BREAKING NEWS: ANNUAL WAGE REVIEW DECISION

The Fair Work Commission’s Expert Panel for annual wage reviews announced today that the national minimum wage will increase by 3.0% (or $21.60 per week). This means that from the first full pay period on or after 1 July 2019, the national minimum wage will be $740.80 per week or $19.49 per hour.

The FWC also determined that increase should apply to the minimum wages in modern awards. Accordingly, from the first full pay period on or after 1 July 2019, the minimum wages in modern awards will also increase by 3.0%, with weekly wages to be rounded to the nearest 10 cents.

Employers are required to ensure that employees are at least being paid the minimum wages or rates of pay set by the Annual Wage Review decision come the first full pay period after 1 July 2019.

Employment Issues

“Stronger penalties for company directors who misuse the Federal Entitlements Guarantee scheme”

The Federal Entitlements Guarantee (FEG) scheme provides employees who have lost their employment as a result of the liquidation or bankruptcy of their employer, with their unpaid wages and other entitlements. The FEG scheme then seeks to recover those amounts from the employing entity or the responsible directors.

Changes to the Corporations Act 2001 (Cth) (Corporations Act) passed in April 2019 have introduced new enforcement measures and increased penalties in an effort to prevent the intentional misuse of the FEG scheme by company directors seeking to avoid paying employee entitlements.

The new enforcement measures include:

1. A criminal offence for company officers who cause the company to enter into an agreement or transaction and are reckless as to whether it avoids, prevents or significantly reduces the recovery of employee entitlements.

2. A new civil penalty provision for persons who enter or cause the company to enter into a relevant agreement or transaction where the person, or a reasonable person in the person’s position, would know that the agreement or transaction is likely to avoid or prevent the recovery of employee entitlements, or significantly reduce the amount of employee entitlements that can be recovered.

This civil penalty provision applies to company officers and also extends to those persons “involved in” the contravention.

3. Extending the right to commence civil recovery action to the Australian Taxation Office, the Fair Work Ombudsman and the Department of Jobs and Small Business as well as to the affected employees.

Further, a person who has contravened the civil penalty provision may be liable to pay compensation or loss of damage suffered.

4. Allowing employee entitlement contribution orders to be made against entities in a corporate group for the payment of outstanding employee entitlements.

5. The Australian Securities and Investment Commission and the courts may disqualify persons from managing corporations where there have been breaches of the Corporations Act by the company or company director and the FEG scheme was misused such that the FEG scheme received no or minimal return.

Comment

The Federal Government’s “Reforms to address corporate misuse of the Fair Entitlements Guarantee Scheme” consultation paper released in May 2017 identified that corporations were using practices, including illegal phoenix activity, to avoid paying employee entitlements upon insolvency, at the expense of the FEG scheme which resulted in significant increased costs for the scheme.

With these amendments, the Federal Government is seeking to deter the use of these practices by employers  and to hold company office holders accountable with harsher consequences for the misuse of the FEG scheme. 

 

NEWS ALERT: Labour hire licencing laws in Victoria have commenced

The provisions of the Labour Hire Licencing Act 2018 (Vic) (the Act) have commenced in Victoria.

The Act requires that a person (i.e. a labour hire business) must not advertise or provide labour hire services unless the person is the holder of a current labour hire licence. All labour hire businesses in Victoria or businesses who place workers with host employers in Victoria should now apply for a licence.

Those requiring a licence should ensure that they obtain one or make an application ahead of the cut off deadline of 30 October 2019.

In addition to labour hire businesses, the Act also applies to those using labour hire services and states that a person must not enter into arrangements for labour hire services with an unlicensed person.

Penalties apply for unlicensed labour hire providers and those using unlicensed labour hire providers. 

The Victorian Labour Hire Licencing Authority is responsible for licencing, education, compliance and enforcement of the new laws. Its website can be accessed here.

 

Adverse Action & Unfair Dismissal

“Employee who refused to provide fingerprint data unfairly dismissed” 

Jeremy Lee v Superior Woods Pty Ltd [2019] FWCFB 2946

 

Executive summary

The Full Bench of the Fair Work Commission (FWC) has found that an employee was entitled to refuse his consent to the collection of his biometric data. His employer’s direction for him to provide the data under a Site Attendance Policy was unlawful, rendering his subsequent dismissal unjust.

 

Background

The employee was a general factory hand at a sawmill in Queensland. He had been employed on a regular and systematic casual basis from November 2014.

The employer had a time recording practice involving manual timesheets that were completed and signed by employees. The employer had identified some shortcomings of this system, including inaccurate time keeping by employees and some employees signing in for colleagues who were late.

To remedy the issues with timekeeping and minimising the risk of timesheet fraud the employer decided to introduce biometric scanners to the workplace which would require employees to sign on and off by scanning their finger.

The employer announced that it would be introducing the system in November 2017. It requested that all employees enrol their biometric data in the system in the trial period over a following seven week period.

The scanning system scanned the biometric data in a person’s finger and took a “template” of particular features in the skin and tissue under the skin. That information was then processed through and algorithm and turned into a series of numbers. The system did not record fingerprints or pictures of fingerprints.

The biometric template of each employee was then stored on the scanning computer and a backup was stored in the servers owned by the employer, but operated by a third party.

After the announcement of the introduction of the scanning system, the employee refused to have his biometric information enrolled in the system. The employee claimed that it was his personal information and he held security concerns in relation to the system.

Over the coming weeks, a series of meetings took place and the employer and employee exchanged correspondence in relation to the biometric scanners system.

The employer attempted to explain the system to the employee, including that it did not take fingerprints. The employee, in turn, tried to explain his privacy and security concerns to the employer.

In early January 2018, the employer introduced a Site Attendance Policy (the Policy) which required all employees to use the biometric scanners to record their attendance on site.

The employee continued to refuse to use the scanners and signed in and out using the manual time sheets.

The employer issued the employee with one verbal warning and two written warnings in relation to his failure to comply with the Policy.

The employee still refused to use the scanners.

The employer then began a “show cause” process with the employee and he was ultimately dismissed from his employment on 12 February 2018 on the grounds that had failed to comply with the Policy.

Following his dismissal, the employee made an application to the Fair Work Commission (FWC) claiming that his dismissal was unfair.

 

First instance decision

The employee’s application was initially heard by a single member of the FWC.

In the matter before Commissioner Hunt, the employee claimed that the Policy was unreasonable and unlawful as was the direction for the employee to comply with the Policy.

The employee argued that the employer had breached its obligations under the Privacy Act 1988 (Cth) (Privacy Act) in attempting to enforce compliance with the Policy because the employer did not:

  • have a privacy policy setting out how it collects and deals with personal information (including sensitive personal information, such as biometric data);

  • issue the employee with a collection notice stating the reasons for collecting the biometric data, what it would be used for, where it would be stored and who would have access to it.

The employee also argued that his consent was required before the employer could obtain the biometric data and that he was within his rights to refuse to provide it.

The employee insisted that there were less invasive alternatives to the finger scanners including the use of unique passwords or swipe cards.

The employee’s position was that there was no valid reason for his dismissal because the Policy and its direction to comply with the Policy was unreasonable and unlawful – he could not be lawfully directed to consent to providing his biometric data to the employer, particularly where the employer had not met its obligations under the Privacy Act. 

The employer, on the other hand, claimed that the Policy was lawful and reasonable, and that it was entitled to implement a new time recording and safety system in the form of the scanners. The employer also argued that that the provisions of the Privacy Act did not apply in the circumstances because the biometric data would be an “employee record”, and employee records are exempt from the Privacy Act.

Commissioner Hunt examined the Policy, the events leading up to the employee’s dismissal and provisions of the Privacy Act.

Commissioner Hunt found that the employee records exemption to the Privacy Act did not apply to information that had not yet been collected by an employer. The exemption could only apply to records already held by an employer. Since the biometric data of the employee in the present case had not been collected, due to his refusals, the employee records exemption did not apply.

Therefore, the employer was required to comply with the provisions of the Privacy Act relating the collection of personal information, including biometric information from the employee.

Commissioner Hunt noted that it was disturbing that the employer (and a number of other entities that could potentially access the employees’ biometric data) did not maintain a privacy policy. 

However, Commissioner Hunt held that the Policy was not, in and of itself, unreasonable. The employer was entitled to improve its efficiency and streamline its payroll processing by introducing a new method of time keeping in the form of the scanners, which had the added benefit of improving safety.

Commissioner Hunt found that it was open to the employer to implement its new policy. It had made numerous attempts to discuss the Policy with the employee and provide him with further information about the scanners and how the new system would work. It also made it very clear to the employee that his continued failure to comply with the Policy would result in termination of his employment. Commissioner Hunt found that the employee was entitled to refuse to consent to the collection of his biometric data but that consequences may flow from that refusal, including termination of employment.

In relation to the alleged breaches of the Privacy Act (said to render the Policy unlawful), Commissioner Hunt found that the failure of the employer to issue a collection notice to the employee did not, in all the circumstances, render the Policy unlawful.

Commissioner Hunt also found that, because the employee had never provided his biometric data to the employer, there was no breach of the Privacy Act in respect to the collection of information – no information was ever actually collected.

The Commissioner noted that there may have been some breaches of the Privacy Act in relation to the manner in which the Site Attendance Policy was implemented, but those were matters for the Australian Information Commissioner and Privacy Commissioner. 

Commissioner Hunt concluded that even if a collection notice had been provided, the employee would still have chosen not to comply with the Policy and would not have provided the employer with the biometric data required for use with the scanners.

Ultimately, she concluded that there was a valid reason for the employee’s dismissal and dismissed his application.

 

Full Bench decision

The employee appealed Commissioner Hunt’s decision to the Full Bench of the FWC.

The primary ground of the appeal was that Commissioner Hunt erred in concluding that there was a valid reason for the employee’s dismissal given the potential breaches of the Privacy Act and the finding that the employee was entitled to refuse to provide his biometric data.

The Full Bench agreed with the Commissioner’s findings that the employee records exemption did not apply in this case. The Full Bench highlighted that the consequence of this was that the provisions of the Privacy Act applied to the employer in connection with the solicitation and collection of the biometric data up to the point of collection, after which, the employee records exemption would apply.

Having concluded that the Privacy Act applied to the situation in question, the Full Bench found that the employee was entitled to refuse to provide his biometric data to the employer under the Policy.

The Full Bench noted that Australian Privacy Principle 3 prohibits the collection of sensitive personal information unless a person consents the collection of that information.

The Full Bench considered that the Policy, and the direction to comply with the Policy, were directly inconsistent with this Principle. The direction to the employee to submit to the collection of his biometric data in circumstances where he clearly did not consent was not a lawful direction and any consent that might have been given once the employee was told that his employment was at risk would likely have been vitiated by that threat (i.e. not genuine consent).

The Full Bench commented,

A direction to a person to give consent does not vest in that person a meaningful right at all. Such a direction is in the circumstances of this case, unreasonable. It was not a valid reason for dismissal.

Ultimately, the Full Bench held that that the employee’s dismissal was unjust because he was not guilty of the conduct alleged by the employer. He had not failed to follow a reasonable and lawful direction. The direction given to the employee was not lawful and he was entitled to refuse to follow it.

The employee was found to have been unfairly dismissed and the question of remedy was remitted for determination.

 

What can your business learn from this decision?

Employers should carefully consider the necessity for finger scanning or other biometric data scanning in the workplace before implementing any new systems.

This decision clarifies that the collection of biometric data from employees amounts to the collection of sensitive personal information from employees and is subject to the provisions of the Privacy Act for employers who are covered by the Privacy Act.

Before moving to collect such information from employees, employers who are covered by the Privacy Act should ensure that:

  • the collection of the biometric data is reasonably necessary for the employer to perform one or more of its functions or activities (as opposed to the system being administratively convenient);

  • they have a privacy policy in place that complies with the Privacy Act;

  • they issue employees with a collection notice in accordance with the Privacy Act; and

  • they obtain genuine consent from employees before collecting the biometric data.

Employers should cautiously approach disciplinary action against employees who refuse to provide their consent to the collection of their biometric data and should seek legal advice.

 

“FWC finds visa worker not dismissed for prohibited reason”

Tiwari v Seljo (NT) Pty Ltd t/a Saffron Indian Restaurant [2019] FWC 1833

 

Executive summary

An employer successfully rebutted a claim by a former employee on a temporary work (skilled) visa (457 visa) that he was dismissed following the denial of his permanent residency application and his request that he only work his contracted hours and duties.

 

Background   

The employee had been employed as a Bar Supervisor from March 2015 to June 2018 when his employment was terminated. The employee had been employed subject to a 457 visa and was seeking permanent residency.

In or about March 2018, the employee was advised that he had not been successful in his application for permanent residency. Shortly thereafter, the employee sent a text message to his employer requesting that he not be required to perform work that was beyond his job description and that he not be required to work beyond his contracted hours.

The employer claimed that following the denial of his application for permanent residency, the employee’s attitude and performance at work significantly deteriorated. The employee was issued warnings in March and May 2018 before his employment was terminated in June 2018.

The employee commenced adverse action proceedings in the Fair Work Commission (FWC).  He claimed that the employer had made false representations to him that it could sponsor his application even though it knew that it could not do so, and that the reason for his dismissal was that he had exercised a workplace right to make complaints about his employment.

In the proceedings, the employer adduced evidence that it had initially thought it would be able to provide a pathway to permanent residency through a Governmental agreement. However, it was subsequently advised that the pathway was not likely to be provided.

 

Decision

The FWC was satisfied that the employee’s text message amounted to a complaint in relation to his employment. In assessing the evidence, the FWC noted that the first warning had been issued three days after the employee had made the complaint. It therefore was of the view that the performance issues raised by the employer were at least in part in response to the complaint.

The FWC went on to note that there were no further performance issues raised until some eight weeks later. In the meantime, the employee’s application for permanent residency had been rejected. The FWC therefore accepted that the employee’s performance had deteriorated from this point onwards. It commented that this was not surprising in circumstances where the employee would have been shocked at the rejection after having spent three years in this employment (and a total of $9000) on the understanding that he would be granted permanent residency.

The FWC was satisfied that the decline in the employee’s performance occurred because of the employee’s disappointment and anger at the failure of the sponsorship of his permanent residency. It further concluded that the employer had made it decision to terminate the employee’s employment based on this decline in performance and that the employee’s complaint was not the reason (or part of the reason) for the employee’s dismissal.

The employee’s general protections application was therefore dismissed.

 

What can your business learn from this decision?

In coming to this decision, the FWC acknowledged the complexities of this particular matter. It sought to clarify at the outset that permanent residency was not a workplace right protected by the general protections jurisdiction in the Fair Work Act 2009.

This decision nonetheless serves as a reminder to employers to ensure that they are aware of their rights and obligations in relation to visas and sponsorship matters, and that these are properly communicated to employees.

It is also a good reminder to employers that proper communication and record-keeping of the reasons for disciplinary action, including reasons for the termination of employment will reduce the risk of miscommunication between employers and employees, and will serve to assist the FWC and the courts if required to determine any disputes or claims of adverse action.

 

Industrial Issues

“Enterprise agreement approved despite non-compliant NERR”

Ross Alexander Family Trust t/a Drilltec [2019] FWCA 2394

 

Executive summary

The Fair Work Commission (FWC) has issued its first decision utilising recent amendments to the Fair Work Act 2009 (Cth) (FW Act), which now permit the FWC to overlook minor errors in a Notice of Employee Representational Rights (NERR) when reviewing proposed enterprise agreements. 

 

Decision

Drilltec had applied to the FWC for approval of an enterprise agreement known as the Drilltec Pty Ltd Exploration Drilling Employee Collective Agreement 2018 – 2021.

When reviewing the pre-approval requirements, the FWC noted the following errors in Drilltec’s application:

  • employees were notified of the time, place and method of the vote on 11 December 2018, which was less than seven clear days before the commencement of the vote on 18 December 2018; and

  • the NERR had been signed by Drilltec’s Managing Director.

The FWC found that these two errors were minor procedural and technical errors respectively, and that employees are not likely to be disadvantaged as a result of the errors.

The FWC therefore approved the enterprise agreement notwithstanding these errors.

 

What can your business learn from this decision?

The amendments to the FW Act (passed in December 2018) permit the FWC to approve an enterprise agreement if it is satisfied that the enterprise agreement has been genuinely agreed to, notwithstanding that there are minor procedural or technical errors in the procedural requirements or the NERR – provided that employees are not likely to have been disadvantage by the errors.

Of course, every effort should be made to comply with the procedural requirements, but, this decision provides some comfort to employers that the FWC is now able to adopt a common-sense approach to applications for approval of enterprise agreements.

Should you require any further information or assistance, please contact our Director Shane Koelmeyer on (02) 9256 7500 or via email on sydney@workplacelaw.com.au.

Information provided in this update is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this update, or from links on this website to any external website.  Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.