – States and Territories do have subtle variations.

1. See for example section 35 Work Health and Safety Act 2011 (NSW).

2. For assistance see SafeWork Australia’s “Incident Notification Information Sheet”

3. See for example Victorian WorkCover Authority v Asahi Beverages Australia Pty Ltd (Ruling) [2014] VCC 1260

4. See for example Part 9 Work Health and Safety Act 2011 (NSW)

Show me the money: cashing out leave entitlements

Sam Cahill, Associate 
Employers and employees may occasionally find it mutually convenient to “cash out” a portion of an employee’s paid leave entitlements. While this can serve as a useful tool for managing an employer’s leave liabilities, the cashing out of leave entitlements is subject to strict rules, which can vary considerably depending on the type of leave involved and the source of these rules. In this article, we examine the most common rules relating to the cashing out of annual leave, personal/carer’s leave and long service leave, and the opportunities they may present to employers.

Annual leave

Cashing out of annual leave is governed by the National Employment Standards (“NES”) in the Fair Work Act 2009 (Cth). The NES provides different rules depending on whether or not the employee is covered by an industrial instrument (a Modern Award or Enterprise Agreement).

Employees covered by a Modern Award

The NES provides that, where an employee is covered by a Modern Award, the employer and employee may only agree to cash out annual leave if this is expressly permitted by the terms of the relevant Award.1

During the Four Yearly Review of Modern Awards, the Fair Work Commission developed a new “model” annual leave award clause, which has since been inserted into most but not all Modern Awards.2 This means that an employer will need to check the applicable Award to determine whether cashing out is permitted and, if so, the conditions that will apply.

The model clause provides that an employer and employee may agree to cash out up to two weeks of annual leave in any 12-month period, provided that the employee will have at least four weeks of annual leave remaining after the cashing out takes effect.
Among other things, the model clause also provides that:

  • each occasion of “cashing out” must be subject to a separate written agreement between the employee and employer;
  • the agreement must include details of
    the amount of leave being cashed out, the amount of money being paid to the employee and the date on which payment will be made;
  • the agreement must be signed by the employer and employee and, if the employee is under 18 years of age, by the employee’s parent or guardian; and
  • the employer must keep a copy of the agreement as an employee record.

Employees covered by an Enterprise Agreement

The NES provides that, where an employee is covered by an Enterprise Agreement, the employer and employee may only agree to cash out annual leave if this is expressly permitted by the terms of the Agreement. Unlike Modern Awards, there is no standard annual leave clause for Enterprise Agreements. This means that an employer will need to check the applicable Enterprise Agreement to determine whether cashing out is permitted and, if so, the conditions that will apply.

For example, the Inghams Enterprises (Lisarow) Enterprise Agreement 2014 includes a provision for cashing out annual leave. It provides that:

“An employee may request in writing to forgo one week of annual leave and to receive payment of that amount (including the leave loading) in lieu of taking the leave. Payment is conditional on the Company agreeing to the request. The employee must have at least four weeks of accrued leave remaining after the pay-out and can only request payment twice per year. Where an employee elects to receive a payment in lieu of taking annual leave, their annual leave entitlement shall be reduced by the quantum of the annual leave payment”.

Employees who are not covered by a Modern Award or Enterprise Agreement

The NES provides that, where an employee is not covered by a Modern Award or an Enterprise Agreement, the employee and employer may agree to cash out annual leave, provided that the employee will have at least four weeks of annual leave remaining after the cashing out takes effect.4

The NES also provides that:

  • each agreement to cash out must be a separate agreement in writing; and
  • the employer must pay the employee at least the full amount that would have been payable to the employee had the employee taken
    the leave.

We note that cashing out of annual leave is prohibited for employees whose employment is governed by the Annual Holidays Act 1944 (NSW) (this will usually be public sector employees).

Personal/Carer’s leave

The NES provides that, where an employee is not covered by a Modern Award or an Enterprise Agreement, he or she is not permitted to cash out personal/carer’s leave.

Employees who are covered by a Modern Award or Enterprise Agreement may cash out personal/ carer’s leave if this is expressly permitted by the relevant Award or Agreement.5 However, given that the NES does not require personal/carer’s leave to be paid out on termination, it is very rare for Awards or Agreements to permit cashing out of this entitlement, and perhaps even rarer for an employer to be willing to do so.

Long service leave

Cashing out of long service leave is governed by the rules of the relevant State or Territory long service leave scheme.

Cashing out of long service leave is permitted in South Australia, Western Australia and Tasmania.In these jurisdictions, an employee and employer may agree to cash out an entitlement to long service leave after the entitlement has been accrued. The agreement to cash out must be in writing (and, in South Australia, signed by the employer and employee).

In Queensland, an employee may only cash out long service leave with the permission of the Queensland Industrial Relations Commission (“QIRC”).7 The QIRC may grant a request to cash out long service leave only if it is satisfied that the payment should be made on compassionate grounds or on the ground of financial hardship.

Cashing out of long service leave is unlawful in New South Wales, Victoria, the Northern Territory and the Australian Capital Territory.

 Key Takeaways

  1. Cashing out annual leave can be an effective way of managing excessive leave liability.
  2. Employers should consider engaging in discussions to cash out annual leave for employees who:
    1. have at least six weeks of annual leave accrued; and
    2. are not covered by an Award or Agreement, or are covered by an Award or Agreement that expressly permits cashing out of annual leave.
  3. Employers with an Enterprise Agreement are subject to the cashing out provisions contained in the Enterprise Agreement. If the Agreement does not expressly permit cashing out of annual leave, given the changes that have been made to Modern Awards, consideration should be given to inserting such a clause when the Enterprise Agreement is re-negotiated.
  4. There is limited capacity for the cashing out of personal/carer’s leave and long service leave.
  5. Given the penalties that can be enforced for breaches of the cashing out provisions, we recommend that employers take a cautious approach to employee requests to cash out leave entitlements. If necessary, an employer should seek specific legal advice on whether it can lawfully enter into a cashing out agreement with a particular employee, and if so, what conditions will apply.

1. Fair Work Act 2009 (Cth), s 92.

2. For example, see clause 29.9 of the Clerks – Private Sector Award 2010.

3. Fair Work Act 2009 (Cth), s 92.

4. Fair Work Act 2009 (Cth), s 94.

5. Fair Work Act 2009 (Cth), s 100.

6. Long Service Leave Act 1987 (SA), s 5(1a); Long Service Leave Act 1958 (WA), s 5; Long Service Leave Act 1976 (Tas), s10.

7. Industrial Relations Act 1999 (Qld), s 53.

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.

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.

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), <…>

2 AI Group, Absenteeisn & Presenteeism Survey (2015), <…>