The importance of procedural fairness

A recent decision by the Fair Work Commission* assessed certain inadequacies of an investigation conducted by Mooroolbark Child Care Centre following an altercation between two child care workers. Whilst the dismissal was ultimately upheld due to the seriousness of the conduct in question, the Commission noted a number of flaws with respect to the investigation process which were considered to weigh in favour of a finding of unfair dismissal.

Commissioner McKinnon said, “In some respects, the process was orthodox. An allegation was made, [the employee] was stood down on full pay, and an investigation occurred before allegations were formally put and determined.”

However, the Commission noted that whilst the employer considered the respondent’s history of domestic violence and related mental health in deciding to dismiss her, it failed to recognise the necessary causal link between one’s prior history and present employment circumstances. The employer also failed to provide the respondent with an opportunity to put her past history into context, and as such these issues could have only been fairly considered with the input of the respondent. Denying the respondent the opportunity to address this resulted in a denial of procedural fairness.

Commissioner McKinnon also noted that other matters that arose during the course of the investigation were not dealt with by the employer on an equal footing which weighed further in favour of a finding of unfair dismissal. The Commissioner stated that this “… highlights both the importance of objectivity and the difficulty for inexperienced employers in ensuring procedural fairness for employees absent specialist advice and support.”

Applying the findings of the investigation

However, ensuring a procedurally fair investigation is just part of the approach for an organisation in mitigating risk. Understanding the findings of an investigation and how they should be applied within an employment law context in making decisions around disciplinary action are equally important.

A decision of the Queensland Industrial Relations Commission** had a significant financial impact on the Wide Bay Hospital and Health Service (WBHHS). Not only was Dr Gregory Coffey reinstated to his former position of District Director of Medical Services at the WBHHS but he was also awarded compensation for remuneration lost or likely to have been lost as a result of the dismissal.

Dr Coffey’s exemplary and unblemished experience spanned more than 40 years and included 5-years with the WBHHS. Dr Coffey’s performance appraisals had always been positive and his professional judgement as a medical practitioner and administrator had never been the subject of criticism. In his role with the WBHHS, Dr Coffey was responsible for the recruitment and retention of medical officers at three hospitals. However, following an independent investigation, the WBHHS terminated Dr Coffey’s employment on 28 September 2017 as Medical Director and the Chair of its Credentialing Committee for appointing Dr Jocobus Cloete, who allegedly had an identified alcohol issue, to an obstetrics position.

Despite the investigation report making no findings critical of Dr Coffey’s actions, the WBHHS dismissed Dr Coffey for reasons including that he had failed to “ensure the highest, professional and ethical standards were followed for the credentialing of Dr J Cloete“. In fact, the investigation report concluded there was “no evidence that the conduct of any WBHHS employee (excluding Dr Cloete) was deliberate or knowingly in breach of any relevant policy or procedure” and that “All witnesses impressed as cooperative and credible, and it is accepted that all witnesses were acting with the best of intentions in relation to the appointment and credentialing of Dr Cloete“.

Following the test established in Byrne v Australian Airlines Ltd, the Commission found that Dr Coffey’s “dismissal was harsh” because “it was disproportionate to the gravity of the misconduct in respect of which the employer acted” and that “the termination was unjust and unreasonable because Dr Coffey occupied no special or different position to anyone else on the Committee but appears to be singled out for special consideration for no obvious or apparent reason.”

Commissioner Thompson stated, “I have carefully considered the findings to substantiate each of the three allegations, relied upon as grounds for terminating his employment on 28 September 2017 and found each of the allegations were on the evidence and material before the Commission, on the balance of probabilities, incapable of being substantiated.”

*Courtney Murphy v ECEC Management Pty Ltd T/A Mooroolbark Child Care Centre [2019] FWC 3169

**Coffey v State of Queensland (Wide Bay Hospital and Health Service) [2019] QIRC 56 (5 April 2019)

The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.

A new financial year is always a busy time for many payroll and human resources teams. It’s a time when performance and commission reviews might be due, salaries can increase and award rate changes need not only to be interpreted, but also implemented. The deadline of “the first full pay period on or after 1 July 2019” is a phrase which instills fear into many Australian workforce managers.

In June this year the Fair Work Commission (FWC) published its Annual Wage Review. The Fair Work Act 2009 (Cth) requires the Commission to review the National Minimum Wage and Modern Award minimum wages each financial year. The outcome of these reviews impacts all Australians employed under an Award, and flows on to many others. The 2017-2018 review estimated that “the number of employees who have their pay set by an award is estimated to be 2.3 million or 22.7 per cent of all employees”.

Any Modern Award minimum wage increase also impacts loadings, penalties, allowances and overtime payments which are calculated with reference to the Modern Award minimum wages. Similarly each 1 July there is a change to the high-income threshold for unfair dismissal applications. The high-income threshold for unfair dismissal applications will rise on 1 July 2019 from $145,400 to $148,700.
Over the past 6 years, we have also seen 1 July as a key date in a phased increasing of the superannuation guarantee. However this year this rate remains steady at 9.5%.

Under the Modern Award system, the wages for each classification are the lowest possible wage rate an employee can be paid. This means an employer cannot pay anything less than the minimum wage outlined the Award which applies. Often organisations make a decision to pay above the minimum wage rate. However, over time this can too easily become an underpayments issue. Any increases to the award wage, loadings, penalties and allowances each year need to be taken into consideration to ensure the employee doesn’t inadvertently fall below the minimum wage.

There is no doubt that the Australian wage system can be complex. Navigating your way through the National Employment Standards, National Minimum Wage, Modern Awards, Enterprise Agreements and contracting arrangements can often be described as a Pandora’s box. We see reminders of where things go wrong in the media regularly, with big business and household names being warned recently by the Fair Work Ombudsman Sandra Parker announcing that they would be taking a tougher approach to enforcement. Just this week it’s been reported that Domino’s Pizza have been the subject of a class action accusing them of misleading and deceptive conduct which alleges that it caused franchise operators to underpay thousands of “award workers” under old, substandard agreements as opposed to the Fast Food Industry Award. It’s estimated that if successful, the class action could cost Domino’s Pizza more than $240 million, a very expensive Pandora’s box in this instance.

As specialist employment lawyers, we often see the cost to an organisation of underpayment issues, often the result of inattention or human error. And the cost isn’t limited to repayment of wages, but often incurs legal fees, sometimes fines and bad publicity. Not to mention the productivity, cultural and morale issues that often remain with the workforce affected. We work with many clients from a risk management perspective to prevent these issues from impacting their business.

The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.

Workdynamic promotes gender equity in its workforce by implementing flexible working arrangements and eliminating gender pay gaps.

This International Women’s Day and every day our team maintain a gender parity mindset and support our clients to do the same. #BalanceforBetter #IWD2019

The World Bank Organisation have identified that gender equality is a critical component of economic growth and recently published Women, Business and the Law 2019: A Decade of Reform outlining how women’s employment and entrepreneurship choices are affected by legal gender discrimination. Workdynamic Director and Principal, Jane Wright, was one of the 2000 lawyers worldwide who contributed to the report.

The report collates and examines ten years of data around the economic decisions women make as they go through their working lives and is intended as an objective measure of how the regulations and laws of the World Bank Group’s 189 member countries affect women’s incentives to participate in economic activity.

There was a worldwide improvement on average towards gender equality in the last ten years, however only six countries achieve a perfect score of 100 in terms of their laws treating men and women equally among the dimensions measured.

While Australia scores 96.88 on the WBL index, we still have considerable room to improve gender equality not only in terms of legislation, but significantly our ability to meaningfully implement these laws.

Workplace policies are an important way to implement frameworks to reduce both direct and indirect discrimination and implement workplace strategies to promote gender equality. For example, the Bankwest Curtin Economic Centre and Workplace Gender Equity Agency identified in their Gender Equity Insights 2019: Breaking through the glass ceiling report that

“Flexible workplaces and paid parental leave are key to staff retention. The loss of skilled workers represents a potentially significant cost to companies, both through the loss of experience and leadership, and through the costs of recruiting and training new appointees. Flexible workplaces with paid parental leave schemes are integral to retaining female staff members during and after pregnancy.”

Should your organisation wish to be on the forefront of gender equality, Workdynamic are well positioned to assist. Not only are we recognised as experts in this area, but we ‘walk the walk’ in our day to day business.

Image source: Women, Business and the Law 2019: A Decade of Reform

The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.

Workdynamic is delighted to announce the opening of a Melbourne office with the appointment of Kathy Dalton as Director.

Before joining Workdynamic Australia, Kathy was an employment law partner of two leading international employment law practices in Melbourne, K&L Gates and DLA Piper.

With a team of 19 lawyers already working for clients spread across the continent, Kathy is a significant addition to the Workdynamic team. Kathy has forged a reputation for being a highly trusted, knowledgeable and practical senior practitioner in her field. Her depth and breadth of experience and leadership establishing our Melbourne office, will allow us to expand our service offering in Victoria in relation to all aspects of workplace investigations, employment, industrial and discrimination law.

Kathy has been providing strategic workplace relations and employment law advice to leading employers for over two decades. She is relied on regularly by boards and senior decision makers to advise on business critical and high stake workforce issues. An experienced workplace relations advisor and litigator, Kathy’s technical employment law knowledge and its practical application across a broad spectrum of private and public sector industries including retail, health, construction, transport, technology and sport, complements the existing team.
Kathy’s responsiveness and proven experience developing practical and commercial workplace relations strategies which protect and strengthen business operations is valued by many clients.

“I’m thrilled to be joining Workdynamic to have the opportunity to help lead the growth of the firm and establish the Melbourne office. The strength and depth of Workdynamic as a specialist employment law practice offers a great platform from which to cement and grow strong client relationships. I’m very much looking forward to demonstrating the benefits of the firm to many more employers down south” – Kathy Dalton

The NSW Civil and Administrative Tribunal recently awarded $20,000 to a Department of Family and Community Services child protection case worker who was forced to take sick leave after her manager became concerned that the employee was discussing conspiracy theories with co-workers.

The case worker spoke with co-workers about her belief in a number of government cover-ups including that some people question whether the Earth is flat, that fallen angels came to earth and breed with humans to create giants and a theory about the Large Hadron Collider “shutting down” the Earth’s atmosphere.

The manager emailed the case worker to advise she had learned of the conversations and stated, “based on these conversations I have concerns about your well-being. To ensure the agency’s duty of care to yourself, other employees and clients is upheld, I am directing you on Sick Leave, effective immediately. Due to the reported conversations I will be engaging a case manager from Human Resources to liaise with yourself and your treating practitioner to determine your fitness for work.”

The case worker returned to work after seven weeks when her treating practitioner provided a report which noted her fitness to resume normal duties and stated, “…all the topics she was discussing were related to her leisure time reading and topics of interest she found in the Internet. She denied any strong beliefs attached to the topics of discussion.”

The NSW Civil and Administrative Tribunal considered that:

“the Anti-Discrimination Act defines ‘disability’ to include ‘a disorder, illness or disease that affects a person’s thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour’. We will call this kind of disability ‘mental illness’. Disability is further defined in s49A to include a disability ‘that a person is thought to have (whether or not the person in fact has the disability)’. We will call this an ‘assumed’ disability.“

The Tribunal determined that the case worker had been subjected to a detriment, however considered whether the direction to take sick leave met the direct discrimination statutory test of “differential treatment”. The Tribunal stated:

“According to the Department, the comparison should be made between the way [the case worker] was treated and the way a hypothetical employee who had the same conversation about conspiracy theories would have been treated. [The manager’s] evidence was that, “if any employee had made similar remarks or comments to those made by [the case worker], the response would have been the same regardless of any concerns about their mental health”. In other words, if another employee, who [the manager] did not think had a mental illness, had had the same conversations, she would have given that employee the same direction. With respect, that reasoning is not logical when the disability is an assumed mental illness. Inevitably [the manager] would have assumed that another employee who had animated conversations about conspiracy theories would also have had a mental illness.

The problem in this case is not with the Department’s submissions but with the way the differential treatment test is drafted. Where the disability is an assumed disability, and the person does not actually have that disability, the differential treatment element of direct discrimination does not reveal the true basis for the direction.”

The Tribunal further determined:

“We are satisfied that one of the true or genuine bases or the real reason for making the direction was that, based on the conspiracy theory conversations, [the manager] thought [the case worker] had a mental illness.
…
It follows that the Department has directly discriminated against [the case worker] on the ground of assumed mental illness.”

The Tribunal did not consider that it was appropriate for the Department to publish an apology for giving the case worker this direction. However, the case worker was awarded damages in the amount of $20,000.

Reminders to employers

Employers should consider the context of this decision when dealing with ill or injured employees or employees who are assumed to be ill or injured. In this instance, the direction to take sick leave without any assertion from the employee that she was unwell was determined to be unlawful.

The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.

Two recent decisions in the Federal Circuit Court provide guidance for employers regarding the scope of the adverse action jurisdiction.

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Wondering about the relevance of earlier casual service to redundancy pay?

In a decision on 30 July 2018 the FWC Full Bench has provided some welcome clarification on when an employer will need to include previous casual service for employees who later become entitled to redundancy pay.

The appeal by the employer, Unilever, concerned the question of whether or not the relevant enterprise agreement (EA) required permanent employees who had previously worked on an almost continuous pattern as casual and seasonal workers before transitioning to permanent work were due redundancy pay calculated by reference to the entire period of service.

The employer was successful in arguing that a redundancy pay entitlement under this particular EA need only be calculated by reference to service as a permanent employee.  In this sense, it is an outcome that applies only in that workplace and turned on the particular aspects of the EA in question, including factors such as the heading of the relevant section of the EA (which stated it did not apply to casual or seasonal employees) and reference to ‘years’ of service (which did not align with repeated separate casual/seasonal engagements).

In interpreting the Unilever agreement, the Full Bench was asked to consider the idea that casuals might be covered by the relevant terms about redundancy in respect of service but not payment.  In dealing with this, the Full Bench observed the conceptual boundary between redundancy and the nature of casual/seasonal work, which inherently entails the possibility of cessation by the employer choosing not to re-engage the employee. In short, if an employer has the choice not to re-engage this type of employee, when would a redundancy ever arise?  There would be no need.

However, of broader relevance are the Full Bench’s general comments on earlier casual service and the error made at first instance when dealing with the Unilever dispute.  Relevantly:

• Since the 2016 FWC Full Bench decision in Donau (which analysed a similar claim under a differently worded enterprise agreement), there has been an understanding that redundancy pay under the National Employment Standards needs to include previous casual service for a permanent employee later made redundant.  For example, the thinking was that an employee working ‘contiguous’ (ie, repeated and close) casual engagements for 2 years before working on a permanent basis for 8 years would be entitled to NES redundancy based on 10 years’ service (not 8).
• In the present case, a different Full Bench has confirmed that Donau turned on its own facts and should not be understood as being generally applicable to considering “service” under the Fair Work Act (as it is defined in section 22) or to service in all enterprise agreements providing for redundancy.  This means the thinking above should now be doubted.

Lessons for employers

1. While redundancy benefits in enterprise agreements are commonly established by reference to continuous service (ie permanent service only), this is not always the case. You should not automatically assume casual service is excluded and look carefully at the particular language of the EA.
2. For employees covered by the NES, it is no longer clear that earlier casual service has to be included when calculating the redundancy pay for a now-permanent employee.

This article was written by Kate Peterson, Executive Counsel at Workdynamic Australia. The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.