The Fair Work Commission has found that a company’s requirement for an employee to agree to work additional hours under an on-call roster was unlawful and that the termination of his employment for failing to follow the company’s direction to undertake the on-call duties was unfair.1

Background

While on annual leave, Bradley Sheldrick, an IT systems developer at Hazeldene Chicken Farms (Hazeldene), did not respond to phone calls and text messages left for him by Adam Hazeldene, the Manager of Hazeldene. Upon his return from annual leave, Mr Hazeldene spoke to Mr Sheldrick about the phone calls and told him that he had been disrespectful not to return his calls.

Mr Sheldrick’s employment contract made no reference to being on-call  but did state that he could be required to work additional hours on any day including weekends and public holidays as necessary to meet Hazeldene’s operational requirements.

After receiving advice from the HR team that Mr Sheldrick was not required to take calls while he was annual leave, Mr Hazeldene sent an email to all IT staff proposing a variation to their contracts. The proposal varied the requirement to work additional hours to make it clear that the employees could be required to work 1,976 ordinary hours per annum with an additional 364 hours for which no additional payment would be made. The proposal also included an on-call roster which would require them to be on call for 13 weeks a year for a payment of $77 per week.

At a meeting on 5 February 2014, Mr Sheldrick met with Ms Grima a member of the HR team.  Mr Sheldrick was told that the proposed new contract was  not negotiable.  Mr Sheldrick said that he would not sign the proposed new contract.

Mr Sheldrick attended a second meeting on 17 February 2014.  At that meeting, Mr Sheldrick said that he would not be signing the new contract but asked if it was open for negotiation. Ms Grima told Mr Sheldrick that the only changes to  his existing contract were to the hours of work clause and the on-call provisions. The new contract did not provide for annual leave loading but Ms Grima advised Mr Sheldrick that this was included in his salary.

Ms Grima gave evidence that at this meeting, she directed Mr Sheldrick to participate in the on-call arrangement and then asked him whether he was going to do so, which he refused to answer. As a consequence of his refusal to answer her question and participate in the on-call arrangement, Ms Grima stood Mr Sheldrick down with pay so that she could consider his response.

On 19 February 2014, a further meeting was held. Mr Sheldrick said that he would participate in the on-call roster but that he would appreciate that Hazeldene show him some respect by allowing the on-call clause to be negotiated.

In response, Hazeldene said that it was extremely concerned at the manner in which Mr Sheldrick was behaving and that he was not prepared to be treated in the same manner as other staff who had accepted the on-call arrangement. Hazeldene concluded that there was no option other than to terminate Mr Sheldrick’s employment, because the employment relationship had irretrievably broken down.  In evidence Ms Grima said that she took from Mr Sheldrick’s further request for negotiation of the contract terms that he was only prepared to participate in the on-call roster if his terms were agreed to. 

Hazeldene argued that Mr Sheldrick’s refusal to follow a lawful and reasonable direction to accept the on-call roster was sufficient grounds for dismissal.

Held: Dismissal requires a valid reason

Deputy President Gooley held that  Mr Sheldrick’s dismissal was unfair primarily because there was there was no valid reason for his dismissal.

The Deputy President found that at the meeting on 19 February 2014,Mr Sheldrick had advised Hazeldene that he would participate in the on-call arrangement and held that Mr Sheldrick could not be compelled to vary the terms of his contract of employment or participate in what Hazeldene was calling the “on-call arrangement,” which in essence was a proposed variation to his contract.

The Deputy President made it clear  that employers can lawfully require  their employees to work reasonable additional hours.  However in this  case, there was a significant difference between the requirement to work such hours as may be reasonably necessary and being required to be on an on-call roster.  Further, the proposed variation significantly changed Mr Sheldrick’s hours of work, removed the annual leave loading and required him to participate in the on-call roster.

The Deputy President held that the direction to agree to these terms was not a lawful or even a reasonable direction, and that Mr Sheldrick  could not be compelled to agree to contractual terms simply because other employees agreed to those terms. In this case, the on-call roster did not amount to reasonable additional hours. At most, Mr Sheldrick could be compelled to comply with his existing contract of employment and he could lawfully be directed to work reasonable additional hours.

The Deputy President also held that Mr Sheldrick was entitled to ask questions about the proposed variation and to attempt to negotiate a different variation. The fact that Mr Sheldrick resisted a change to his terms and conditions  is not evidence of a breakdown in the employment relationship.

Mr Sheldrick had found a new job six weeks after his dismissal; consequently, the Deputy President awarded him compensation of $7,125 less tax and $641 in lost superannuation.

Bottom line for Employers

Employers should take care when managing employees who resist change to companywide changes to terms and conditions of employment. Employers should reasonably consider any request by an  employee to negotiate a proposed companywide change to terms and conditions of employment.

Employees cannot be compelled to significantly vary the terms and conditions of their employment. Any directive to an employee to comply with a significant variation may be considered unlawful and unreasonable.

Employers can still lawfully direct their employees to work reasonable additional hours. Whether the  hours are reasonable needs to be assessed in relation to all of the circumstances.