Over the course of 2020, the Full Bench of the Fair Work Commission (the Full Bench) has heard and determined applications to vary modern awards to deal with the COVID-19 pandemic.
In April 2020, 99 modern awards were varied to include provisions providing an entitlement to unpaid pandemic leave. At the time, a number of unions and employee associations foreshadowed that further provisions to provide for paid pandemic leave may be required for health workers covered by some of the modern awards.
Applications were later lodged for the inclusion of provisions for paid pandemic leave for health care workers covered by the following awards:
These applications were declined by the Full Bench in July 2020. However, only a short time later and in response to COVID-19 developments in the Victorian aged care sector, the Full Bench decided to vary the Aged Care Award, Nurses Award and HPSS Award by inserting a new schedule to provide employees with an entitlement to up to two weeks paid pandemic leave.
Full-time and part-time employees, and casual employees who are employed on a regular and systematic basis, who are covered by these awards, will now be entitled to take pandemic leave on each occasion the employee is prevented from working because:
At this stage, the paid pandemic leave award variations will operate from 29 July to 29 October 2020, but can be extended on application by any party. In its decision, the Full Bench also contemplated that, given ongoing developments, it was possible that the provisions may need to be extended to other awards.
Employers should be aware that ASIC has recently updated its Financial Reporting and Audit COVID-19 FAQs (frequently asked questions).
The FAQs relate to key areas of focus for ASIC in the current environment and, specifically, the FAQs include advice to companies that they should consider including in their financial reporting additional employee entitlements (such as paid annual leave and paid personal leave) for past and present “casual employees” covered by the recent decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84.
You can read our summary of that decision here.
In this context “casual employees” refers to employees who are not true casual employees and who may have an entitlement to paid leave and other permanent employee entitlements under the Fair Work Act 2009 (Cth). In the Rossato decision, the Court did not permit the employer to offset any additional entitlements owed to a “casual employee” with a casual loading paid to the employee.
“High Court settles interpretation of paid personal/carer’s leave entitlements”
Mondelez Australia Pty Ltd v AMWU & Ors; Minister for Jobs and Industrial Relations v AMWU & Ors [2020] HCA 29
The High Court of Australia (the High Court) has confirmed that the entitlement to paid personal/carer’s leave in the National Employment Standards (NES) of the Fair Work Act 2009 (Cth) (FW Act) is to be understood and accrued on the basis of a “notional day” rather than a “working day” (or a 24-hour period).
The recent uncertainty personal/carer’s leave initially arose in a dispute about the interpretation of the Mondelez Australia Pty Ltd, Claremont Operations (Confectioners & Stores) Enterprise Agreement 2017 (the Enterprise Agreement).
In 2017, Mondelez had applied to the Fair Work Commission (FWC) for the approval of the Enterprise Agreement. The Enterprise Agreement expressed the entitlement to paid personal/carer’s leave as 80 hours per annum rather than 10 days.
At the time, Mondelez had two employees who worked 12-hours shifts. In considering whether the Enterprise Agreement should be approved, the FWC raised a concern that those employees would not receive the full 10-day NES entitlement. It requested an undertaking from Mondelez to address the inconsistency. Mondelez refused to do so and, in 2018, the FWC refused a request to refer the issue to the Full Bench.
Mondelez then applied to the Full Court of the Federal Court of Australia (Full Federal Court) to determine the interpretation of the entitlement under the section 96(1) of the FW Act.
Given the possible ramifications of this determination, the Minister for Small and Family Business, the Workplace and Deregulation intervened.
The personal/carer’s leave provisions in the Enterprise Agreement provided that employees:
Mondelez had two employees who worked 12-hours shifts. Mondelez sought declarations from the Full Federal Court which provided that when the employees were absent from a 12-hour shift on paid personal/carer’s leave, 12 hours was to be deducted from their leave balance and that the paid personal/carer’s leave entitlement in the Enterprise Agreement was more beneficial than those in the NES.
Before the Full Federal Court, Mondelez argued that the accrual of a “day” of personal/carer’s leave under section 96 should be based on the average daily ordinary hours of a five-day working week (the “notional day” construction). Mondelez argued that the Explanatory Memorandum to the Fair Work Bill 2008 supported the notional day construction. It pointed to passages in the Explanatory Memorandum which stated that the NES:
The Minister also argued that the “10 days” was equivalent to an employee’s ordinary hours of work over a two-week period, which in turn was in alignment with the entitlement under the WR Act which calculated the entitlement based on 1/26th of an employee’s hours worked in a year.
Representing the employees, the Australian Manufacturing Workers Union (AMWU) submitted that the accrual of a “day” of personal/carer’s leave under section 96 should be based on a “calendar day” (or a 24-hour period) (the “working day” construction). This would mean that employees would be entitled to 10 calendar days of personal/carer’s leave without loss of pay.
The AMWU argued that the true purpose of the entitlement is to protect an employee from loss of income as the result of personal or familial illness or unexpected emergency, and that the “notional day” construction would be inconsistent with this purpose.
Mondelez submitted that the working day construction would create anomalies and unreasonable results in relation to the entitlement.
The majority of the Full Federal Court preferred the “working day” construction put forward by the AMWU – that a “day” under section 96 of the FW Act referred to a 24-hour period. For each day of paid personal/carer’s leave taken, one day would be deducted from the accrued leave balance. The majority also agreed with the AMWU’s submission that paid personal/carer’s leave was a form of income protection for employees.
Accordingly, the majority refused to grant the declarations sought by Mondelez.
As a result of the Full Federal Court’s interpretation of section 96 of the FW Act, employers were left in the absurd position where:
Mondelez and the Minister (now the Minister for Jobs and International Relations) lodged appeals against the Full Federal Court decision on the basis that the majority erred in its interpretation of “day” as a working day.
Before the High Court, the issue in dispute was the interpretation of a “day” in section 96 of the FW Act and whether it was to be taken to mean a “notional” day or a “working” day.
The High Court agreed with the notional day construction of the word “day” in the paid personal/carer’s leave entitlement under section 96 of the FW Act.
Chief Justice Kiefel and Justices Nettle and Gordon held that this construction was consistent with the stated objectives of the FW Act, and the statutory provisions in the FW Act:
"Construing the expression “10 days” as referring to the equivalent of an employee’s ordinary hours of work in a two week period, or 1/26 of their ordinary hours of work in a year, is consistent with the purpose of the paid personal/carer’s leave scheme and in particular, that of s 96, which is aimed at protecting employees against loss of earnings when then are unable to work for one of the reasons set out in s 97." [at 23]
The majority also held that this interpretation was reinforced by the Explanatory Memorandum and the legislative history under the WR Act, with the Explanatory Memorandum showing the “continuity” between the WR Act and the FW Act. In particular, the majority noted that the entitlement under both the FW Act regime and the WR Act regime were the same, and both used the language of “10 days” and “two weeks” in relation to the leave accrual.
In this way, the majority held that the “working day” construction was not consistent with section 96 or the objectives of the FW Act as it would lead to inequalities for employees working longer shifts in fewer days and provide the same or greater entitlement to part-time employees.
In a separate judgment which supported the majority, Edelman J held that the statutory context of the entitlement under section 96 of the FW Act did not support the “ordinary meaning” interpretation and also noted the legislative history and the Explanatory Memorandum supported the notional day construction.
Gageler J provided a dissenting judgment in which he supported the “working day” construction. In his view, this approach provided fairness and equal protection of income – each employee would be entitled to be paid where they were unfit for work due to illness and injury.
Accordingly, the High Court held that in relation to the entitlement under section 96 of the FW Act:
The High Court allowed the appeal and made an order setting aside the Full Federal Court’s order, and made a declaration reflecting the above conclusions.
In this decision, the High Court has settled the uncertainty regarding the paid personal/carer’s leave entitlement. It is a return to the recognised and widely accepted method of calculation of paid personal/carer’s leave.
Employers should review their payroll systems to ensure that the paid personal/carer’s leave is accruing and being paid correctly.
“Failure to properly consult on redundancy resulted in harsh and unreasonable dismissal”
Freebairn v Dandie Pty Ltd ATF the DM & IT Moore Family Trust, TJL Business Advisors Pty Ltd ATF the Lumtin Family Trust, and Profitwatch Pty Ltd ATF the Rosemark Trust T/A TJL Business Advisors and Accountants [2020] FWC 3915
The Fair Work Commission (FWC) found a COVID-19-related redundancy to be harsh and unreasonable because the employer failed to meets its consultation obligations under a modern award. Had the employer conducted a proper consultation, the employee would likely have remained employed and become entitled to JobKeeper payments.
The employee was a part time Administrative Assistant in the employer’s financial services firm. Her employment was covered by the Clerks – Private Sector Award 2020 (Clerks Award).
In March 2020, as a result of the COVID-19 pandemic, the employer was required to examine its business and consider ways of ensuring its ongoing viability.
On 18 March 2020, an all staff meeting was held during which employees were informed that the employer was considering ways to sure up its future and some employees may be directly impacted.
On 25 March 2020, the partners of the firm met to discuss the impact of the COVID-19 pandemic on their business and the options available to them. In that meeting the partners decided to reduce the hours of administrative staff.
That afternoon, one of the partners met with the employee to discuss the impact of the pandemic. During that meeting, the partner informed the employee that all administrative staff would be impacted by changes that the business needed to make, primarily by way of a reduction in their hours.
The partner then showed the employee some calculations he had done which demonstrated that the employee would be financially better off if her employment ended and she claimed JobSeeker payments. The partner went on to explain that, for this reason, her position had been selected for redundancy. The partner asked the employee if she had any questions, comments or suggestions. She said that she did not.
The partner then made the decision to terminate the employee’s employment as the result of redundancy and provided her with a letter.
The employee subsequently submitted an application to the FWC alleging that her dismissal was unfair.
The employer raised a jurisdictional objection to the application, arguing that the termination of employment was a genuine redundancy and the employee was jurisdictionally barred from bring her claim.
The FWC considered the meaning of a genuine redundancy under the Fair Work Act 2009 (Cth) and specifically the consideration found in s389(1)(b) – whether an employer “has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.”
The Clerks Award contains consultation obligations under clause 38. It requires that if an employer has made a definite decision to make major changes the employer must, amongst other things:
The FWC held that the employer had failed to comply with its consultation obligations under the Clerks Award because:
Having failed in its consultation obligations, the employer failed to secure the genuine redundancy exemption. Accordingly, the FWC dismissed the employer’s jurisdictional objection and moved to consider whether the dismissal was unfair.
The FWC held that there were sound, defensible and well-founded reasons for the employee’s dismissal, namely that the employer no longer required her role to be performed by anyone. In the FWC’s view, that conclusion was rational and justified in an environment where the employer was genuinely trying to reduce its costs having suffered a significant reduction in revenue as the result of the impact of COVID-19 on its clients. However, the failures in consultation rendered the dismissal harsh and unreasonable.
The FWC found that, had proper and meaningful consultation taken place, either the employee or the employer would have suggested the option of the employee reducing her days of work from three to two per week, and that suggestion would have been accepted. Further, the FWC held that a proper consultation period would have extended the employee’s employment to at least the end of March 2020, at which time the JobKeeper scheme was announced and the employee would therefore have remained employed and supported by JobKeeper.
The FWC held that an award of compensation to the employee was appropriate in the circumstances. The FWC took into account that, had the employee remained employed, she would have received a higher rate of pay under the JobKeeper scheme and it should therefore calculate any loss that she suffered based on that amount.
The employer argued that, had it not made the employee’s position redundant at the time that it did, her position would have been made redundant shortly thereafter due to the imminent closure of one of its offices at which the employee worked for a portion of her time.
Taking into account the JobKeeper rate of pay and wages paid to the employee between the termination of her employment and the anticipated redundancy of her position due to the office closure, the FWC calculated the employee’s loss at $3,189.01 and made an order for the employer to pay compensation in that amount to the employee.
The consultation obligations in enterprise agreements and modern awards are critically important in any redundancy situation involving agreement or award covered employees.
Employers should fully understand their consultation obligations before commencing a redundancy process to not only ensure that they meet the requirements of a genuine redundancy, but also to afford employees the opportunity to think about the situation and offer suggestions or ask meaningful questions during what can be an emotionally difficult time.
“Payment of general damages under Deed did not disentitle worker to seek compensation for work injury”
Gardiner v Laing O’Rourke Australia Constructions Pty Ltd [2020] NSWCA 151
An employer sought to rely on a Deed of Release, in which it had agreed to pay a worker general damages in settlement of a discrimination claim, as a basis for disputing the worker’s subsequent claim for workers compensation.
The New South Wales Court of Appeal (the Court) held that the Deed did not prevent the worker from seeking compensation for a psychological injury under workers compensation legislation.
The worker was employed by Laing O’Rourke Australia Constructions Pty Ltd (the Employer).
On the termination of his employment, the worker made a complaint of discrimination and victimisation against the Employer to the NSW Anti-Discrimination Board (Discrimination Claim).
The worker and the Employer settled the discrimination claim by way of a Deed of Release (Deed) in which the Employer agreed to pay the worker $29,412 in general damages and a further $4,400 in payment of his legal costs.
The terms of the Deed included:
The worker also made a workers compensation claim alleging that he suffered aggravation, acceleration, exacerbation or deterioration of a psychological condition in the course of his employment (Workers Compensation Claim).
The Employer denied liability for the Workers Compensation Claim on the basis that the worker had received payment for the same injury from the settlement of the Discrimination Claim. It relied upon section 151A of the Workers Compensation Act 1987 (NSW) (WC Act) to argue that the worker was not entitled to any further compensation.
Subsection 151A(1)(a) of the WC Act relevantly provides:
At first instance, an Arbitrator of the Workers Compensation Commission (the Commission) upheld the declinature by the Employer. On appeal, the President of the Commission dismissed the appeal and confirmed the Arbitrator’s decision.
The worker then lodged an appeal to the Court. Relevantly in issue was the nature of the payment under the Deed – specifically, whether “damages” were paid in “in respect of” the worker’s psychological injury.
The Court had regard to the construction of the Deed. It held that the proper construction of the terms of the Deed made it clear that there was no possibility that the payment of “damages” was intended to settle any workers compensation or work injury damages claim. This was because:
In his decision, Justice of Appeal Basten had regard to the statutory schemes under the:
Basten JA held that the workers compensation legislation was “concerned with “damages” payable in respect of an injury caused by the negligence or other tort of the employer” (at [36]) while the AD Act was a separate statutory scheme in relation to unlawful discrimination. In his view, a “purposive construction” of the two statutory schemes did not support the argument that a payment for a discrimination complaint excluded a workers compensation or work injury damages claim, even if the discriminatory conduct gave rise to an injury.
On that basis, the Court allowed the appeal. Orders were made to set aside the decision of President of the Commission and the certificate of determination from the Arbitrator and to remit the matter to the Commission to determine the remaining issues in dispute.
It is not uncommon for employees to make multiple claims (such as employment-related and workers compensation) arising from the same incident or conduct.
Deeds of Release or Terms of Settlement should be carefully drafted to reflect the intention of the parties in relation to the settlement of a particular claim. Employers should note that, generally, releases cannot include claims under workers compensation legislation or superannuation legislation.
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
