1. Orders to stop bullying – a review of the first year

The Fair Work Commission (FWC) has now concluded its first year with new powers to make orders to stop bullying.  There was initially a concern that the powers would unleash a flood of applications for such orders and over-regulation of workplace relationships.  Indeed, the FWC itself warned that it:

“should guard against creating a workplace environment of excessive sensitivity to every misplaced word or conduct.”

In the first part of the year the FWC considered its jurisdiction in a number of decisions and confirmed that to obtain orders, an Applicant must establish that:

  • the Applicant was subject to unreasonable behaviour;
  • the behaviour was repeated;
  • the Applicant was subject to the repeated unreasonable behaviour while at work;
  • the behaviour was not reasonable management action carried out in a reasonable manner;
  • the behaviour created a risk to health and safety; and
  • if orders are not made, there is a risk the Applicant will continue to be bullied at work.

Early decisions by FWC confirmed that the threshold for “repeated” behaviour is low and that there must only be more than one instance of unreasonable behaviour.  In addition, when considering whether there is a risk that an Applicant will continue to be bullied at work the FWC will consider the status of the employment relationship at the time it makes its decision.  As such, if the employment relationship has ceased there can be no risk of a continuation of bullying at work and orders will not be made.

The cases show that reasonable management action is regularly raised by employers when defending an application and hotly contested by employees.  The FWC has explained that the test is whether the management action was reasonable, not whether it could have been undertaken in a manner that was “more reasonable” or “more acceptable”.  Its decisions have made the following comments regarding reasonable management action:

  • the action need not be perfect or ideal to be considered reasonable;
  • a course of action may constitute reasonable action, even if particular steps in that course are not;
  • the action cannot be unlawful, irrational, absurd or ridiculous;
  • any unreasonableness must arise from the action in question and be assessed objectively, rather than the Applicant’s subjective perception of it; and
  • consideration must be given to whether the action represented a significant departure from established policies or procedures and whether any such departure was reasonable in the circumstances.

The FWC is alive to the risk of over-regulation of interpersonal relationships in the workplace and concerned to ensure that employers remain able to undertake reasonable management action.  Future issues to watch include whether the number of applications rise as awareness of the jurisdiction increases and the development of case law around what constitutes reasonable management action.

  1. No implied trust and confidence – the High Court has spoken

2014 saw the demise of “mutual trust and confidence” in Australian law.  In September, the High Court ruled that employment contracts in Australia don’t contain a term of “mutual trust and confidence” implied by law.

For some time, employees have used the possible existence of the implied term and uncertainty regarding its practical application to assert rights, for example, in relation to standards of behaviour from their employer or as a basis on which to challenge the conduct of workplace investigations.

In Commonwealth Bank v Barker, the Court overturned the Full Federal Court’s decision which held the implied term had been breached by the Bank not consulting with Mr Barker (an executive whose position had become redundant), about the possibility of redeployment and provide him with the opportunity to apply for alternative positions.  The Full Court had overturned the trial judge’s conclusion that the implied term had been breached because the Bank had not followed its redundancy and redeployment policy.

The ruling removes a significant risk for employers, in particular when investigating allegations against employees.  The next issue to watch is how an implied contractual duty for parties to co-operate to achieve the benefits provided by an employment contract (an implied duty which the Court appears to have endorsed) may be used by employees.

  1. The high cost of sexual harassment today 

This year saw a number of decisions where significant damages were awarded to the victims of discrimination and sexual harassment. One such case was the matter of Richardson v Oracle Corporation Australia Pty Ltd where Ms Richardson was initially awarded damages of $18,000 after suffering sexual harassment and discrimination at work. She successfully appealed and the Full Federal Court increased her damages award to $130,000 noting that the initial award was ‘manifestly inadequate’ and ‘out of step with the general standards prevailing in the community”.

In its decision, the Full Federal Court noted that “the general range of general damages in respect of pain and suffering and loss of enjoyment of life caused by sex discrimination has scarcely altered since 2000 and does not reflect the shift in the community’s estimation of the value to be placed on these matters. The range has remained unchanged, notwithstanding that the community has generally gained a deeper appreciation of the experience of hurt and humiliation that victims of sexual harassment experience and the value of loss of enjoyment of life occasioned by mental illness or distress caused by such conduct.”

This decision points towards the increased willingness of Courts to award significant damages for discrimination and should sound as a warning to employers to take steps to manage discrimination risks at work. Employers can no longer assume that damages in discrimination cases will be under $20,000 or that having a generic discrimination policy and providing employees with some cursory training will be enough to defend a claim of vicarious liability.

Employers should take some time in the New Year to:

  • review their discrimination polices and rectify any deficiencies;
  • ensure that employees receive adequate and regular training in anti-discrimination law;
  • ensure that policies and training programs have been tailored to reflect Australian laws; and
  • ensure that adequate complaint handling procedures and investigation processes are in place.
  1. General protections and workplace rights 

G+T has seen a significant increase in the number of general protection claims this year where employees assert they were dismissed because they exercised a workplace right. Employees can bring a general protections claim if they are dismissed or if other adverse action is taken against them because they exercised a workplace right. The meaning of workplace right is very broad and includes where the employee makes a complaint or inquiry in relation to their employment.

The courts have taken divergent approaches when considering what constitutes a complaint or inquiry in relation to employment, although it seems the prevailing approach is to interpret the phrase broadly.  In the recent decision of Evans v Trilab Pty Ltd, the court considered whether a complaint made to the employer about the method it used to perform certain tests was a complaint or inquiry in relation to employment. The court held:

“It … is arguable that a complaint or inquiry need:

  1. not arise from a statutory, regulatory or contractual provision before it can be a complaint or inquiry in relation to a person’s employment …; and
  2. only have an indirect nexus with a person’s terms or conditions of employment to come within the scope of s.341(1)(c)(ii), and may be a complaint about the conduct of another person in the workplace or about a workplace process which concerns or has implications for an employee’s employment.” 

In other decisions, the following have each been found to be a complaint or inquiry capable of supporting an adverse action claim:

  1. a complaint made by an employee to their employer about an alleged failure to pay a vehicle allowance and salary was a complaint in relation to employment even though the complaint was not made through a formal complaint mechanism - Devonshire v Magellan Powertronics Pty Ltd;
  2. an employee seeking legal advice in relation to their right to be paid was an inquiry in relation to employment - Murrihy v Betezy.com.au Pty Ltd;
  3. complaints made about health and safety issues with no direct connection to the employee and a complaint made on behalf of another employee were complaints made in relation to the employee’s employment, even though there was only an indirect connection between the complaint and the employee’s terms and conditions of employment. Where the subject matter of the complaint raises an issue with potential implications for the employee’s employment, it is likely that the requisite nexus will be satisfied - Pilbara Iron Company (No. 3);
  4. a complaint made by an employee about a probity issue relating to contract with a supplier was a complaint made in relation to employment because the employee’s failure to report suspected wrong doing had the potential to reflect badly upon her and to cause her prejudice in her employment - Walsh v Greater Metropolitan Cemeteries Trust (No. 2); and
  5. an employee’s acceptance of a change to his working hours “under strong protest”, constituted a complaint, notwithstanding that the complaint was implicit. The court held “… an implicit but clear complaint is sufficient” - Ratnayake v Greenwood Manor Pty Ltd.

The take home message for employers is:

  • consider the potential for general protection claims when terminating employees who have exercised a workplace right;
  • ensure the reasons for termination are lawful; and
  • keep detailed and contemporaneous notes about the reasons for termination to be best placed to defend a claim.
  1. Superannuation contributions frozen at 9.5% until 2021 

G+T has previously reported on the Federal Government’s 2014 budget announcement that the scheduled increases to the minimum employer superannuation contribution rate would be delayed until 30 June 2018. The Senate has since passed legislation delaying the scheduled increases for a further 7 years until 2021. This means:

  • the minimum superannuation contribution rate will increase to 10% on 1 July 2021 and then by a further 0.5% on 1 July each year until it reaches 12% in 2025; and
  • employers should continue to calculate compulsory superannuation contributions at the current rate until 30 June 2021 unless more generous arrangements have been agreed, that is, at 9.5% of an employee’s ordinary time earnings to the maximum superannuation contributions base (currently $49,430 per quarter).