Work Health & Safety

“Safe system of work defeats negligence claim”

Capar v SPG Investments Pty Limited ta Lidcombe Power Centre & Ors (No 5) [2019] NSWSC 507

Executive summary

A security officer (the Plaintiff) developed post-traumatic stress disorder (PTSD) after confronting an intruder whilst guarding a shopping centre. The NSW Supreme Court has found that the security company, the security services provider and shopping centre owner did not breach their duty of care to the Plaintiff.

Background

The Plaintiff was employed as a security officer for Dynamite Security Protection Services Pty Limited (Dynamite) since 2009. Dynamite was engaged by Business Protection Group Pty Limited (BPG) who had been contracted to provide security services at a shopping centre owned by SPG Investments Pty Limited (SPG).

In March 2010, whilst on overnight duty, the Plaintiff observed an intruder on the premises from a CCTV monitor in the security control room. The Plaintiff exited the control room and proceeded to investigate the location of the intruder, waiting for the intruder appear. The intruder emerged in front of the Plaintiff and after being confronted by the Plaintiff, the intruder with an axe in his hands, said “I’m going to kill you”. The Plaintiff was then chased back to the control room where he locked himself in and called the police.

The Plaintiff suffered psychological injury from the incident by way of chronic PTSD and depression and commenced proceedings in the NSW Supreme Court alleging negligence.

Hearing

At the hearing, the Plaintiff alleged that Dynamite (now represented by the Workers Compensation Nominal Insurer), BPG and SPG (the Defendants) breached their duty of care owed to him and claimed damages.

Relevantly, the Plaintiff argued that:

  • Dynamite breached its non-delegable duty to provide reasonable care for his safety, including providing a safe place of work and safe system of work; and
  • BPG owed the Plaintiff a duty of care which was similar to that owed by an employer to an employee and breached this duty to the Plaintiff.

Dynamite accepted that it owed a non-delegable duty of care but denied that it breached this duty. It argued that it provided the Plaintiff with a safe system of work and the Plaintiff was trained in that system and that in breach of this system of work, the Plaintiff confronted the intruder, exposing himself to the risk of injury.

BPG denied that it owed the Plaintiff a duty of care, but if it did owe a duty, it discharged the duty by engaging Dynamite.

Decision

Justice Bellew noted that while the Plaintiff was employed by Dynamite, BPG had input into the system of work at the shopping centre. The system of work included an operations manual, work health and safety management plan and standard operating procedures for general duties and in relation to specific incidents. In short, the system of work clearly set out that security personnel were to maintain their own safety first and not to put themselves in danger and were not to approach intruders but call for police and wait for the police to arrive.

Justice Bellew found that the Plaintiff knew and understood what he was required to do in the event that there was an intruder. However, contrary to the system of work and training and instruction given to him, including specific instruction in relation to what to do if there was an intruder, the Plaintiff left the control room and approached the intruder, waiting for him to appear and placing himself in danger.

Accordingly, Justice Bellew found that Dynamite did not breach its duty of care to the Plaintiff, but rather that the Plaintiff “was entirely the author of his own downfall”.

With respect to BPG, Justice Bellew accepted that there was a relationship between it and the Plaintiff analogous to that owed by an employer to an employee. The Plaintiff wore a uniform with BPG logo, BPG was responsible for part of the training given to the Plaintiff, and the manuals and procedures were issued by BPG. Justice Bellew was also satisfied that BPG’s duty extended to protecting the Plaintiff from being attacked by an intruder.

Again, however, in the opinion of Justice Bellew, BPG did not breach its duty of care to the Plaintiff. It was found that BPG had discharged its duty because it provided the Plaintiff with a safe system of work, which included training and instructions which the Plaintiff admitted he understood.

Justice Bellew made orders in favour of the Defendants.

What can your business learn from this decision?

The provision of a safe system of work which includes training and instruction to workers will be a relevant factor in determining that there was a breach of duty of care, or other duties, including work health and safety duties. Where a worker knowingly acts contrary to the system of work instructed, this can be relied upon to demonstrate that the employer discharged their duty of care.


Employment Issues

NEWS ALERT: Increase to the high income threshold from 1 July 2019

From 1 July 2019, the high income threshold increased from $145,400.00 per annum to $148,700.00 per annum.

Under the Fair Work Act 2009 (Cth) (FW Act), an employee who is award-free and enterprise agreement-free must earn less than the high income threshold to be protected from unfair dismissal.

The increase to the high income threshold means that award-free and agreement-free employees earning up to $148,700.00 per annum will now be protected from unfair dismissal and will be eligible to bring an unfair dismissal claim under the FW Act for a dismissal which takes place after 1 July 2019.

The increase to the high income threshold also impacts on the compensation that the Fair Work Commission (FWC) can award in unfair dismissal matters. The maximum compensation that can be ordered by the FWC will now be $74,350.00.


“Full Court finds additional payments above base in annualised salary not “ordinary time earnings” for superannuation”

Bluescope Steel (AIS) Pty Ltd v Australian Workers’ Union [2019] FCAFC 84

Executive summary

The Full Court of the Federal Court has found that where an employee is employed under an industrial instrument that specifies ordinary hours (e.g. 38 hours per week) and is paid an annual salary that includes a base salary component as well as an amount for potential over time or public holiday work, the component of the salary attributable to ordinary hours (i.e. the base salary component) is the amount upon which superannuation should be calculated, not necessarily the whole annualised salary.

Background

This matter concerned six employees of BlueScope (AIS) Pty Ltd and BlueScope Steel (the employers) whose interests were represented by the Australian Workers Union (AWU). The hearing of the matter focussed on two employees in particular.

The employment of each of the employees was subject to the terms and conditions in a series of industrial instruments, including pre-reform awards and later a number of enterprise agreements.

In summary, the following features of the awards and enterprise agreements were relevant to the determination of the matter:

  • The awards included a term acknowledging that superannuation is governed by federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act).

  • The later enterprise agreements included terms stating that superannuation is governed by federal legislation, as well as terms stating that the employer “will make contributions” in compliance with that legislation.

  • The enterprise agreements described the standard hours of work for employees as an average of 38 hours per week.

  • Under one enterprise agreement arrangement, employees could be paid an “annualised salary”. The annualised salary was comprised of:
    • a “base salary” – calculated on an ordinary rate for 38 hours per week; and
    • “a component which absorbed all additional payments such as penalty rates, allowances, shipping shift premiums, public holiday loadings and payouts and payments for additional hours worked outside the normal rostered hours” – this amount was expressed as “overtime” of 5.5 hours per week at the relevant overtime rate.
  • Another enterprise agreement arrangement provided for payment of an “aggregate salary” The aggregate salary was comprised of three components:
    • a “base salary” – calculated as 38 hours per week at the ordinary rate;
    • “additional payments” which included work performed on public holidays. Using a model roster, the enterprise agreement estimated that employees may be required to work about five public holidays per year and so an amount equivalent to payment for such public holiday work was included; and
    • “shiftwork payment and penalties” – again using a model roster, the amount of weekend penalties and shift allowances was estimated and included.

The AWU claimed that the employers had contravened the awards and later the enterprise agreements by failing to make the superannuation contributions on behalf of employees according to their full salaries.

The employers argued that the additional hours/overtime and public holiday components of the salaries were not “ordinary time earnings” for the purposes of calculating superannuation contributions.

Federal Court of Australia decision

The matter in the first instance was heard by a single judge of the Federal Court of Australia. The questions for the Court were:

  • Did the employers contravene the awards and/or the enterprise agreements?
  • If so, what superannuation contributions should have been made?

Justice Flick found that the employers had contravened the awards and the enterprise agreements and they were obliged to pay superannuation contributions on the additional hours and public holiday components of the employees’ salaries.

Full Court of the Federal Court of Australia decision

The employers appealed the matter to the Full Court of the Federal Court of Australia.

The Commissioner of Taxation applied for and was granted leave to be an intervener in the proceedings on the basis that he had a vested interest in the outcome and could provide the Court with unique insights.

The employer appealed the matter on a number of grounds, but the primary issues for consideration were similar to those in first instance:

  • Did the employers contravene an award of enterprise agreement?
  • If so, what superannuation should have been paid by the employers?

On the first question, the Full Court agreed that the language of the awards did not create any legal obligation on the part of the employers. The superannuation terms in the awards were an acknowledgement of the relevant superannuation legislation and did not compel the employers to pay any contributions on behalf of the employees.

As pointed out by the Commissioner of Taxation, the superannuation legislation does not compel an employer to make superannuation contributions on behalf of an employee – rather it incentivises employers to contribute superannuation to avoid the superannuation guarantee charge, plus an administrative charge and interest. In this sense, there is no positive obligation on an employer to make contributions, merely an incentive to do so in order to reduce the charge to nil.

In relation to the enterprise agreements, the Full Court found that the language was different to that in the awards and it did impose a binding obligation on the employers. The superannuation terms in the enterprise agreements stated that the employers “will make contributions”, which the Full Bench held was clear in its intent to create an obligation.

Therefore, if the employers did not make appropriate superannuation contributions, they would have contravened the term of an enterprise agreement and, in turn, contravened the Fair Work Act 2009 (Cth).

In order to determine whether there had been any contraventions, the Full Court was next required to consider whether the employer had made the correct superannuation contributions and on what basis the correct superannuation contributions should be calculated.

Under superannuation legislation, superannuation contributions are calculated according to an employee’s ordinary time earnings, which is defined as an “earning in respect of ordinary hours worked”.

The employers argued that “ordinary time earnings” should be interpreted as meaning earnings based on ordinary time – in other words, the base salary component of the annualised and aggregate salaries that was calculated according to ordinary hours of 38 per week at the ordinary rate of pay.

The Full Court considered a range of precedent case law and interpretive materials, including explanatory memorandums from superannuation legislation and amendments.

Chief Justice Allsop concluded that for the purposes of superannuation, “ordinary time earnings” should be interpreted to mean payment for the ordinary hours the employees work, which is to be determined according to the relevant industrial instrument. It does not mean the hours that the employee ordinarily works. Therefore, hours that are distinguishable from ordinary hours, like overtime, no matter how regularly they are worked, are not ordinary hours. The Chief Justice highlighted that the history and context of the superannuation legislation was relevant to this interpretation, noting that the legislature had intended the legislation to operate simply and efficiently.

Based on these findings, the Chief Judge held that ordinary time earnings should not be interpreted to include earnings beyond ordinary hours, such as overtime or additional payment for work on public holidays.

Justice Rangiah agreed with the reasons of the Chief Justice.

Justice Collier issued a separate decision in which her Honour also considered the recent case law and explanatory material. Justice Collier concluded, similarly to the Chief Justice, that ordinary time earnings in respect of ordinary hours of work should be interpreted with reference to ordinary hours and ordinary rates of pay set out in any applicable industrial instrument. However, her Honour did not accept the employers’ argument that ordinary time earnings excluded higher rates on public holidays or weekends. Justice Collier found that the enterprise agreements included terms stating that weekends and public holidays were to be considered ordinary working days and therefore, earnings on those days were to be considered “earnings in respect of ordinary hours of work”.

The parties were invited to consider the Full Court’s decision and file submissions regarding the appropriate orders.

What can your business learn from this decision?

Superannuation is governed by federal legislation that is aimed at incentivising employers to make superannuation contributions on behalf of employees to avoid the superannuation guarantee charge.

The amount that should be contributed by an employer on behalf of an employee under the legislative scheme should (generally) be determined according to the employee’s “ordinary time earnings”.

“Ordinary time earnings” is defined in the superannuation legislation to mean earnings in respect of ordinary hours of work.

Where a modern award, enterprise agreement or contract of employment specifies an employee’s ordinary hours of work and their ordinary rate of pay for such hours, then this will be employee’s ordinary time earnings.

Earnings for hours that are more that the ordinary hours specified in an industrial instrument, such as overtime, will not be ordinary time earnings for the purposes of superannuation no matter how frequently the employee works those additional hours or whether they are compensated for those hours on a regular basis in an annualised salary.


Modern Awards

“Model annualised salary clauses to be inserted into 19 modern awards”

4 yearly review of modern awards – Annualised Wage Arrangements [2019] FWCFB 1289


Executive summary

The Full Bench of the Fair Work Commission (FWC) has decided to insert model clauses seeking to regulate annualised salary arrangements in modern awards that already deal with the subject (19 in total).

Decision

In 2018 as part of its 4-yearly modern award review, the Full Bench determined that the annualised wage provisions that were currently in a number of modern awards did not adequately ensure that employees on annualised salaries were not disadvantaged compared to employees who were not on annualised salaries.

In that 2018 decision, the Full Bench identified model clauses that would alleviate this concern and subsequently invited interested parties to make submissions in this regard.

After hearing from those interested parties, the Full Bench determined in February 2019 to insert two variants of the model clause into those modern awards that currently have annualised salary provisions (as well as the Pastoral Award, the Horticultural Award and the Health Professionals Award).

The model clauses impose a number of obligations on employers, including:

  • a requirement that employers must conduct annual reconciliations of salaries (which, according to the FWC, whilst creating an additional administrative burden on employers, remains less onerous than having to calculate wages on a weekly, fortnightly or monthly basis);
  • a requirement that employers must record the hours worked by employees on annualised salaries to ensure that they can conduct annual reconciliations;
  • annualised salaries must not be terminated unless by agreement or on 12 months’ notice;
  • the calculation method used to generate the salary amount must be provided to the employee to ensure transparency about the extent of additional hours that may be worked without additional remuneration; and
  • employers must advise employees of the outer limit of hours that would attract penalty rates.

The first variant of the model clause will apply to those awards where employees generally work relatively stable hours of work, which will relevantly include those employers in the banking, finance and insurance, clerical, telecommunications and mining industries.

The second variant of the model clause will apply to those awards where employees work highly variable hours or significant ordinary hours that attract penalty rates, which will relevantly include those employers in the broadcasting, local government, manufacturing, pharmacy and rail industries. In these industries, written agreement must be reached with the employee about the annualised salary.

The implementation date is yet to be determined with the Full Bench allowing further submissions from interested parties on the application of these clauses.

What can your business learn from this decision?

The model clauses will only be inserted into those modern awards that currently have provisions relating to annualised salaries. It is important that employers begin (if they have not already) reviewing their arrangements in relation to annualised salaries to ensure that employees are not disadvantaged, and that they have the resources in place to ensure compliance with the new reconciliation requirements.

 

Discrimination & Harrassment

“Court orders $170,000 in damages for sexual harassment in the workplace”

Hill v Hughes [2019] FCCA 1267

Executive summary

The Federal Circuit Court of Australia has awarded $170,000 in compensation to a paralegal who was subjected to “relentless” sexual harassment from her employer, a principal solicitor.

Background

The employee began work at the principal solicitor’s law firm as a paralegal in May 2015.

Shortly after she started with the law firm, the solicitor (her employer) offered to represent her in a family law mediation with her former husband. As a result of this client/lawyer relationship, the employee disclosed a large amount of personal information to the solicitor including information about her former relationships and her children.

On the evening before the family law mediation, the solicitor called the employee and told her that his feelings for her had grown. From this date, the solicitor engaged in a persistent campaign in pursuit of a romantic relationship with the employee.

The solicitor sent the employee a constant barrage of emails of personal nature, imploring the employee to enter into a relationship with him. The employee repeatedly told the solicitor (in person, on the phone and in email) to stop sending her emails of a personal relationship, that she did not want to be in a relationship with him and that his conduct was stressful for her.

The solicitor also engaged in inappropriate conduct towards the employee including appearing unexpectedly in her room during a work trip and asking for hugs from her whilst blocking her exit at the end of the work day.

During the course of the solicitor’s email campaign between June and October 2015, his emails included statements pursuing the employee as well has veiled threats about her employment should they not end up together, denials that he was harassing her and insistence that he would defend any harassment complaint against him.

In October 2015, the employee started seeing a psychologist to help her deal with the stress she was feeling.

By December 2016, a new female employee and friend of the solicitor had begun working at the firm. In February 2016, the solicitor informed the employee that he had begun a relationship with this new employee.

In June 2016 the solicitor sent an email to the employee stating that his views regarding her personal life, which she had disclosed to him in 2015 in his capacity as her legal representative, had coloured his view of her professional abilities. He reduced the days of work he offered the employee.

The employee responded that she did not consider her personal life relevant to her professional abilities and again implored the solicitor to refrain from emailing her about personal matters.

The employer responded in two further emails. In one of his emails he said “I know you must be musing whether to complain about me here well I would fight.”

The employee resigned soon afterwards and finished working at the firm at the end of June 2016.

Federal Circuit Court of Australia decision

The employee claimed that the solicitor had sexually harassed her in contravention of the s28B of the Sex Discrimination Act 1984 (Cth) (SD Act).

The Court considered the definition of sexual harassment in the SD Act, which includes unwelcome sexual advances in circumstances where a reasonable person, having regard to all the circumstances, would have anticipated the possibility that the person harassed would be offended, humiliated or intimidated.

The solicitor argued that he was not making sexual advances but rather, he was attempting to pursue a romantic relationship. The Court described this attempt at a distinction as “social myopia” and found that the SD Act did not allow for such a distinction in any event.

The Court found that the relationship that the solicitor was seeking to enter was clearly a sexual one. The Court said,

The fact that the Respondent might view his actions as merely “romantic” does not detract from the fact that his actions were, to this Applicant, a daily nightmare that occurred because the Respondent, as a man, was targeting her sexually, as a woman and as his inferior.

The Court found that numerous sexual advances were made and that the actions of the solicitor were precisely the sort of actions the SD Act seeks to address. The Court held that the solicitor had sexually harassed the employee.

The Court accepted expert medical evidence that the employee has suffered a psychological injury as a result of the harassment and awarded her $120,000 in damages.

The solicitor argued that his conduct was at worst annoying and he had suffered because his name had been reported in the media. He therefore argued any award made to the employee should be nominal. This was rejected by the Court.

The Court also considered whether aggravated damages were appropriate. The Court noted that the solicitor had made threats to the employee in an attempt to stop her from making a complaint against him. He had also attempted to bribe her by saying that he would not continue to train her as a lawyer if she complained about him. He had also insisted on several occasions that he was expressing his feelings and that was not harassment and that he had been careful not to harass her. The Court commented that his conduct was akin to, but fell just short of perverting the course of justice.

The Court also took issue with the solicitor’s conduct during the proceedings, noting that he had included irrelevant information (including privileged information) in materials filed with the Court in an attempt to blacken the name of the employee.

The solicitor also attempted to blame the employee for his conduct by describing her as flirty and recounting occasions she wore alluring dresses to the office. He described her perfume and that on occasion he could see her bra strap or part of her breast when looking at the neck line of her dress. He claimed this was the employee encouraging his behaviour.

The Court said the solicitor’s submissions were “utterly outrageous”, commenting that:

It is the mark of a bygone era where women, by their mere presence, were responsible for the reprehensible behaviour of men. The Sex Discrimination Act was enacted to help eliminate this sort of thinking.

The Court awarded a further $50,000 to the employee for aggravated damages, bringing the total award to $170,000.

What can your business learn from this decision?

The relentless pursuit of a romantic relationship in the workplace is likely to amount to sexual harassment and is a contravention of the SD Act.

Employers and employees should be aware that “expressing feelings” for a colleague repeatedly when that person does not share those feelings if unwelcome conduct, and should stop. In this case, the employee was consistent in her refusals of the employer and yet his conduct persisted.

Employers should be alive to the conduct of employees, taking steps to intervene where appropriate. All employees should be trained in appropriate workplace conduct.

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