NEWS ALERTS
NSW Work Health Safety Legislation Amendments
The Work Health and Safety Act 2011 (NSW) (WHS Act) was recently amended giving effect to some of the recommendations of the 2018 national review of the modern WHS Act.
Relevantly, the Work Health and Safety Amendment (Review) Act 2020 includes:
Employers and officers should now take the time to review their insurance contracts or other indemnity arrangements, including directors and officers insurance, to ensure that they do not fall foul of the new offences in relation to insurance arrangements.
Wage Theft Bill passed in Victoria
The Victorian Parliament has passed the Wage Theft Bill 2020 (the Bill). The Bill is expected to commence on 1 July 2021 or earlier by proclamation.
It will be a criminal offence to dishonestly withhold an employee entitlement owed to an employee by their employer or to authorise or permit, either expressly or impliedly, another person to withhold an employee entitlement from an employee. Other offences included in the Bill relate to record keeping, including the falsification of employee entitlement records and failing to keep employee entitlement records.
The penalties for these offences are $991,320 for a body corporate or, $198,264 for individuals or a maximum of 10 years imprisonment.
The Bill also provides that officers who commit these offences will face a penalty of up to 10 years imprisonment.
Under the Bill, criminal liability is extended to officers or directors of a body corporate where such conduct has taken place. An officer will be taken to have committed the offence where the body corporate commits the offence and may also be prosecuted.
Enforcement of the offences will be by a new statutory body created by the Bill, the Wage Inspectorate Victoria. The Wage Inspectorate Victoria will be responsible for monitoring and enforcing compliance, investigating possible offences and commencing criminal proceedings in relation to the offences.
Workers compensation and injury on work trip
“Employee loses appeal over work trip slip”
Dring v Telstra Corporation Limited [2020] FCA 699
Executive Summary
The Federal Court of Australia rejected an employee’s appeal finding that her injury, which was sustained in the small hours of the morning in a hotel lobby while on a work trip, did not arise out of or in the course of her employment.
Background
In 2016, the employee was engaged as a Senior Project Manager when she was sent, by her employer, to participate in a number of information technology workshops in Melbourne. To facilitate her participation, the employer arranged for the employee to stay at the Novotel, Collins St.
After one day of workshops, with more workshops the next day, the employee went out with one of her colleagues. They shared a bottle of champagne in the employee’s hotel room before going out for dinner and then on to a cocktail bar.
At 2.30am they arrived back at their hotel. Before proceeding to their rooms, the employee urgently needed to use the bathroom in the hotel lobby. When she was exiting the bathroom, she slipped on the floor of the lobby which had recently been mopped.
The employee made a workers compensation claim for the hip contusion that she allegedly suffered. Her claim was initially rejected by the employer’s insurer and was rejected again upon review.
The employee appealed the insurer’s decision to the Administrative Appeals Tribunal.
Decision of the Administrative Appeals Tribunal
The Tribunal confirmed the insurer’s decision to reject the claim on the basis that the employee’s socialising had broken the requisite connection with her employment and therefore, her injury did not arise out of or in connection with her employment, as required by the Safety, Rehabilitation and Compensation Act 1988 (Cth).
Federal Court of the Australia Decision
The employee appealed the decision to the Federal Court of Australia primarily on the basis that the Tribunal had erred in its interpretation of the legal test required.
Specifically, the employee disagreed with the Tribunal’s interpretation that her conduct in socialising with a friend was a relevant factor in assessing whether the connection to her employment had been broken.
The employee argued that she was required and authorised by her employer to be at the hotel because she was on a work trip, and it was a hazard in that place which caused her injury, not the fact that she had been out socialising. The employee submitted that this should be the end of the inquiry as to whether her injury held the required nexus to her employment.
The Court disagreed with that approach, finding that it was permitted to inquire further into the circumstances of the incident to ascertain whether or not the incident held the requisite connection to employment. The Court commented that the time of injury was relevant, as was the eight-hour period of socialising that preceded it.
The Court said,
by reason of the fact that her injury occurred at the time that it did, after the extensive socialising that preceded it and in the context of the work to which she was to attend later that morning, the circumstances that gave rise to [the employee’s] injury lacked a connection with her employment sufficient to constitute it as one that arose out of, or in the course of, her employment. (at [59])
…
[The employer] did not encourage [the employee] to be in the hotel foyer at 2:30 am on a day that she was to attend business-related workshops. (at [65])
The Court held that the extent and duration of the personal activity broke the nexus with her employment.
The employee’s appeal was rejected.
What can your business learn from this decision?
In general, employers are responsible for the health and safety of workers when they are on work trips, including the conditions in a hotel or other accommodation.
However, if an employee engages in a course of conduct that is not authorised or endorsed by the employer, then this may break the connection with their employment as necessary for a successful workers compensation claim.
Penalties for underpayment of minimum entitlements
“Payroll officers penalised for falsifying payroll records”
Fair Work Ombudsman v HSCC Pty Ltd [2020] FCA 655
Executive Summary
The Federal Court of Australia (the Court) has ordered three sushi outlets and five individuals, including three employees responsible for managing accounts and payroll, to pay pecuniary penalties totalling $806,000.00 for deliberately underpaying 94 employees and falsifying records during an investigation by the Fair Work Ombudsman (FWO).
Background
These proceedings were commenced by the FWO following its investigation into alleged underpayments of employees employed by a number of sushi outlets operated by the Hero Sushi Group.
The investigation found that three sushi outlets in Kotara, Canberra and Broadbeach had underpaid 94 employees a total of $700,832.88 between April 2015 – July 2016, and that false pay records had been provided to the FWO in the course of its investigation in an attempt to conceal the underpayments.
The FWO sought declarations and penalties against the following entities and individuals:
The allegations made against these Respondents involved a number of contraventions of the Fair Work Act 2009 (Cth) (the FW Act), the Fair Work Regulations 2009 (the Regulations) and the Fast Food Industry Award 2010 (the Award), including failing to pay minimum rates of pay and entitlements in accordance with the Award and failing to keep records as required by reg 3.44 of the Regulations.
It was alleged that the individual Respondents were involved in the contraventions, within the meaning of s 550(2) of the FW Act. Specifically, the Fourth to Sixth Respondents directed the Seventh and Eighth Respondents to create false records to provide to the FWO as evidence of their compliance, and the Seventh and Eighth Respondents created false records in accordance with those directions.
All eight Respondents admitted to the contraventions following the commencement of the proceedings. The FWO and the Respondents were thereafter able to provide joint submissions to the Court in relation to the imposition of penalties.
The pecuniary penalties proposed by the parties were:
Decision
The Court was required to consider whether the proposed penalties were appropriate and whether there were any discretionary considerations to be taken into account prior to making those orders.
The Court considered that there was a particular importance in this matter to impose penalties that would serve as a specific deterrence to the Respondents and a general deterrence to others who might otherwise consider engaging in similar conduct, particular those in the fast food industry.
In relation to the need for specific deterrence, the Court noted that the Respondents had committed to a course of deliberately underpaying their employees and of attempting to conceal their wrongdoing, which involved a considerable amount of time and effort in creating false records to be provided to the FWO. The Court found that the Respondents only admitted to their conduct after they realised that their fraud could no longer be concealed.
In relation to the need for general deterrence, the Court noted that the FWO had recently published a Report that found that 39 of 45 sushi businesses that had been audited were non-compliant. The Court stated:
“Both the Respondents to the present proceeding, and others engaged in the fast food industry, need to know that contraventions of (inter alia) the Fair Work Act and the non-payment or underpayment of employees’ entitlements will attract substantial penalties. The quantum of those penalties in lieu of compliance cannot be regarded as “an acceptable cost of doing business.” (at [39])
The Court considered the contraventions to be particularly serious noting that it involved the exploitation of vulnerable workers, many of whom it could be inferred were young persons on a visa who were in need of money and were not familiar with minimum rates of pay.
The Court also had regard to the Respondents’ admissions that the rates of pay being offered to employees were calculated by reference to a target of keeping wages between 20-25% of sales, noting: “The entitlements of employees were deliberately being sacrificed by the Respondents in order to maximise their own financial returns.” (at [49])
Ultimately, the Court considered that all of the penalties were appropriate, but strongly suggested that it would have imposed higher penalties on the Respondents had it not been for the FWO’s endorsement of the penalties proposed. In particular, it considered the penalties imposed against the individuals to be appropriate notwithstanding that some of them were only following the direction of their employer.
In addition to declarations that the Respondents contravened provisions of the FW Act, the Regulations and the Award and the imposition of pecuniary penalties, the Court also ordered the employers to:
What can your business learn from this decision?
The pecuniary penalties imposed on the Respondents by the Court in this matter are significant for a number of reasons. In addition to being one of the largest pecuniary penalties ordered by the Court to date in relation to underpayments, it is also significant to note the penalties imposed on the individuals in this matter.
The Courts have made it clear on numerous occasions now that it is not acceptable for individuals to say that they were simply following orders when managing and administering employee entitlements. Any individual found to be involved in the underpayment of employees, particularly vulnerable workers, may be found to be personally liable for those contraventions.
Unfair dismissal and safety breaches
“Commission orders reinstatement of employee unfairly dismissed for safety breach”
Knowles v BlueScope Steel Limited [2020] FWC 1015
Executive Summary
The employee was dismissed for breaching the employer’s Critical Safety Procedure (CSP). The FWC found that the employee did not breach the CSP and as such there was no valid reason for the dismissal and the dismissal was harsh, unjust and unreasonable. The employer was ordered to reinstate the employee.
Background
The employee was employed as Despatch Operator for BlueScope Steel Limited.
In September 2018, the employee received a final warning letter for breaching a CSP when he climbed on a wagon while there was a suspended coil in close proximity.
A year later, the employee was dismissed for breaching another CSP. At the time of his dismissal, the employee was 64 years of age and had been employed by the employer for 31 years.
The employer alleged that the employee did not follow the relevant CSP when he was moving coils with a crane unsafely.
The employer claimed that the employee’s actions created a risk of the coil tipping and causing a fatality and had caused damage to two coils.
The employee lodged an unfair dismissal application in the Fair Work Commission (the FWC) claiming there was no valid reason for his dismissal. The employee claimed that his dismissal was harsh, unjust and unreasonable, it was disproportionate both owing to his conduct and due to his age and length of service with the employer.
The employee gave evidence of how he moved the tongs with the crane, stating that he would hoist them rather than long travel as it would cause less damage. The employee stated that he was not aware that he caused damage to the coil but that in any case, damage to coils was a very common occurrence. The employee also argued that there were other circumstances where employees had breached CSPs, but at those times, the employer only issued warnings to employees.
The employer submitted that there was a valid reason for the dismissal as the employee had seriously breached the CSP which could have resulted in injury or fatality. The employer submitted that the employee admitted to regularly breaching the CSP and had previously received warnings in relation to his unsafe conduct, including the earlier final warning. The employer argued that as a result of the employee’s conduct, it had lost trust and confidence in his ability to comply with its CSPs.
Decision
Commissioner Riordan acknowledged the importance of safety in the workplace, but expressed caution about safety issues being inflated and used to justify a course of action. For employers, Commissioner Riordan warned that they “should not invent or falsely amplify safety hazards in order to discipline employees.”
Commissioner Riordan noted that if the employee had in fact breached the CSP, then this would be a valid reason for dismissal - the employer could require its employees follow the CSPs.
However, the Commissioner found that the employee did not breach the CSP. Rather, he found that the employee had used his skills and experience to operate within his interpretation of the CSP – something the employee was allowed to do. This interpretation had been assessed annually by the employer and most recently two months prior to the incident and the employer did not raise any issue with it at that time.
Commissioner Riordan also did not accept that the tipping of the coil was a safety risk or incident, stating that there was only a safety risk if there was a risk of injury or death. For Commissioner Riordan, this risk was a “virtual impossibility” as there was no walkway nearby where persons would be exposed to the risk, and a person would have to be standing directly in front of the coil to be injured. Commissioner Riordan expressed doubt that the employee would continue to operate the crane if there was a person in their view.
Commissioner Riordan went on to state that if there was a valid reason for the termination of employment, it was nevertheless harsh and unfair. Commissioner Riordan took into account:
The employer was ordered to reinstate the employee to his former position, with continuity of employment and payment for loss remuneration since his termination.
What can your business learn from this decision?
Whether there is a valid reason for the termination of an employee’s employment is one of the key considerations that the FWC must determine in an unfair dismissal application. As noted in this case, a breach of a safety policy will be a valid reason for dismissal, however it must be demonstrated that the breach actually occurred and that the risk created by the breach was not minor in nature. The FWC has the power to order a remedy if an employee is found to have been unfairly dismissed with reinstatement being the primary remedy.
Workplace bullying
“HR Department criticised for mishandling of bullying claim”
Application by Pilbrow [2020] FWC 2458
Executive Summary
The Fair Work Commission (FWC) has dismissed an employee’s application for stop-bullying orders against their supervisor, but has criticised the employer’s Human Resources department for failing to adequately respond to the employee’s complaints of bullying or appropriately manage the employee’s return to work following an injury.
Background
Ms Pilbrow (the Applicant) is a nurse employed by Queensland X-ray, and the stop-bullying application was made against a more senior nurse (the Respondent) at the practice at which they were primarily employed.
The Applicant claimed that the Respondent had engaged in bullying behaviour towards her following an injury she sustained to her finger, which required a splint and interfered with her ability to work. The specific allegations included:
The Respondent denied bullying the Applicant and provided different versions of the events. In particular:
Decision
The FWC preferred the evidence of the Respondent in relation to many of the allegations, finding that she was engaging in reasonable management action in an attempt to address performance issues with the Applicant.
The FWC accepted that the Respondent had not assaulted the Applicant but was rather attempting to guide her to the lunch room, and that the request for the Applicant to take her lunch break was a reasonable one. The FWC found that, whilst this did not constitute bullying behaviour, it may have been poor management behaviour.
The FWC also accepted that the meeting between the Applicant and the Respondent was to address the Applicant’s performance issues, and that the Applicant was upset about the matters raised. However, the FWC was not satisfied that this constituted bullying behaviour, even though the meeting could have been conducted more appropriately by the Respondent.
The FWC was not satisfied that the failure to provide light duties, or the failure to properly consult with the Applicant about relocation, amounted to bullying behaviour by the Respondent. Rather, the FWC found that the Respondent had properly referred the management of the Applicant’s injury to the HR team and it was a failure by the HR team to properly support the Applicant. The FWC noted that there was no evidence of a plan for injury management or workplans for the various locations where the Applicant was required to work.
The FWC found that it was the employer’s usual practice that if an employee was asked to relocate and was unhappy about it, that there would be an opportunity to discuss the relocation. However, this did not happen with the Applicant and instead, she was sent to various locations with limited, or no, training or support.
The FWC found that HR’s failure to effectively manage her injury and respond to her complaints contributed to the Applicant’s concerns and “it may have been that this significant failure by HR to assist the Applicant potentially reached the required level of unreasonableness in the bullying application. However, no such claim has been brought by the Applicant against any persons from HR.”
As a result, the FWC found that the bullying claim against the Respondent was not established.
However, the FWC did issue a number of recommendations to the employer:
What can your business learn from this decision?
This decision should serve as a reminder to employers, and in particular HR Departments, of the need to adequately and promptly respond to bullying complaints made by employees and properly manage workplace injuries.
This decision should also serve to remind employers of their potential obligations to consult with employees about any changes to their employment.
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.
