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), <https://www.ahri.com.au/__data/assets/pdf_file/000…>

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

PCS Published: an extract from “Doping in Sport and the Law”

In this edition of Strategy-Eyes we have extracted a portion of the chapter written by PCS Team Members Professor Joellen Riley (who is on a leave of absence during her term as Dean of Sydney Law School) and David Weiler (Associate).

In the lead up to the 2016 Olympics in Rio de Janeiro we witnessed a resurgence of controversy around doping in sport, including the International Olympic Committee (“IOC”) considering banning the entire Russian team from competing in the Games. Ultimately the IOC decided to allow 278 of the 389 Russian athletes to compete. However, the seriousness of the allegations against the Russian Government highlights the need for a better understanding of the regulation of performance enhancing drugs in sport.

Closer to home, the majority of the 34 past and present Essendon Bombers players who were charged with using prohibited substances by the World Anti-Doping Agency (“WADA”) following the 2013 AFL doping scandal are set to have their bans expire at the end of this year.

Doping in Sport and the Law1 is an edited book that seeks to fill a knowledge gap in the academic literature surrounding these controversies with a range of experts in their respective fields of study contributing views. However, it is not just for lawyers or academics. Former President of WADA, John Fahey, AC, has described it as “a significant resource for athletes and officials. It should certainly be read by sport medical officers, coaches and club directors.” This chapter seeks to explore the complex nature of the employment relationship of professional athletes whose “work” falls under the authority of WADA and looks at the rights and responsibilities of both the employee and employer in these circumstances.


1 Edited by Ulrich Haas, Professor of Law at the University of Zurich, Switzerland and Deborah Healey, Associate Professor of Law at UNSW, Australia, published on 22 September 2016 by Hart Publishing. The book is available for purchase from Co-op bookstores and online at: http://www.bloomsburyprofessional.com/uk/doping-in…

Seven tips for becoming a more effective negotiator

Joydeep Hor, Founder and Managing Principal and Sam Cahill, Associate

The workplace presents a broad range of situations where parties are required to negotiate. These can range from everyday tasks (such as rostering, allocating work and setting deadlines) to more challenging situations (such as industrial disputes or litigation). In any context, the negotiator’s task is to work towards a solution that meets some of the needs of each of the parties to enable the parties to reach agreement and resolve their dispute. This article sets out seven tips for becoming a more effective negotiator.

Tip 1: Focus on interests, not positions

A negotiator should look for ways to address the needs and interests of the parties, rather than simply defending their own position, or attacking the position that has been adopted by the other party.

While parties will often have conflicting positions, they may have some interests that do not necessarily conflict. This is illustrated by the classic example of the two sisters who each wanted a whole orange. As only one orange was available, they were each given one half. The first sister used her half to make orange juice (discarding the peel) while the second sister used her half to grate the peel to make an orange cake (discarding the flesh). In this scenario neither party was satisfied with the outcome.

If the sisters had taken an interest-based approach to resolving their dispute, and explored why they each wanted the whole orange, they would have realised that their underlying interests were not necessarily in conflict, and could have constructed a solution that met both of their interests.

Example

In the lead up to an annual salary review, John tells his manager, Katie, that he is seeking an increase of $10,000 per annum.

Katie values John and wants to retain him as an employee, but only has the capacity for a salary increase of $5,000. She considers that John’s interests go beyond simply maximising his salary. Indeed, John has a broad set of interests, which includes:

  • recognition of his contributions to the team;
  • confirmation of his seniority and status;
  • having a clear path for career progression; and
  • having greater flexibility in working hours and locations.

Having considered these interests, Katie is able to develop a range of options that John may find satisfactory in addition to a modest salary increase. This might include, for example, a new job title, a larger office, confirmation that he is on track for a promotion and/or the ability to work from home on some days. Moreover, the prospect of a larger salary increase could be framed in terms of reaching specific targets in the future, with a clear time period for achieving these targets.

Tip 2: Be prepared

Step 1: Know your own interests

Your interests will provide you with a guide to what you are looking to achieve from the negotiation. You should ask yourself:

  • What outcomes would be acceptable to me?
  • What is negotiable and what is non-negotiable?
  • How can I justify these outcomes to my stakeholders?

However, you should be careful not to focus only on your own side of the equation. The key to effective preparation is also to pay attention to what the other party is seeking and to understand from where they are coming. This will enable you to approach the dispute with a view to achieving a constructive resolution.

Step 2: Consider the interests of the other party

The best way to consider the interests of the other party is to ask the “why” question. Why do they find the current situation unsatisfactory? Why is the party seeking what they have requested? Why do they feel the way they do? This will allow you to go beyond the initial position that a party is advocating, and work towards a resolution that has the capacity to satisfy some of the needs of both parties.

Step 3: Consider any emotional, historical or relationship factors

A full understanding of any emotional, historical, and relationship factors also provides useful insights into the motivations of the parties.

It can help you to adjust your negotiation strategy to the particular circumstances.

Hence, you should consider:

  • What do you know about the other party, including their personality and track record? What does this tell you about the nature of their request?
  • What do you see as the emotional or historical factors that motivate them?
  • What sort of outcome would they be able to justify to their stakeholders?
  • In light of these factors, what outcomes are likely to be acceptable or unacceptable to them?

Step 4: Identify options for resolution

The earlier stages of preparation should enable you to develop a set of options to put to the other party that are realistic ways of resolving the dispute and are likely to have some appeal to them. These should be based on your careful consideration of the interests of the parties as well as any emotional, historical or relationship factors. Having a range of options available enables the options to be packaged together in varying ways, and also gives each party the capacity to have a say in the ultimate outcome.

Tip 3: Identify areas of agreement

A negotiator should seek to identify areas of agreement from the outset of the negotiation process. It does not matter that the subject matter of the agreement may be minor or procedural. The fact that the parties can reach an agreement on something signals that each party is willing to act in a reasonable manner and is capable of resolving the more difficult issues. It also sets up the negotiation as a joint problem-solving exercise, rather than a conflict management situation.

Example

An employer has received a log of claims from a union representing the employees at the workplace. Amanda is appointed as the bargaining representative for the employer. At the first meeting with the union, Amanda begins by proposing an agenda for the meeting, as well as a clear timeframe for further meetings. The union agrees to Amanda’s proposal and the parties begin to negotiate on the substantive issues. Not only has Amanda demonstrated that the parties are capable of reaching an agreement, she has also sent an important message that she is committed to a process for achieving an outcome.

Tip 4: Demonstrate your willingness to make a deal

A negotiator should demonstrate to the other party that their primary goal is to resolve
the matter. This helps to set the tone of the negotiation process, and can encourage the other party to commit to working towards a solution.

Example

Blake has made an anti-bullying application to the Fair Work Commission. Susan attends the conciliation conference as the employer’s representative. At the conciliation conference Susan starts by telling Blake that she is interested in resolving the matter. She explains her preferred options for achieving a resolution. She then tells Blake that she is open to considering any options that he may wish to put on the table for consideration.

Tip 5: “Help me understand…”

A negotiator should always try to understand what is motivating the other party. One of the most effective ways to do this is to ask them for help.

For example, you could ask:

  • “Help me understand why you want this outcome.”
  • “Help me understand why you are reluctant to agree.”
  • “Help me understand what might change your point of view.”

The simple phrase “help me understand” can have a significant impact on the tone of the negotiation and the mindset of the parties. Firstly, it can help to make the negotiation feel more open and collaborative. Framed as a request for “help”, it has the potential to prompt a positive emotional response from the other party. It also puts the onus on the other party to justify or explain their position.

“Why do they find the current situation unsatisfactory? Why is the party seeking what they have requested? Why do they feel the way they do?”

Tip 6: Ignore ultimatums

A negotiator should avoid engaging with any ultimata issued by the other side. The best response to an ultimatum is to turn the discussion back towards seeking a resolution. It is often better to walk around a demand rather than walk into it, or try and walk through it.

Example

John and Sally are involved in a heated argument at work. The next day, John tells his manager, Mary, that he is going to resign unless Sally is dismissed for her role in the incident. Mary does not try to convince John not to resign. Instead, she says: “This is obviously an important issue… Let’s talk about how we might address this situation. Are there things about how the workplace is functioning that you would like to bring to my attention? Are you concerned about any broader issues in the workplace? How do you think these issues could be resolved?”

Tip 7: Remember that “no” doesn’t always mean “no”, it can mean “not now”

A negotiator should not be discouraged if an agreement cannot be reached immediately. There will usually be the opportunity for further discussions and the prospect of an eventual resolution. If there hasn’t been agreement, the negotiation is still a success if it has narrowed the issues between the parties or provided greater clarity about motivations and needs, thereby building a foundation for a resolution at some time in the future.