Employment Issues

“ALERT: NSW Government passes Modern Slavery Act”

The NSW Government has passed the Modern Slavery Act 2018 (NSW) (the Act) aimed at addressing modern slavery, slavery-like practices and human trafficking in NSW and in supply chains.

To promote supply chain transparency, the Act introduces a mandatory reporting requirement for commercial organisations (meaning a corporation, incorporated partnership or association that has employees in NSW, supplies goods and services for profit or gain and has a turnover of not less than $50 million in a financial year). Under the Act, a commercial organisation must produce a ‘modern slavery statement’ each financial year.

A modern slavery statement will be a public statement which will contain information about the steps taken to ensure that goods and services are not the product of modern slavery. The content of modern slavery statements will be set out by regulations. The Act contemplates that the regulations may require a modern slavery statement to include the following information in relation to a commercial organisation:

  • its structure, business and supply chains;
  • its due diligence processes in relation to modern slavery in its business and supply chains;
  • the parts of its business and supply chains where there is a risk of modern slavery taking place, and the steps it has taken to assess and manage that risk; and
  • the training about modern slavery available to employees.

Maximum penalties of $1.1 million will apply for failing to prepare, publish or provide false or misleading material in a modern slavery statement. Disclosures in modern slavery statements that goods and services are or may be a product of modern slavery supply chains will be kept in a public register.

NSW government agencies will also be required to include a statement in their annual reports about the steps taken to ensure that that goods and services acquired are not the product of modern slavery.

The Act will be supported by the newly established independent position of Anti-slavery Commissioner.

The Act is yet to commence in NSW however the Federal Government has already introduced the Modern Slavery Bill 2018 (the Bill) into Federal Parliament which will establish similar reporting requirements for businesses at a Federal level. We will keep you updated as the Bill progresses.

“Full Bench clarifies approach for assessment of enterprise agreements with loaded rates”

Loaded Rates Agreements [2018] FWCFB 3610

Executive Summary
The Full Bench recently handed down its decision on loaded rates and the application of the better off overall test (BOOT). The decision held that:

  • Where an enterprise agreement (EA) contains loaded rates, a mathematical comparison with the relevant modern award involving sample rosters will be required.
  • Non-monetary, contingent or optional benefits in an EA are not likely to have much impact in offsetting any detriment of loaded rates.
  • In most circumstances, an EA with loaded rates will only be approved if the EA also contains provisions concerning when employees paid a particular loaded rate can be rostered.
  • Loaded rates are particularly troublesome in relation to casual employees, who by virtue of the nature of casual employment, are not typically restricted to one roster pattern.

Background
Loaded rates are rates of pay contained in certain EAs that are higher that the relevant modern award base rates of pay and which are paid in exchange for the exclusion of other entitlements such as penalty rates, allowances and other loadings from the terms of the EA.

Typically, an employee employed under an EA with loaded rates will be paid the higher rate of pay for all of the hours they work, but will not receive, for example, a weekend penalty when they work on a Saturday or Sunday.

The purpose of loaded rates is to provide employers and employees with certainty around rates of pay and to streamline internal processes. Some employees derive benefit from loaded rates in circumstances where they work more normal hours than penalty hours. This is because they receive a higher loaded rate of pay when they are not working in a penalty period. Employers also benefit from loaded rates both in that the relevant modern award penalties no longer apply.

In 2016, the Full Bench handed down its decision in Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 in which it was held that the loaded rates in an enterprise agreement resulted in a small number of employees not being better off overall. In that decision the Full Bench held that all employees must be better off overall under an EA.

Since that decision a number of EAs containing loaded rates were referred to the Full Bench following an ongoing exchange of correspondence between the Fair Work Commission (FWC) and the parties about the proper approach for the assessment of such EAs.

Full Bench Decision
In this case, the Full Bench was tasked with reviewing the applications for approval of five EAs, all of which contained loaded rates.

In providing its assessment of the five EAs, the Full Bench sought to clarify the approach that should be taken to the assessment of the BOOT and its impact on loaded rates.

In summary, the questions for the Full Bench to address were:

  • Are EAs containing loaded rates capable of passing the BOOT?
  • How can loaded rates be assessed for the purposes of the BOOT?
  • Does every employee and every prospective employee have to be better off overall in order for an EA to pass the BOOT?
  • If so, how can the FWC be expected to assess the impact of an EA on every employee and prospective employee?

The Full Bench commenced its exploration of these issues by examining the loaded rates contained in the five EAs and the submissions made by the parties concerned.

It was submitted, from the perspective of the employers in general, that the FWC should take an approach to the BOOT in accordance with the objects of the Fair Work Act 2009 (Cth) (FW Act), including promoting productivity and fairness through an emphasis on enterprise-level collective bargaining for EAs. Parties representing the views of employers claimed that the BOOT should not be applied as a line-by-line comparison with the relevant modern award and should not involve an overly prescriptive examination of the impact of an EA on each and every individual employee.

It was also submitted that the FWC should take into account non-monetary benefits provided to employees under EAs, many of which are not contemplated by modern awards.

Conversely, the Australian Council of Trade Unions submitted that a rigorous approach to the BOOT was required and that satisfaction of the BOOT demanded that each employee be better off overall.

The Full Bench proceeded to set out the general principles that should be applied to the BOOT and to loaded rates EAs specifically.

  • Every employee or prospective employee must be better off overall as required by s193 (1) of the FW Act. “It is not sufficient that the majority – even a very large majority -are better off overall if there are any employees at all who would not be better off” [at para 100].
  • It is an “exhaustive task” to examine the circumstances of every single employee and so, as permitted by s193 (7) of the FW Act, the FWC is allowed to assume that if an employee belongs to class of employees and that class of employees would be better off overall, the individual employee would be better off overall – but only if the EA would apply to the whole of the class in the same way.
  • The relevant classes of employees would not only include classifications but also subclasses based on common rostering patterns to take into account work in penalty periods such as weekends and evenings.
  • The assessment of the BOOT in relation to prospective employees concerns circumstances where an EA contains arrangements that may affect classes of employee not necessarily engaged at the time the EA is submitted for assessment. For example, an EA may contain an assistant manager classification even though the employer does not engage any assistant managers at the time the EA is submitted for assessment. The FWC is required to conduct the BOOT in relation to the assistant manager position regardless. Similarly, the FWC may be required to assess how the EA will impact on the pay of employees working particular rostering patterns permitted by the EA, even if the employer doesn’t use those particular rostering patterns. An employer’s assertions that a particular way of working is unlikely to occur does not mean that it should be excluded from assessment.
  • The BOOT requires an overall assessment of the EA. Therefore, where terms of remuneration are assessed it is necessary of the FWC to conduct a mathematical comparison with the relevant modern award.
  • An assessment of loaded rates requires an analysis of rosters and working arrangements. If a possible roster arrangement under an EA results in an employee not being better off overall, the EA will fail the BOOT.
  • The assessment of an EA can become complex where optional, contingent or non-monetary benefits are proposed. In lieu of any firm evidence from an employer as to utilisation of such benefits, it is not possible for the FWC to assess the value of the benefits in a manner capable of offsetting any detriment in the EA, such as the detriment some employees may experience as a result of loaded rates. For example, where an EA provides for blood donor leave, a benefit beyond that provided by modern awards, this benefit may not be utilised by all employees, despite being available to all employees. Some employees cannot give blood or may choose not to and so the take up of this benefit will not be consistent. Therefore, the value of the benefit to employees cannot be readily established for the purposes of the BOOT.
  • Since all employees may not be better off overall under loaded rates and any detriment is unlikely to be off-set by a non-monetary, contingent or optional benefit, the only mechanism through which an EA with loaded rates can pass the BOOT is where the EA contains rostering parameters for each loaded rate or, where employees are paid at a high loaded rate that is capable of satisfying the BOOT for all of the possible rostering arrangements under the EA.
  • Loaded rates are particularly problematic in relation to casual employees. True casual employment is ad hoc in nature and is not directed by a specific rostering pattern. Accordingly, it is difficult to apply a loaded rate to a casual position where the averaging principles of loaded rates don’t really apply. That is, if a casual employee who works on a weekend and is paid a loaded rate, they will not receive the weekend penalties that they would otherwise be entitled to – they will not better off under the flat loaded rate. If that casual employee does not work at other times where they would receive the benefit of the loaded rate, there is no averaging or offsetting of their rate of pay and they remain worse off.

The FWC applied these principles to the five EAs in question. It found that three of the EAs failed the BOOT and the applications for approval in relation to those EAs were dismissed.

In relation to the remaining two, the Full Bench issued directions for the parties to make further submissions to the FWC in relation to a number of deficiencies that were identified.

In regard to the FWC approval process, the Full Bench noted that the FW Act permits an EA to be approved with undertakings where issues have been identified but are capable of correction. However, the Full Bench said that where an undertaking fundamental alters the nature of the EA (which employees have agreed to) the undertaking cannot be accepted because it changes the EA and would raise questions as to whether the EA was genuinely agreed.

What can your business learn from this decision?
Employers should be aware that if submitting an EA (with or without loaded rates) for approval with the FWC, the EA will be subject to detailed scrutiny and sample rosters and other submissions about the employer’s operations will likely be required.

It is likely that an EA with loaded rates will only be approved if the EA contains rostering parameters setting out when the loaded rates will be paid and to which class of employee.

Lastly, undertakings should only be relied on to correct deficiencies in EAs where the undertaking does not fundamentally alter the terms of the EA. Where significant changes are proposed in an undertaking, the undertaking will likely be rejected.

 

Industrial Issues

“Full Federal Court makes first personal payment order against a union official”

Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97

Executive Summary
The Full Court of the Federal Court of Australia has issued a personal payment order in relation to contraventions of the Fair Work Act 2009 (Cth) (FW Act) by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and one of its delegates – four months after the High Court of Australia confirmed that the courts have a power to do so under section 546 of the FW Act.

The order prevents the CFMMEU from indemnifying the delegate in relation to the penalties personally imposed upon him.

Background
In our April 2018 E-Update, we reported on a judgment of the High Court that confirmed that section 546 of the FW Act gives courts an implied power to make personal payment orders when seeking to impose penalties on parties who have contravened the FW Act.

Those proceedings concerned the conduct of the CFMMEU and one of its delegates, Mr Myles, at a worksite in Footscray, Melbourne on 16 and 17 May 2013 which significantly disrupted a large-scale concrete pour. The CFMMEU and Mr Myles were found to have contravened the FW Act by:

  • Organising and going through with a blockade;
  • Making coercive threats to return to the worksite the next day and repeat the blockade; and
  • Making threats to go to “war” and repeat the blockade.

In the current proceedings, the Full Court was tasked with re-determining the penalties to be imposed on the CFMMEU and Mr Myles subsequent to the decision of the High Court. Given the High Court’s decision, the discussion in this proceeding was whether the Full Court should make such a personal payment order in this instance.

The Australian Building and Construction Commissioner sought orders including that Mr Myles be prevented from seeking or receiving any moneys referable to the payment of penalties from the CFMMEU or any officer, employer or agent of the CFMMEU.

The CFMMEU and Mr Myles argued that the making of such an order should only be exercised in circumstances where there is a proven necessity for the order. According to the CFMMEU and Mr Myles, such a necessity would only be found if there was a proven failure of deterrence by the ordinary imposition of penalties (i.e. without a personal payment order).

The CFMMEU and Mr Myles submitted that there was no proven failure of deterrence and accordingly no personal payment order should be made.

Decision
In relation to the imposition of penalties, the Full Court ordered that the CFMMEU pay penalties totalling $111,000 and that Mr Myles pay penalties totalling $19,500.

In relation to the making of a personal payment order, the Full Court rejected the submissions of the CFMMEU and Mr Myles and said that the power of the courts to make such an order is not limited by some “wait and see” principle. Whilst the order must be appropriate and should not increase the “sting” of a proper penalty, its purpose should be to ensure that, as far as possible, the burden of the penalty is recognised.

Accordingly, the Full Court ordered that Mr Myles be prevented from:

  • Whether before or after the payment of the penalties, seeking or encouraging the CFMMEU in any way whatsoever, directly or indirectly, to pay to him or for his benefit in any way whatsoever any money or benefit referable to payments of the penalties whether in whole or in part; and
  • Accepting or receiving from the CFMMEU in any way whatsoever any money or benefit referable to payment of the penalties either in whole or in part.

In making such an order, the Full Court took into consideration the notable number and frequency of the CFMMEU’s prior contraventions of the FW Act. It found that the CFMMEU’s conduct “has a theme of deliberateness in contravention of the Act” and that “it is a natural inference that those officials of the Union, such as Mr Myles here, tolerate and facilitate this attitude and approach of contraventions of the Act at the choice and will of the Union”.

The Full Court reasoned that the personal payment order should serve to “bring home to [Mr Myles], and others in his position, that he, and they, cannot act in contravention of the Act knowing that Union funds will always bale him, or them, out”.

What can your business learn from this decision?
Individuals who contravene the FW Act no longer have a “safety blanket” in the form of their employer or other well-funded organisations to cover any penalties that might be personally imposed upon them. The Court has made it clear that it will not tolerate any party that chooses to engage in contravention of the FW Act simply as a means of achieving its own ends.

 

Bullying, Harassment and Discrimination

Australian Human Rights Commission: rescission of employment offer due to criminal record was discrimination

BE v Suncorp Group Ltd [2018] AusHRC 121

Executive Summary
The Australian Human Rights Commission (AHRC) inquiry has found that an employer unlawfully discriminated against a job applicant on the basis of his criminal record by excluding him from a position.

Background
The complainant applied for a work-from-home consultant role with Suncorp. The complainant progressed through the recruitment process and was conditionally offered the role, subject to the satisfactory outcome of background checks including a criminal record check. The criminal record check identified that the complainant had convictions in 2008 relating to child pornography offences and a recent conviction for failing to comply with reporting obligations.

Suncorp notified the complainant of the criminal record check outcome. The conditional offer of employment was subsequently rescinded and the complainant was advised that an internal candidate had been appointed instead. Suncorp did not notify the complainant that the conditional employment offer was rescinded due to his criminal record.

The complainant lodged a complaint with the AHRC claiming that Suncorp discriminated against him in employment on the basis of his criminal record.

In response to the complaint, Suncorp denied that its decision not to make an unconditional offer of employment constituted discrimination. It submitted that the complainant was not ultimately offered employment because it had concerns about his ability to undertake the inherent requirements of the position based on the criminal convictions and because preference was given to an internal candidate.

Suncorp claimed that the complainant was unable to meet the inherent requirements of the role. It submitted that:

  • Being trustworthy and of good character was an inherent requirement as the role involved dealing with confidential customer information, working at home unsupervised, having access to technology and promoting Suncorp’s corporate responsibility community programs;
  • The complainant did not meet the requirements of the role to demonstrate its corporate values of respect, fairness, caring and trust and having empathy; and
  • The complainant did not fully disclose his criminal record in his online application.

Outcome
The AHRC considered each of the inherent requirement submissions but was not satisfied that the complainant’s criminal record meant that he could not perform the inherent requirements of the role.

While noting that the offences were serious, the AHRC was of the view that the nature of the offences was not related to his trustworthiness and did not have a sufficient connection to the complainant being able to handle personal information. As such, the AHRC did not consider that the complainant was not able to appropriately handle confidential customer information.

Similarly, it also did not consider that the complainant’s criminal record meant that he was not able to work alone at home or carry out duties using technology and the internet. It referred to the fact that the complainant’s offences were from nine years ago, he had held other positions which required him to access personal information and computer systems largely unsupervised and that Suncorp’s computer systems actively monitored internet usage.

The AHRC found that the promotion of Suncorp’s community programs was not sufficiently connected to the role and there was little reputational risk to Suncorp as criminal convictions were personal and confidential.

In relation to the complainant’s failure to fully disclose his criminal record in the online application, the AHRC did not accept that this meant that the complainant was not able to comply with the requirements of being trustworthy and of good character. It noted that, while the complainant did not fully disclose the extent of his criminal record in the online application, he did disclose it at the interview and had agreed to a criminal record check.

On this basis, the AHRC was satisfied that Suncorp discriminated against the complainant on the basis of his criminal record by rescinding the offer of employment and excluding him from the consultant role.

Under the Australian Human Rights Commission Act 1986 (Cth), the AHRC has the power to investigate complaints of discrimination, make findings and recommendations (which are not enforceable) and prepare a report to be tabled in Federal Parliament. Accordingly, the AHRC made recommendations that Suncorp:

  • pay compensation to the complainant for hurt, humiliation and distress;
  • revise its recruitment policies; and
  • conduct training for its recruitment and human resources staff in relation to assessing inherent requirements and criminal records.

What can your business learn from this decision?
In our recent blog “Checking it twice: the importance of pre-employment and reference checking in recruitment” we discussed the importance of conducting pre-employment checks, including criminal record checks, pre-employment medicals and qualification checks. Employment offers should only be made after pre-employment checks are conducted and there is a satisfactory outcome on those checks.

Particular care should be taken in the recruitment process as there are a number of legal risks which may arise from rescinding offers of employment (even conditional offers of employment) including claims of misleading and deceptive conduct, discrimination or adverse action claims.

 

Work, Health and Safety

“New guide to work-related psychological health and safety issued by Safe Work Australia”

On 7 June 2018, Safe Work Australia published its guide to Work-related psychological health and safety: A systematic approach to meeting your duties (the Guide).

The Guide sets out what a person conducting and business or undertaking under work health and safety (WHS) laws, or an employer under workers compensation laws, must or should do in relation to psychological health and safety in the workplace.

The Guide is based on best practice and the model WHS laws (which have not been enacted in all jurisdictions).

The Guide promotes a systematic approach, centred on three principles – prevent harm, intervene early and support recovery. It sets out a range of psychosocial hazards in the workplace that may result in psychological injury, how to identify those hazards, how to minimise risks and intervene early.

The Guide is a useful resource for employers and should be utilised as a minimum standard for managing psychological health and safety in the workplace.

Employers should also review their existing policies and procedures in relation to psychological health and safety in the workplace to ensure they are meeting the minimum standards set out in the Guide.

 

Workers Compensation

“Employer found negligent in failing to separate worker with violent criminal history prior to physical assault”

Colwell v Top Cut Foods Pty Ltd ACN 010 650 281 [2018] QDC 119

Executive Summary
The Queensland District Court (QDC) has found Top Cut Foods Pty Ltd (the Employer) was negligent in failing to separate two co-workers before a physical assault occurred in its workplace, ordering it to pay almost $600,000 in damages to the injured worker.

Background
These proceedings concerned a physical assault committed by an employee of the Employer (Mr P), against another employee, Mr Colwell (the Worker), on 20 January 2014 whilst in the workplace. There was no dispute that Mr P had physically assaulted the Worker, however, the Worker claimed that the Employer had failed to take all reasonable steps to prevent the assault and was, as a result, liable for the injuries he sustained.

The co-workers were employed by the Employer as knife hands/butchers in its food processing plant. On 20 January 2014, they were involved in a heated verbal exchange. As a result, their supervisor directed them to attend the office (an adjacent store room). On the way to the office, Mr P attacked the Worker, initially from behind, punching him numerous times in the back of the head and the face until he was physically restrained by two other co-workers.

The Worker sustained physical injuries and was on workers’ compensation for a period before ultimately returning to work. His employment was dismissed in May 2014 for reasons unrelated to the physical assault.

The Worker developed Post-Traumatic Stress Disorder which he claimed arose as a result of the Employer’s failure to take reasonable steps to prevent the physical assault, despite being aware that Mr P had a history of violence.

In this regard, Mr P had previously been convicted of doing grievous bodily harm with intent to do grievous bodily harm as well as occasioning actual bodily harm whilst in the United Kingdom and had served four and a half years’ imprisonment as a result. Mr P had also previously been employed by the Employer both prior to and after his return from the United Kingdom. During one of those periods of prior employment, Mr P had been involved in a verbal altercation with another employee.

The Worker claimed that, during his employment, Mr P presented himself as an intimidating figure in the workplace and had a propensity for talking about his criminal history and violent tendencies to co-workers.

In December 2013, the Worker raised concerns with their supervisor about Mr P’s emotional state in the workplace and stated that he was concerned for his own safety. In the proceedings, the Worker stated that he had described him like a “ticking time bomb”.

The Worker also relied on Mr P’s evidence in the proceedings that, a few days prior to the physical assault, Mr P had approached their supervisor and requested that they be separated because they were not getting along and Mr P was “close to losing it”.

The Worker claimed that the Employer was aware of the heated verbal exchanges that had occurred between the co-workers in the lead up to the physical assault but had nonetheless failed to separate them, which resulted in the Worker’s injuries.

The Employer argued that the physical assault was not a foreseeable risk because it was not aware of the details of Mr P’s criminal history and Mr P had not been involved in any violent incidents whilst employed. It argued that the incidents in the lead up to the physical assault were not sufficient to put it on notice that there was animosity between the co-workers or that they required separation in the workplace.

Decision
The QDC was not persuaded by the Employer’s arguments and found that, in addition to being put on notice that Mr P could be violent towards the Worker, the Employer had general knowledge of Mr P’s previous behavioural problems. The QDC noted that the Employer had found those problems to be so significant that, upon being re-interviewed for a position, it had asked Mr P if he had “changed”, which the QDC found was “suggestive of a perception that there had been a necessity for change”. It was therefore foreseeable that a physical assault would occur.

The QDC found that, despite this knowledge, the Employer failed to separate the co-workers in the workplace and had further failed to separate them when they were arguing on 20 January 2014. It regarded this step as “relatively simple and inexpensive” and would have likely prevented the physical assault from occurring.

As a result, the Employer was order to pay $584,995.09 by way of damages to the Worker, comprising of general and special damages as well as past and future economic loss.

What can your business learn from this decision?
Employers should ensure that their managers and supervisors are well-equipped at listening and responding to the concerns of their workers in a timely manner, particularly those relating to the health and safety of those workers. A failure to do so may result in findings that an employer was negligent in its duty of care.

Need a laugh…

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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.