Weighing in on the right to Workers’ Compensation

A worker at BHP Pty Ltd (“BHP”) has had his Workers’ Compensation claim denied, after his employment was terminated because his weight posed a safety risk to himself and other employees.

Facts

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

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

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

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

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

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

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

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

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

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

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

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

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

The primary decision

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

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

BHP appealed this decision to the Queensland Industrial Relations Commission. 

The appeal

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

Section 32(5) of the Act provides:

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

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

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

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

The decision

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

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

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

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

What does this mean for employers?

  • A decision to terminate an employee’s employment will be hard to displace if it is based on legitimate OH&S concerns: given the obligations of employers under OH&S legislation, employers will generally be in a strong position to defend against claims brought in relation to termination of employment (i.e. workers compensation, unfair dismissal, adverse action etc.) where it can be established that the reason for the decision was due to safety concerns and their corresponding obligations under OH&S legislation. 
  • Employers should act quickly: given the significant financial costs associated with workers compensation claims, if employers are concerned as to the legitimacy of a workers compensation claim they should act quickly to challenge and/or influence the investigation of a claim before an insurer makes a determination to accept the claim.
  • Keep detailed notes and evidence: in this case Mr Ilife’s notes and that of the medical advisors supported the reasonableness of the decision to terminate Mr Bray’s employment and ultimately influenced the Commission in its findings.

Offensive Drunk Slips Employer’s Noose

A team leader whose employment was terminated after he verbally abused and sexually harassed colleagues on the night of his office Christmas party has successfully challenged his dismissal. Vice President Hatcher of the Fair Work Commission found the dismissal harsh for the purposes of section 394 of the Fair Work Act 2009 (Cth).

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

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

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

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

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

The decision 

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

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

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

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

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

What does this mean for employers?

  • Don’t cherry pick allegations of misconduct: employers should put all allegations of misconduct to an employee and provide an opportunity to respond. If there are multiple valid reasons for termination of employment, employers will be in a much better positon to defend their decision if the employee is afforded procedural fairness in respect of each allegation. 
  • Employers should act consistently with their legal obligations and polices: employers have an obligation under OH&S laws to provide a safe work environment for all employees at all work related activities (including Christmas parties). Accordingly, prior to such events, employers should remind employees of applicable polices and procedures, the types of behaviours that will not be tolerated and encourage responsible consumption of alcohol. During such events employers should also monitor compliance with these policies by ensuring responsible service of alcohol and where possible addressing instances of misconduct.
  • The delineation between work and private lives remains grey: the law with respect to misconduct out of hours is not black and white. If in doubt seek professional advice.

HR Managers beware…

In a decision handed down last week (Cerin v ACI Operations Pty Ltd & Ors [2015] FCCA 1654), the Federal Circuit Court held that a human resources manager at bottle manufacturer ACI Operations (“ACI”) may have a penalty imposed on her personally for her role in dismissing an employee in breach of the National Employment Standards (the “NES”).

The manager gave the employee one month’s notice of termination of his employment rather than the five weeks’ he was entitled to under the NES (as an employee over the age of 45 who had been employed with ACI for over five years). The Court held that she was “involved” in ACI’s breach of the NES within the meaning of the Fair Work Act 2009 (Cth).

Whether a penalty (which could be up to $10,200) will be imposed against the manager will be determined at a later hearing.

The decision makes clear that human resources managers must have a thorough understanding of the employment law framework in which they operate if they are to protect not just their companies, but themselves, from the ramifications of getting it wrong.

High income threshold increases from $133,000 to $136,700

From 1 July 2015 the High Income Threshold will increase from $133,000 to $136,700. The maximum amount of compensation that an Applicant can be awarded will increase to $68,350.

Determining an employee’s earnings for the purposes of the High Income threshold

Pursuant to section 332 of the Fair Work Act 2009 (Cth) (FW Act) an employee’s earnings includes:

  • wages;
  • money that is applied or dealt with on their behalf (e.g salary sacrificing, additional superannuation); and
  • non-monetary benefits with an agreed value (e.g car, mobile phone etc).

An employee’s earnings does not include:

  • payments which cannot be determined in advance (e.g bonuses, commission etc);
  • reimbursements; or
  • superannuation contributions.

What does this mean for your business?

  • An employee earns more than the High Income Threshold and is not covered by an Enterprise Agreement or Modern Award will not be protected from unfair dismissal under the FW Act.
  • Employers should keep this figure in mind when conducting their annual remuneration reviews as employees previously not covered by unfair dismissal protections may now be covered as a result of the increase.
  • Employers should also take note of the definition for earnings when assessing if an employee is covered by the unfair dismissal protections in the FW Act. In particular employees who earn more than $136,700 may still be covered by unfair dismissal protections if their remuneration consists of:
    • bonuses or commission payments that can’t be determined in advance; or
    • a car allowance in circumstances where the vehicle is required to perform their job.

If you require advice or clarification, please call PCS on 02 8094 3100

Industrial Action by government departments to delay travellers and visa processing

Protected industrial action commenced this week by employees of the Department of Immigration and Border Protection (DIBP) and the Australian Customs and Border Protection Service (Customs) and will continue until Friday 26 June 2015, affecting various airports and visa processing.

As a leading provider of employment and migration law services, PCS is keen to ensure that employers and employees alike are aware of and prepared to deal with the potential implications of this industrial action personally and for their organisations over the coming period.

Background

Employees of DIBP and Customs have this week commenced industrial action in connection with the negotiation of the terms and conditions of employment under their proposed new enterprise agreement.

This industrial action will take the form of half day strikes.

Various airports will likely be affected by the strikes, at the locations and dates provided below:

  • 18 June 2015 – Sydney, Perth and Darwin
  • 24 June 2015 – Brisbane and Gold Coast
  • 25 June 2015 – Melbourne

How will this affect you?

Employers

Employers may be affected by delays arising from the industrial action in a number of ways, including:

  • possible delays in processing visa applications for existing employees or newly recruited expats;
  • visitors, including but not limited to clients, may have their travel schedules disrupted, resulting in disruption to the employer’s business; and
  • employers may face the need to exercise a degree of flexibility with arrival dates for employees or make arrangements to enable employees to work remotely if they are likely to be impacted by the strikes.

We recommend that employers take steps to understand, and be prepared for, the potential impact of these delays on their employees, visitors and their business operations over the coming period. This may include drafting communications for employees and others who may be impacted by the delays, informing them of the potential delays and encouraging them to ensure there is flexibility in their travel plans and the scheduling of any other work-related commitments to accommodate any delays.

Employees

Employees who have applied for a visa should plan accordingly for the delays in the coming weeks as this may impact on their ability to commence work, undertake travel (in-bound or out-bound) or change visa status.

Current employees who are required to undertake travel in connection with their work should similarly consider the potential impact of the delays and plan accordingly.

What can PCS do for you?

PCS can assist you in any number of ways in managing the potential impact of the delays arising from the industrial action by DIBP and Customs employees, from drafting communications with employees to providing advice on the potential implications of delays in the processing of visas.

If you would like any advice in respect of the above, please contact us.

FWC hands down decision on annual leave

Yesterday, the Fair Work Commission (the “FWC”) handed down its award review decision on annual leave with a number of implications for employers.

Most importantly, the FWC has determined that a model term on cashing out of annual leave will be inserted into all modern awards. The Fair Work Act 2009 (Cth) has allowed for such terms since 2009 and they have been a common feature of enterprise agreements.

The model term will allow the cashing out of an award-covered employee’s annual leave, subject to four safeguards consistent with and expanding upon the minimum safeguards provided for by the FW Act:

  • maximum of two weeks’ paid annual leave can be cashed out in any 12 month period (subject to the requirement of the FW Act that an employee cannot be left with less than four weeks’ accrued annual leave following the cashing out);
  • employers must keep records of any agreement relating to cashing out annual leave and its content;
  • agreements to cash out annual leave involving employees under 18 years of age must be signed by the employee’s parent or guardian; and
  • the model term will be followed by notes drawing attention to the general protections provisions of the FW Act with respect to undue employer influence and misrepresentation of employee rights.

The decision also covered a number of other issues, including:

  • excessive leave: a model term has been drafted which will allow employers, in certain circumstances, to direct an employee to take annual leave if the employee has accrued more than six weeks’ annual leave;
  • close down: the FWC has rejected inserting a model term into 65 modern awards which would have allowed employers to shut down their organisations and require annual leave to be taken at certain times (for example, during business turndown); and
  • purchased leave: the FWC has recognised an interest in “purchased leave” (whereby an employee chooses to forego wages in return for receiving a corresponding period of leave) and will begin work on a discussion paper with respect to this issue.

Proposed changes to the Paid Parental Leave scheme

Baby out with the bath water?

Earlier this week as part of the budget rollout, Ministers announced the potential end of “double dipping” from the federal government’s paid parental leave (“PPL”) scheme. The legislation currently allows new mothers to receive PPL from the Commonwealth in addition to any entitlements from their employers. Starting on 1 July 2016 women whose employer’s paid parental leave benefits amount to more than $11,500 will be ineligible for any taxpayer-funded PPL. Employees who receive benefits less than this will be entitled to “top up” to $11,500. Women who do not receive any PPL from their employers will continue to receive their current entitlement. This policy amendment is expected to affect up to 79,000 women around the country.

A change such as this will have ramifications for employees and employers alike. For companies, a generous PPL benefit can attract top talent and encourages a culture which values families and flexible work arrangements. For employees, paid parental leave can be a vital step towards achieving equality in the workplace. Many who have entered into employment contracts or voted on enterprise agreements under the current scheme may be looking for alternative compensation or supplementary benefits.

While employers should be conscious of the impact on employees if the budget is passed in its current form, the answer may not necessarily be more cash. Creative solutions will allow businesses to manage costs while continuing to recruit and retain an elite workforce. For example, employers may look to allowing leave to be taken in a more flexible manner as opposed to immediately after the birth or adoption of a child.

Although the future of the PPL scheme is uncertain, it is clear from the response to the announcement that the government faces an uphill battle.

Retrenched employees receive annual leave windfall

Last week Justice Robert Buchanan of the Federal Court clarified the meaning of section 90(2) of the Fair Work Act 2009 (Cth) (“FW Act”) in deciding that at termination employees must be paid their annual leave entitlements at the same rate that this entitlement would have been paid had the employees taken their annual leave during their employment regardless of whether this amount was in excess of the minimum annual leave entitlement required under section 90(1) of the FW Act.

Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 136 (27 February 2015)

In a dispute over the payment of annual leave entitlements under the Centennial Northern Mining Services Enterprise Agreement 2011 (“EBA”), Centennial Northern Mining Services (“Centennial”), a New South Wales coal mine operator and the Construction, Forestry, Mining and Energy (“CFMEU”) offered two competing interpretations of section 90(2) of the FW Act.

Section 90 of the FW Act provides as follows:

“Payment for annual leave

(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.

(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”

Relevantly clauses 19.5 and 19.6 of the EBA provided for different payments for annual leave entitlements, with employees who took annual leave during their employment receiving a greater benefit than employees who had their annual leave paid out as a result of termination of employment. 

Centennial argued that the entitlement in section 90(2) is an guarantee of the minimum obligation to annual leave under section 90(1) (i.e. base rate of pay for the employee’s ordinary hours of work in the period) and that this did not prevent Centennial from differentiating between the annual leave paid at termination of employment and annual leave during the course of the employment provided both were above the minimum entitlement in section 90(1) of the FW Act.

Conversely the CFMEU asserted that “the amount that would have been payable” in section 90(2) of the FW Act was not just a re-statement of the minimum obligations under section 90(1) but instead required a payment of whatever was payable if the annual leave was taken during the employment. This meant that rather than the ordinary rate of pay in section 90(1) Centennial employees who had their employment terminated should have their remaining annual leave paid at their ordinary rate of pay plus the greater of either a 20% loading OR rostered overtime, shift allowance, weekend penalty rates and bonus (which was consistent with the leave payments they would have been entitled to under clause 19.6 of the EBA had they taken their annual leave during their employment).

Justice Buchanan agreed with the CFMEU stating at [34] that:

“…s 90 (2) (unlike s 90 (1) is not confined to a statement of a minimum obligation, but is a statement to the effect that an employee should not suffer a reduction in the value of unpaid leave if employment comes to an end while paid annual leave remains untaken.”

What does this mean for employers?

This interpretation of section 90 of the FW Act means that employers should:

  • review their current EBAs, contracts and policies and consider the enforceability of clauses that provide a lesser entitlement to annual on termination of employment;
  • not offer increased annual leave payments during an employee’s employment if they are not prepared to pay the same entitlements at termination; and
  • consider seeking legal advice if they are concerned about previous payments of annual leave under a mistaken interpretation of section 90(2) of the FW Act.

Looking forward

The confusion associated with section 90(2) of the FW Act will hopefully be resolved once the Fair Work Amendment Bill 2014 (which is currently stalled in the Senate) is passed. The proposed bill aims to repeal section 90(2) of the FW Act to enable employers the flexibility to offer different rates of pay for annual leave during employment and at termination.