“NEWS ALERT: FWC announces approach to its Annual Wage Review”
The Fair Work Act 2009 (Cth) (FW Act) requires an Expert Panel of the Fair Work Commission (FWC) to conduct and complete an annual wage review in each financial year. The review is normally conducted between March and June of each financial year and includes a review of:
- The minimum wage set out in modern awards and transitional instruments; and
- The national minimum wage order for employees who are not covered by an award or agreement.
As part of the annual wage review each year, the Expert Panel establishes a research program that will be undertaken for that year’s wage review.
In February 2018, the FWC confirmed its research program and published the research which will inform the 2017-2018 Annual Wage Review.
This year, the research includes reports considering:
- The economic and labour market;
- The characteristics of workers earning the national minimum wage and of the low paid;
- The characteristics of the underemployed and unemployed;
- Recent trends in collective bargaining;
- the employment effects of minimum wage increases; and
It is interesting to note the focus on the characteristics of the underemployment and the unemployed for this particular annual wage review, which has commenced, at the time of publishing this E-update.
We will update you further about the Annual Wage Review decision and National Minimum Wage Order in future E-updates.
“High Court clears path for personal payment orders related to penalties under the Fair Work Act”
Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union  HCA 3
The High Court of Australia (HCA) has opened the door for “personal payment orders” whereby a person who is ordered to pay a penalty for contravening a provision of the Fair Work Act 2009 (Cth) (FW Act) is also ordered not to rely on a particular party (likely a co-contravener) to pay their penalty for them.
In May 2013, an official of the Construction, Forestry, Mining and Energy Union (CFMEU) organised the blockade of an entrance to construction site in Victoria, disrupting a concrete pour and causing work to be abandoned. The blockade was organised after the General Superintendent of the site declined the official’s requests for a CFMEU delegate to be placed on site. The General Superintendent had declined the official’s request because the site was subject to an enterprise agreement made with another union and that union had a delegate onsite. The official continued to threaten further blockades if a CFMEU delegate was not placed onsite.
The Australian Building and Construction Commission (ABCC) commenced proceedings against the CFMEU and its official alleging that the blockade and the threats about further blockades were contraventions of s348 of the FW Act, in that they were attempts to coerce the companies responsible for work on the site to engage in industrial activity (being placement of a CFMEU delegate).
Prior to the matter being heard in the Federal Court of Australia, the official and the CFMEU admitted that the official had organised and participated in the blockade and had made threats of further blockades with the intention of coercing the companies to have a CFMEU delegate onsite. The CFMEU and the official admitted that through the official’s conduct, both had contravened the FW Act.
Federal Court of Australia Decision
The hearing of the matter in the Federal Court proceeded as a penalty hearing on the basis that the conduct and contraventions were admitted.
Judge Mortimer found that the CFMEU and the official had repeatedly engaged in similar behaviour on previous occasions and were indifferent as to whether their conduct was lawful or unlawful as long as it served their purposes. Judge Mortimer commented that neither the CFMEU or the official showed any remorse.
Judge Mortimer held that the evidence demonstrated that the CFMEU and the official maintained a continuing attitude of disobedience to the law, their conduct was abusive of their industrial power and they used whatever means they considered necessary to achieve favourable outcomes for themselves.
Judge Mortimer considered it appropriate to set penalties at a level to promote both specific and general deterrence and to ensure that the penalties carried the necessary “sting”. The CFMEU was ordered to pay $60,000 for its contraventions of the FW Act and the official was ordered to pay $18,000 for his contraventions of the FW Act.
Judge Mortimer also ordered that, pursuant to a power under s545(1) of the FW Act, the CFMEU not directly or indirectly howsoever indemnify the official against the penalties imposed on him (the non-indemnity order). In other words, the CFMEU were ordered not to pay the official’s penalty for him.
Full Court of the Federal Court of Australia Decision
The CFMEU appealed this decision to the Full Court of the Federal Court. The CFMEU argued that the court did not have the power under s545(1) of the FW Act to make non-indemnity orders.
The Full Court found that it was impermissible for a court to make orders under s545(1) of the FW Act that interfered with the freedom of a person or organisation to conduct his/her own otherwise lawful dealings with property. The Full Court said that such a power would need to find its source in clear and express statutory language, and no such language exists in s545(1).
The Full Court ordered that the non-indemnity order be set aside, but the penalties ordered by Judge Mortimer remain.
High Court of Australia Decision
The ABCC appealed the Full Court’s decision to the HCA.
The HCA reviewed the reasoning of the judges in the previous decisions and concluded that the there was no power in s545(1) of the FW Act for a court to make non-indemnity orders of the kind made by Judge Mortimer. The HCA found that the orders capable of being made under s545(1) are preventative, remedial and compensatory orders. The non-indemnity order was therefore not within the scope of s545(1).
However, the HCA examined s546 of the FW Act, which grants the court the power to make pecuniary penalty orders when it is satisfied that a person has contravened the FW Act. The HCA reasoned that, under s546 there exists an implied power to make any further orders reasonably required to accomplish the deterrent effect that a penalty is calculated to achieve.
In short, there is an implied power under s546 of the FW Act for a court to make a personal payment order that a person pay a pecuniary penalty personally and not seek or accept indemnity from a co-contravener.
This power is different to the power the that Judge Mortimer relied upon in making the non-indemnity order and therefore the Full Court was correct in overturning that aspect of the decision at first instance. However, the HCA held that the Full Court was not correct in severing the non-indemnity order from the penalties ordered – the non-indemnity order and the penalties ordered were intertwined and one could not be overturned in error without the other also being overturned in error.
On this basis, the HCA remitted the matter to the Full Court for fresh decision in regards to penalty. The HCA commented that in light of its finding in regards to the implied power in s546 of the FW Act, the Full Court may also consider making a personal payment order against the CFMEU official if it considered such an order appropriate.
What can your business learn from this decision?
Individuals and organisations alike should be aware that they can be ordered to pay penalties for contraventions of the FW Act personally, without the assistance of another party who may have deeper pockets. The imposition of personal penalties will likely have more sting for individuals now than in the past.
Unfair Dismissal/Adverse Action
“Full Bench settles approach to inherent requirements unfair dismissals”
CSL Limited T/A CSL Behring v Papaioannou  FWCFB 1005
The Full Bench of the Fair Work Commission (FWC) has held that it is the FWC’s role to consider available evidence and make findings about an employee’s incapacity in unfair dismissal applications concerning capacity to perform the inherent requirements of a role.
The Employee was employed by CSL Limited T/A CSL Behring (the Employer). The Employee was absent from work from 25 August 2016 due to non-work-related illness.
In April 2017, the Employer advised the Employee that his employment was at risk of termination due to his inability to perform the inherent requirements of his role and requested that he provide further information.
The Employee’s treating psychiatrist provided a report stating that the Employee’s condition was temporary and the Employee would recover in six months. Not satisfied with the treating doctor’s prognosis, the Employer arranged for the Employee to be assessed by an occupational physician.
The occupational physician provided a guarded prognosis for the Employee’s recovery, stating that it could not be predicted when the Employee would have a capacity to return to work but that a return to work might be possible within 12 to 24 months. Relying on the opinion of the occupational physician, the Employer terminated the Employee’s employment on the basis that Employee did not have capacity to perform his pre-illness duties.
The Employer lodged an unfair dismissal application, arguing that his dismissal was harsh, unjust and unreasonable.
First Instance Decision
At first instance, Commission Ryan noted that a valid reason had to be “sound, defensible or well-founded” and not “capricious, spiteful or prejudiced”. He found that the Employer’s reliance on the occupational physician’s report was “entirely defensible” and was satisfied that there was a valid reason for the dismissal based on the medical report.
Notwithstanding that there was a valid reason for dismissal, Commissioner Ryan ultimately found the dismissal to be harsh, unjust and unreasonable because the Employee no longer enjoyed the benefit of salary continuance under the enterprise agreement. Commissioner Ryan ordered for the Employee to be reinstated.
The Employer appealed the decision and order of Commissioner Ryan.
Full Bench Decision
The main issue identified on appeal was the tension between the FWC Full Bench decision in Lion Dairy & Drinks Milk Ltd v Norman  FWCFB 4218 (Lion Dairy) and the earlier Full Bench decision in Jetstar Airways Ltd v Neeteson-Lemkes  FWCFB 9075 (Jetstar).
In Jetstar, the Full Bench held that to determine whether a dismissal based on capacity was unfair, the FW Act required the FWC to consider and make findings about whether at the time of the dismissal, the employee suffered from the incapacity based on the medical evidence available.
By contrast, in Lion Dairy, the Full Bench stated that the FWC’s role was not to make an expert assessment about the employee’s capacity and that where there was conflicting medical evidence, employers were entitled to rely on the expert medical evidence available. The Full Bench held that a decision to terminate an employee’s employment based on medical evidence would be a valid reason for dismissal.
The Employer argued that Lion Dairy should be followed, which provided that the FWC should not go behind expert medical evidence to make its own assessment and should only interfere if the medical evidence was unreasonable. The Employee submitted that the approach in Jetstar was to be adopted.
To resolve the tension, the Full Bench in the matter had regard to:
(a) the ordinary meaning of section 387(a) of the FW Act. It noted that the words did not suggest that there was to be an objective test and that the same approach was to be taken whether it was a conduct or capacity related dismissal; and
(b) case law, which provided that to determine whether there was a valid reason for dismissal, the FWC was to consider the evidence and make findings.
The Full Bench held that the Lion Dairy decision was “plainly wrong” and that the approach in Jetstar was to be adopted.
In setting the approach to be taken, the Full Bench stated:
In a dismissal related to the person’s capacity, s.387(a) requires the Commission to consider and make findings as to whether, at the time of dismissal, the applicant suffered from the alleged incapacity. Such findings are to be based on the relevant medical and other evidence before the Commission.
Accordingly, it was found that the Commissioner erred at first instance. The decision and order were quashed and the matter was remitted to a different Commissioner to rehear.
What can your business learn from this decision?
With this decision, the Full Bench has now settled the approach the FWC will adopt when considering unfair dismissal applications involving circumstance where an employee has been dismissed as a result of their capacity to perform the inherent requirements of the role. Under this approach, the FWC will consider the available medical evidence and make findings in relation to capacity.
Before dismissing an employee due to their inability to perform the inherent requirements of their role, employers should seek advice due to the legal risks, including unfair dismissal and discrimination claims.
“Employee’s resignation ineffective as a result of distress and confusion”
Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Tavassoli  FWC 1074
The resignation of an employee that was accepted in circumstances where she was distressed and confused has been found legally ineffective, resulting in a finding that the subsequent termination of her employment was “at the initiative of the employer.”
The employee was an assistant in nursing at an aged care facility. In November 2016, the employee was covertly filmed on a mobile phone by a colleague. The videos of the employee were alleged to show her smiling about the deaths of two residents, being rude to another resident by singing “anything you can do I can do better” and sitting in the facility’s TV room with a cup in her hand having a conversation with two other colleagues while residents’ buzzers can be heard going off in the background.
Upon receiving these videos, the employer commenced an investigation involving the employee.
The employer attempted to contact the employee without success to advise her not to attend the workplace. Upon learning that the employee was attending training two days later, the employer’s Acting General Manager asked the employee to leave the training and return to the employer’s premises for a meeting later that day to discuss some serious matters.
Having no place to go, the employee waited out the front of the aged care facility for the meeting to commence. During that time, the employee concluded that the meeting was related to a six-pack of beer that a resident had offered her. The employee claimed to have become upset during that time and did not want to be accused of being a thief or have her employment terminated for stealing. With the assistance of a colleague, the employee drafted a resignation letter providing one month’s notice of termination of employment and handed the letter to the Acting General Manager. He refused the employee’s resignation.
The meeting regarding the videos and the investigation was conducted as scheduled. The employee became upset during the meeting and later claimed that she was distressed and confused because she had thought that the issues to be discussed were related to the six-pack of beer, not the videos of which she had no prior knowledge.
The Acting General Manager informed the employee of the allegations, though she was not shown the footage, and advised the employee that an investigation would conducted.
The employee persisted with her attempt to resign on the basis that she did not want to be subjected to an investigation. The Acting General Manager advised the employee that even if the employer accepted her resignation, her one month notice period would mean that the investigation would go ahead.
The employee amended her resignation letter to render the termination of her employment immediate. The Acting General Manager then accepted the employee’s resignation.
The following day, the Acting General Manager sent the employee a letter confirming the employer’s acceptance of her resignation. The day after that, the employee presented at the employer’s premises and attempted to withdraw her resignation. The Acting General Manager refused the request.
The employee subsequently lodged an unfair dismissal claim against her employer, seeking reinstatement.
First Instance Decision
The matter was heard in the first instance by Commission Riordan.
The employer raised a jurisdictional objection to the employee’s unfair dismissal application on the grounds that the employee resigned and was not dismissed at the initiative of the employer.
Under the Fair Work Act 2009 (Cth) (FW Act) an employee must either be dismissed at the initiative of their employer or must have been forced to resign by a course of conduct engaged in by their employer in order to access the unfair dismissal jurisdiction.
The employee claimed that her resignation was legally ineffective because of the conduct of her employer and the state she was in at the time that it accepted her resignation.
At first instance, Commissioner Riordan rejected the employer’s jurisdictional objection and found that the employee was unfairly dismissed. Commissioner Riordan found that there were special circumstances surrounding the employee’s resignation that made the termination of employment constructive dismissal, which amounts to dismissal at the initiative of the employer. Those special circumstances included that:
- The employee was escorted from the training session to outside the employer’s premises and asked to return in two hours’ time for a meeting to discuss serious allegations, without being told the nature of the allegations;
- The employee was crying and upset throughout the meeting;
- The employee had difficulty with the English language and was confused;
- The Acting General Manager had been informed that the employee thought the allegations were about the six-pack of beer, not the videos; and
- The employee later attempted to rescind her resignation.
Commissioner Riordan ordered that the employee be reinstated.
Full Bench Decision
The employer appealed the first instance decision to the Full Bench of the Fair Work Commission (FWC). The employer argued that Commissioner Riordan had:
- erred in finding that the employee had been constructively dismissed;
- failed to make a finding as to whether the employee had been forced to resign by the employer;
- failed to take into account that the employee had voluntarily resigned; and
- found that the employer should have taken additional steps in regards to the employee’s resignation when it was entitled to simply accept the resignation.
The Full Bench reviewed the facts of the case and the relevant legislation and case law. The Full Bench held that there may be dismissal at the initiative of the employer where:
although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign.
The Full Bench held that Commissioner Riordan had found that the employee resigned as a result of the conduct of the employer, which was not the case argued by the employee. The employee’s case was that her resignation was legally ineffective because of her mental state and she was dismissed at the initiative of the employer.
The Full Bench held that this was an appealable error and remitted the issue of whether the employee had been dismissed at the initiative of the employer to a single member of the FWC to determine.
Commissioner Cambridge re-heard the matter in January 2018.
He determined that when the employee resigned and her resignation was accepted, the employee was acting irrationally as a result of having a disturbed state of mind. Commissioner Cambridge said that the resignation was not given freely or deliberately, nor was it given as the result of any reasoned deliberation.
Commissioner Cambridge said that the resignation should not have been accepted in circumstances such as it was, where the employee was clearly distressed and confused.
On that basis the resignation was legally ineffective and the actions taken by the employer to subsequently terminate the employment were at its own initiative.
Consequently, Commissioner Cambridge found that the employee was dismissed at the employer’s initiative.
The matter was referred back to the Full Bench of the FWC for further orders.
What can your business learn from this decision?
The FWC has outlined the circumstances in which a resignation may be considered to be a dismissal at the initiative of the employer.
Employers should, as far as reasonably possible, ensure that when accepting a resignation, the employee’s intention to resign is clear and they are not acting a result of a distressed mental state or out confusion.
Work Health Safety
“Sole director convicted as an officer for work health safety breaches after worker falls from railing”
Safe Work NSW v Butler; Safe Work NSW v Edgesafe Pty Ltd  NSWDC 60
The District Court of New South Wales has convicted and fined the sole director of a temporary edge protection installation business $5,500 for breaching his duties as an “officer” under the Work Health & Safety Act 2011 (NSW) (WHS Act). The business was also convicted and fined for breaches of the WHS Act.
Edgesafe Pty Ltd is a business that supplies and installs edge protection and fall prevention systems to clients in the building industry. It had been engaged by RO Steel Pty Ltd to install a temporary edge protection system along the edges of a roof at premises in Riverwood.
Prior to the installation of the temporary edge protection system, the sole director of Edgesafe, Mr Butler, had met with Mr Steel of RO Steel. They agreed that they would attach steel mounting plates to the building’s metal purlins using a “fascia fix” method with self-drilling screws.
The system was then installed whilst Mr Butler was on annual leave by three other employees of Edgesafe, overseen by an experienced on-site supervisor of Edgesafe.
When a sole trader engaged by RO Steel started working on the roof two days later, he placed his hand on the guardrail that had been installed, which separated from the purlins and resulted in him falling five metres to the ground along with 26 sections of railing. The sole trader sustained injuries to his back, neck, wrists as well as internal injuries to his bowel and spleen.
An investigation later revealed that the screws that had been used to attach the mounting plates to the purlins had been blunted and did not sufficiently engage with the purlins.
It also found that the on-site supervisor had failed to provide RO Steel with a handover certificate, as required by the Australian Standard, that would have confirmed he had inspected the system to ensure it was secure and that all connections between the parts of the system were secure and that it could handle potential loads, including a person falling against it.
SafeWork NSW commenced proceedings against:
- Edgesafe for a failure to comply with section 26 of the WHS Act (“Duty of persons conducting businesses or undertakings that install, construct or commission plant or structures”) and thereby exposing a person to a risk of death or serious injury under section 32 of the WHS Act; and
- Mr Butler, as an officer of Edgesafe, for failing to exercise due diligence under section 27(1) of the WHS Act and thereby exposing a person to a risk of death or serious injury under section 32 of the WHS Act.
Both Edgesafe and Mr Butler pleaded guilty to the offences.
Mr Butler, as the sole director, provided evidence that he had trained his workers on the requirements of the Australian Standard and in particular the need for inspection of the completed system. He gave evidence that the on-site supervisor had assured him that he had tested the system and that it had passed. It later came to light that the on-site supervisor had the handover certificate but had failed to provide it to RO Steel.
Mr Butler nonetheless acknowledged that something had gone wrong in the installation process and that the sole trader had been seriously injured. He expressed remorse for the incident and gave evidence of the financial and emotional impact the incident had on him personally, including separation from his wife, sale of their matrimonial home as well as the onset of depression.
The Court found that the risks posed by ineffective installation of an edge protection system were obvious and, whilst the failure of the screws was not readily foreseeable, proper testing of the installation would have revealed this problem.
The Court found that there should have been measures in place, such as pre-drilling holes into the plates or implementing a written system of instruction, and that these were “simple and readily available at little cost”.
In determining the penalties to be imposed upon both Edgesafe and Mr Butler, the Court exercised its discretion and took into account the need for general and specific deterrence, as well as the early guilty pleas and the limited financial capacity of both parties to pay a fine.
The Court accordingly ordered that:
- Edgesafe pay a fine of $75,000 (reduced from the starting point of $250,000);
- Mr Butler pay a fine of $5,500 (reduced from the starting point of $30,000); and
- Mr Butler pay the prosecutor’s costs as agreed or assessed.
What can your business learn from this decision?
“Officers” of a “person conducting a business or undertaking” (PCBU) have individual duties under WHS laws to exercise due diligence to ensure that the PCBU complies with its health and safety obligations. The WHS Act sets out what is required as a minimum to exercise “due diligence”. Officers need to be aware of their due diligence obligations and have active plans in place that ensure compliance.
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