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Kathryn Dent, Director and Dimi Baramili, Associate

How far can you push employee surveillance? Can an organisation monitor employees’ activities out of hours? What rights to privacy do employees have?

It can be difficult for organisations to get the balance right between respecting the privacy of employees and ensuring they have the ability to monitor and control their business operations, processes, systems and reputation effectively. There are a myriad of surveillance and privacy laws and regulations concerning when and how organisations can legitimately examine employees’ activities both within and outside the workplace and with which organisations should ensure their policies and practices are consistent.

How does privacy law impact on my employees?

The Privacy Act 1988 (Cth) (the “Privacy Act”) requires organisations (other than small businesses) to adhere to a set of Privacy Principles (the “Principles”) in their collection and management of “personal information”. The Principles include the requirements to take reasonable steps to protect personal information from misuse, interference, loss, or unauthorized access. From 12 March 2014 there will be changes to the Principles which include shifting the onus from the individual to the organisation to take ‘reasonable steps’ to make corrections to changes in personal information.

An important exception to compliance with the Principles (which is not new) covers “employee records” of current or former employees. An employee record is defined quite broadly to include personal or health records relating to employment which can go so far as to capture documents concerning the termination of an employee. This exemption does not cover prospective employees, contractors or employees of other companies (such as labour hire employees, or employees of a subsidiary).

Failure to comply with relevant privacy laws may lead to disciplinary action from the Privacy Commissioner through enforceable determinations, undertakings and/or civil penalty orders. The amendments have increased the type, strength and consequences of sanctions available.

When and how can I perform employee surveillance?

Your organisation can conduct surveillance on your employees when they are at work through camera, tracking or computer devices in certain circumstances, provided certain conditions are met (which will vary depending on your relevant state or territory). For example, in New South Wales (one of the few jurisdictions with prescriptive regulation across all forms of surveillance) surveillance can only be performed whilst the employee is at work, with 14 days’ written notice required prior to commencement of surveillance which must specify certain details about the form and nature of the surveillance. Although for new employees, if surveillance is already being undertaken prior to their commencement, they just need to be notified prior to their first day. In addition where computer surveillance is used it must be carried out in accordance with an organisation’s policy where the employee has been notified in advance about the application of the policy.

Where using camera or tracking surveillance such devices must be in clear view as well as other specific requirements being met. Surveillance of any form is also expressly prohibited in a change room, toilet or similar facility, with some restrictions also attaching to the ability to block employee emails and internet access.

When can I consider (and monitor) employee conduct outside the workplace?

There can be some uncertainty around when organisations can legitimately regulate employees’ behavior outside of work. Generally, it is not about the physical time or place within which the behavior occurs but rather, whether it occurs in front of or with co- workers and/or has the capacity to impact upon work relationships.

This has become a vexed issue in particular with the increasing popularity of social media and more organisations deciding to monitor and take action in respect of employees’ conduct in these forums. Courts and tribunals are no longer inclined to be lenient towards employees pleading ignorance of social media, however, employers should still clearly delineate acceptable uses of social media and when out of hours conduct may impact on employment.

It is recommended that your organisation puts in place appropriate policies to regulate the conduct of employees in their private time as long as the policies are reasonable and related to the practices of the business.

“surveillance can only be performed whilst the employee is at work, with 14 days’ written notice required prior to commencement.”

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  • Review your privacy policy and practices to ensure compliance with the Privacy Act including its recent amendments which commenced in March.
  • Include details of surveillance in standard contracts of employment and issue them prior to commencement.
  • Develop and implement surveillance policies ensuring their content and the organisation’s practices comply with the legislation applicable to the State or Territory where surveillance is being conducted.
  • Ensure surveillance activities are confined to the “workplace” as opposed to employee’s private activities.
  • Create or review social media policies to ensure they encourage responsible use of these platforms as opposed to imposing a blanket ban on their use.
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Enterprise agreements (in a variety of forms) and their use has ebbed and owed over time, swaying one way or the other depending on the persuasion of the Government of the time. Not only is the use of enterprise agreements, particularly versus the use of statutory or common law individual contracts of employment, a source of debate in Australia, but also the content in enterprise agreements has come under significant scrutiny.

Consequently, clauses in enterprise agreements must evolve and change to reflect varied legislative requirements as well as changing needs in the economy. As such, it is important that, rather than simply “rolling over” employers consider the productivity improvements that can be gained through innovative use of enterprise agreement terms.

As we come to the end of the fifth year since the commencement of the Fair Work Act 2009 (Cth) with many enterprise agreements having a nominal expiry date of not more than four years and the advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 it is timely to reflect generally on the use and content of enterprise agreements and look forward to what we expect in the future.

Consistent with this theme the Fair Work Commission is establishing a database of model enterprise agreement clauses adopting one of the themes under the Commission’s Future Directions of “productivity and engaging with industry”, as detailed in Future Directions 2014–15: Continuing the Change Program.

It is important that employers regularly review their enterprise agreements as there can be times where Award conditions may be in fact be more beneficial to employees, as is the current case with a national retailer. Enterprise bargaining negotiations failed between the national retailer and the Shop, Distributive and Allied Employees’ Association, with the union convincing the Fair Work Commission to terminate the retailer’s first ever collective agreement that had a nominal expiry date of September 2012. As a result of the failed negotiations and taking a hard line stance, the retailer must now follow the conditions set out in the Modern Award, giving the retailer less flexibility and control in determining the terms and conditions of employment for employees.

Construction industry clients be aware – building and construction industry (fair and lawful building sites) code 2014

On 17 April 2014, the Minister for Employment, Senator Eric Abetz, published an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (the “Code”). The Code provides the Commonwealth Government’s expected standards of conduct for all building industry participants that seek to be, or are, involved in Commonwealth funded building work.

The Minister announced that the Code will come into effect when the Building and Construction Industry (Improving Productivity) Bill 2014 commences and has said that enterprise agreements and other “procedures” will no longer be able to contain “restrictive work practices” or “discriminatory provisions”.

Once the Code commences then entities covered by it that have enterprise agreements made after 24 April 2014 that do not meet the Code will not meet the key criteria for eligibility to tender for, and be awarded, Commonwealth funded building work.

For example, clauses and practices that will not be permitted by the new Code include:

  • an agreement or practice that prohibits or limits the employment of casual or daily hire employees;
  • an amount paid that nominally incorporates payment for ordinary time and other matters such as overtime and allowances in one loaded rate;
  • an arrangement or practice whereby employees are selected for redundancy based on length of service alone; and
  • “one in, all in” clauses where, if one person is offered overtime, all the other workers must be offered overtime whether or not there is enough work.

PCS recommends that any employer in the construction industry that intends or may bid at any time for Commonwealth projects or other work, carefully consider the terms of any agreements about which they are bargaining with their employees.

“It is important that employers regularly review their enterprise agreements as there can be times where Award conditions may be in fact more beneficial to employees.”

Beneficial leave provisions

An employer recently had an enterprise agreement approved which allows employees access to six days of compassionate leave per year. The clause is said to recognise that when this type of leave is taken it usually requires employees to travel long distances. The provision of six days’ compassionate leave is three times the statutory standard for compassionate leave.

In addition to the increased flexibility around compassionate leave the enterprise agreement also allows long-serving employees to cash out personal leave if they retain at least 30 days of accrued personal leave. After completing ten years of service an employee will be able to cash out ten days of personal leave and a further five days after 15 years’ service and then every five years thereafter.

With the recognition of domestic violence as a reason for requesting flexible working arrangements we may also see an increase in clauses entitling victims of domestic violence to paid leave. In 2010 a Victorian employer agreed on a groundbreaking clause entitling victims of domestic violence to 20 days’ paid leave each year. Since then Sydney University’s Professor Marian Baird who has undertaken a study says that similar rights had been included in more than 100 agreements or state public service awards covering more than one million workers.1

Increases in pay

The Department of Employment’s “Trends in Federal Enterprise Bargaining”2 report shows that the agreements approved by the Fair Work Commission in the December 2013 and March 2014 quarter paid an average 3.6% increase to employees.

On an industry basis construction (4.7%) and education (3.7%) increased the average and health and community services (3%) and finance and insurance services (3.3%) pushed the private sector average down.

What does this mean for us?

PCS encourages those employers with enterprise agreements or those thinking about adopting an enterprise agreement to use clauses such as the ones described above as a way to have terms and conditions of employment that suit their operation and give employees something more beneficial than the award. Clauses such as the ones discussed above can also be used to attract and retain key staff.

  1. An equality bargaining breakthrough: Paid domestic violence leave Marian Baird, Ludo McFerran and Ingrid Wright, JIR published online 23 January 2014
  2. “Trends in federal enterprise bargaining December quarter 2013”, http://employment.gov.au/trends-federal-enterprise- bargaining




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Elizabeth Magill, Senior Associate

Managing a mentally healthy workplace is becoming an increasingly important, and an increasingly topical, aspect of workplace relations. As the prevalence of mental health conditions in the workplace continues to increase, together with the costs to employers and productivity, the management of mental health conditions often falls into the too hard basket. This article will discuss mental health conditions and how they affect the workplace and will also look at the legal considerations relevant to the management of mental health conditions in the context of two recent unfair dismissal cases.

What is mental illness and how does it affect the workplace

The Australian Government Department of Health defines mental health conditions as a general term that refers to a group of illnesses that “affect how a person feels, thinks, behaves and interacts with other people.” Mental health conditions include mood disorders, such as depression and bipolar disorder, anxiety disorders, such as social anxiety disorders, obsessive-compulsive disorders or phobias, and psychotic disorders, such as schizophrenia. Latest statistics indicate that one in five Australians will suffer from a mental illness at some point in their lives and according to the World Health Organization, depression will be one of the biggest health problems worldwide by the year 2020.

In terms of how mental health conditions impact on business, a recent report prepared by PwC reveals significant costs to Australian businesses as a result of untreated mental health conditions and, in particular:

  • over six million working days lost each year due to depression;
  • over 12 million days each year of reduced productivity;
  • 3-4 days off work per month for each person experiencing depression; and
  • $10.9 billion dollars lost each year due to absenteeism, lost productivity and compensation claims.

The report also revealed that it is generally employees experiencing mild depression who represent the greater volume of financial burden to employers, with 61% of the costs attributable to those suffering from mild depression as opposed to clinical depression. In conjunction with the launch of the first national campaign to target mental health in the workplace, beyondblue, a leading mental health organisation has advised businesses “if you’re not investing in mental health you’re losing money.”

At a practical level mental health conditions affect employees’ ability to concentrate, relate and interact with others, impair judgment, cloud decision-making, can result in reduced motivation, difficulties with logical thought, lowered productivity, deterioration of work performance, social withdrawal and erratic behavior. Understanding and responding to early warning signs can have a very beneficial impact on the management of mental health conditions and it is widely accepted that the earlier the response and, if necessary, the sooner treatment starts, the better the outcome, including by reducing absenteeism and productivity costs to businesses.

Failing to manage mental illness and the risks

Prolonged disharmony in the workplace arising from workplace bullying, interpersonal conflict, excessive or unreasonable work demands or workplace change, for example, the uncertainty created by restructure, are all factors commonly cited as the cause of an employee’s onset or exacerbation of mental health conditions. In addition to the business risks that arise from mental health conditions in the workplace as discussed above, mental health conditions in the workplace can also expose employers to risk with respect to workplace bullying, adverse action, discrimination, workers compensation and unfair dismissal claims. Two recent cases that have already received a good deal of media attention highlight the consequence for employers when mental health conditions are not managed in the workplace.

Brett McAuliffe v Australian Taxation Office [2014] FWC 1413 (6 June 2014)

In this decision the Fair Work Commission (the “Commission”) handed down a scathing decision criticising the Australian Taxation Office (the “ATO”) and its treatment of an employee who had been suffering from a mental health condition. Commissioner Riordan described the ATO’s actions as “unconscionable” at a time when “Australian society is focusing on the issues of mental health in the workplace” and remarking that he hoped the ATO would not treat an employee diagnosed with depression and anxiety in the future “in the same shabby manner”. The decision highlights the fallout that results from the mismanagement of mental health conditions in the workplace and the potential legal and reputational exposure.

Mr McAuliffe had been employed by the ATO for a period of 10 years. In the period between August 2012 and April 2013, Mr McAuliffe had been absent from the workplace for approximately two months due to “psychological issues” resulting from his perception of bullying and harassment by his managers. As a result of Mr McAuliffe’s absences, Mr McAuliffe was referred by the ATO to an independent psychologist, Dr Synnott, who diagnosed Mr McAuliffe with “an adjustment disorder with anxiety and depressed mood”. Dr Synnott certified Mr McAuliffe as being fit to work but noted that if Mr McAuliffe was required to work with the people he identified as having caused his problems, any return to work would be unlikely to be “successful or enduring”.

Mr McAuliffe subsequently returned to work in June 2013. On Mr McAuliffe’s return to work he was not transferred to another role or team, nor was his return to work plan followed by the ATO. Shortly after Mr McAuliffe’s return to work, and despite there being no complaints or issues about Mr McAuliffe’s performance or ability, the ATO directed Mr McAuliffe to attend a series of further consultations with Dr Synnott. These consultations resulted in a recommendation that Mr McAuliff cease work and obtain further treatment. Mr McAuliffe was directed by the ATO to “cease work immediately and go home”. Mr McAuliffe complied with this direction and the ATO then went on to deactivate his security pass and provide Mr McAuliffe’s photo to its security desk as someone to be denied access to the building.

Mr McAuliffe challenged this direction by providing two medical certificates from his GP which certified him as fit to work. Despite Mr McAuliffe producing medical evidence certifying him fit to work the ATO refused to allow Mr McAuliffe to return. Mr McAuliffe then lodged an unfair dismissal claim with the Commission claiming that he had been constructively dismissed.

Although Mr McAuliffe’s unfair dismissal claim was ultimately unsuccessful, Commissioner Riordan was very critical in his judgment of how the ATO “deliberately and mischievously delayed Mr McAuliffe’s return” to work. Commissioner Riordan also criticised the ATO for trying “to manipulate an outcome to suit its purposes” and found the “ATO’s behaviour in seeking multiple clarifications from Dr Synnott as appalling.” It was also noteworthy that Commissioner Riordan found that it was “a breach of Mr McAuliffe’s contract of employment and the [Fair Work] Act to refuse him entry to his workplace to undertake the functions that he was contractually obligated and entitled to perform” particularly in circumstances where the ATO knew of Mr McAuliffe’s fitness to work and his dire financial situation.

Ronaldo Salazar v John Holland Pty Ltd T/A John Holland Aviation Services Pty Ltd [2014] FWC 4030 (26 June 2014)

In another particularly scathing decision, the Commission has condemned John Holland Pty Ltd T/A John Holland Aviation Services Pty Ltd (“John Holland”) for its treatment of an employee when it sacked the employee for “serious misconduct” without having proper regard to the fact that the employee was suffering from a mental health condition and in full knowledge of the employee’s mental health condition and his need for ongoing treatment.

Mr Ronaldo Salazar was employed as a Licensed Aircraft Mechanical Engineer (“LAME”) in the maintenance of commercial jet aircraft at Tullamarine Airport. Mr Salazar was notified that he was to change work groups from Crew A to Crew B as Crew B was in need of skilled engineers. However, Mr Salazar refused to change work groups stating that he had not been appropriately trained to complete work on a Rolls Royce Trent 700 engine which predominately formed part of the work in the Crew B work group.

On 18 July 2013, Mr Salazar sent an email to Glenn Palin, the Managing Director of the John Holland Group alleging that John Holland was incompetent, was trying to “kill” him and his family, that he was being denied his legal rights as a LAME and suggesting that there may be a repeat of an air crash that occurred in San Francisco. Mr Salazar also threatened to take complaints to Today Tonight, 60 Minutes or the Prime Minister.

On 5 August 2013, Mr Salazar received a letter from John Holland alleging that he had engaged in serious misconduct as a result of his refusal to change work groups as directed and as a result of his email to Mr Palin and was subsequently dismissed from his employment.

Commissioner Ryan found that the dismissal was “invalid and unfair” as it appeared that the managers of John Holland had not given sufficient, if any, weight to the obvious mental health problems that Mr Salazar was experiencing at the time the company directed him to change work crews and in the period that followed. Commissioner Ryan found John Holland’s actions to be “towards the major end” of the “scale of unfairness” particularly as Mr Salazar had been suffering from mental health conditions since January 2013 and had provided medical certificates showing he was being treated by a psychiatrist and psychologist. As a result, Commissioner Ryan found that it was “neither sound nor defensible” to rely upon the conduct of an employee with an obvious mental health problem in drawing a conclusion that the conduct of the employee amounted to serious misconduct. Commissioner Ryan further found that it was totally unreasonable for the company to come to the conclusion that Mr Salazar engaged in serious misconduct and that the evidence of Mr Salazar’s mental health condition provided a “strong reason for excusing the conduct” when Mr Salazar sent the email to Glenn Palin.

Commissioner Ryan was unable to order Mr Salazar’s reinstatement because John Holland’s Tullamarine operations had since closed, but ordered compensation based on lost wages and redundancy payments made to other engineers when the operations closed.

These decisions illustrate the importance that the Commission places on the appropriate treatment of mental health conditions in the workplace both throughout the employment relationship and at the time of dismissal. These decisions also highlight the increasing importance of managing mental health conditions at a time when mental health is at the forefront of drives to improve Australian workplaces and productivity.