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Murray Kellock
Partner
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Sydney
Andrew Gray
Perth
Robert Lilburne
Canberra
Ian Johnson
The New South Wales Industrial Relations Commission has upheld an employer’s decision to summarily dismiss an employee for sexually harassing a female co-worker. The Commission found the employer had undertaken a thorough and exhaustive internal investigation that demonstrated the seriousness with which the employer regarded its obligations to prevent discriminatory and harassing behaviour in the workplace.
Implications for employers
This decision reinforces key steps employers should take to prevent unlawful harassment and discrimination in the workplace, and ensure any disciplinary measures taken in relation to allegations of harassment and discrimination are fair and appropriate. These include:
- implementing workplace policies in relation to harassment, discrimination and equal employment opportunity;
- ensuring such policies are effectively communicated to employees through ongoing workplace training;
- responding to allegations made against employees in a timely and appropriate manner in accordance with applicable policies, particularly when the allegations are of a serious nature and may (if proven) result in disciplinary action or dismissal; and
- ensuring employees are afforded procedural fairness, which should include a thorough investigation of the alleged conduct, careful assessment of the findings of that investigation and due consideration of what action should be taken on the basis of those findings.
Background
The applicant had been employed by BlueScope Steel (the Company) since 1974. He was one of four pumphouse attendants employed by the Company to work at the water treatment plant at the Company’s steelworks. When the applicant was not required to work on-site at the plant, he was based in the pumphouse attendant’s shed.
The applicant had day-to-day conduct with a female co-worker who regularly attended the shed to discuss operational issues. The co-worker alleged that on one occasion when she was visiting the shed, the applicant had inexplicably hugged her and then kissed her twice on the neck with an open mouth. She claimed she tried to move away from the applicant but he had held on to her tightly, until she was eventually able to push him away and say “no”.
The employee informed her supervisor of the incident the next morning, and the Company commenced a formal investigation.
The applicant was stood down with pay while the investigation was conducted.
He denied the allegations, and claimed the co-worker had invented the story because she was angry with him for refusing to do a particular work task that was outside his job description. There were no witnesses to the alleged incident.
The initial investigation concluded that the allegations were substantiated and the applicant had breached the Company’s equal employment opportunity policy and anti-discrimination legislation. The Company then carried out a review of the initial investigation. This review was conducted by senior employees of the Company in order to ensure that all appropriate steps had been taken and due consideration given before any final decision was made.
Following the investigation review process, the Company concluded that the allegations had been substantiated and there were sufficient grounds to terminate the applicant’s employment summarily for breaching the policy and anti-discrimination legislation. His employment was summarily terminated in March 2009 on the ground of serious misconduct.
The applicant commenced unfair dismissal proceedings in the Commission.
Decision
The Commission ultimately accepted the female co-worker’s version of events and found that on the balance of probabilities the alleged sexual harassment had taken place. The Commission rejected the applicant’s suggestion that his co-worker had fabricated the incident.
The Commission emphasised that there is no place for harassment, sexual or otherwise, in the workplace. Harassment, when proven in accordance with proper process, provides a sound basis for disciplinary action - including summary dismissal where the harassment is of a serious nature.
On the facts before it, the Commission held the applicant had not been unfairly dismissed. In reaching its decision, the Commission had regard to a number of factors including:
- the serious nature of the sexual harassment that took place despite the fact it was a one-off incident
- that it was not unusual for there to be no witnesses present to corroborate a complainant’s evidence
- the candid and forthright evidence of the female co-worker - including her evidence that any previous contact she had with male colleagues, such as a pat on the head or shoulder, was part of the bond that had developed between colleagues and was not of a sexual nature
- the seriousness with which the Company regarded its obligations under anti-discrimination legislation. This was evidenced by the extensive anti-discrimination policies and guidelines in place and the compulsory training all employees were required to attend
- the level of procedural fairness demonstrated in the investigations undertaken by the Company, including the testing of the initial investigation findings by very senior levels of the Company’s management hierarchy, and
- the questionable reliability of the applicant’s evidence.
The unfair dismissal claim was dismissed.
AWU, NSW (on behalf of Grahovac) v BlueScope Steel [2009] NSWIRComm 86.
Author
Sarah Houghton, Solicitor
The Federal Court has awarded significant compensation to an employee who was made redundant in circumstances where the employer ignored a grievance procedure set out in the employee’s Australian Workplace Agreement (AWA).
Implications for employers
This decision confirms that grievance procedures in employment agreements may grant enforceable rights to employees, and failure to comply with such procedures may result in claims for significant damages awards. Employers must ensure that any disciplinary action or other action impacting the employment relationship is taken in accordance with relevant procedures in any applicable employment instruments, contracts and enforceable policies.
Background
Mr Van Efferen was employed by CMA Corporation Ltd (CMA) under an AWA to work on a project in Port Hedland. Mr Van Efferen had also signed a letter of offer from CMA. The AWA had a nominal term of three years. CMA was working on the Port Hedland project under a commercial contract with John Holland, and the terms of the contract allowed John Holland to request CMA to remove employees from the project site if their performance was unsatisfactory.
Mr Van Efferen raised a number of safety concerns with his supervisor on site (who was also employed by CMA), and voluntarily took a short period of leave. John Holland subsequently requested that CMA remove the supervisor from the site, and CMA asked Mr Van Efferen to return from leave to take over some of the supervisor’s responsibilities. On his return, Mr Van Efferen had further disagreements with his new supervisor (also employed by CMA) in relation to site safety issues. Even though he disagreed on safety grounds with his new supervisor’s directions, Mr Van Efferen ultimately complied with them. However, the supervisor eventually organised for Mr Van Efferen to be relocated to CMA’s Geelong office before completion of the project. There, Mr Van Efferen performed general maintenance work. CMA was unsuccessful in some contract tenders and as a result ran out of work that was suitable for Mr Van Efferen to perform. Two weeks later Mr Van Efferen was made redundant.
Mr Van Efferen initiated proceedings in the Federal Court, claiming that when CMA terminated his employment, it breached the grievance procedure clause in his AWA. Mr Van Efferen also claimed CMA had breached terms implied in his common law contract of employment that:
- CMA would not conduct itself in a manner calculated or likely to destroy the relationship of trust between CMA and Mr Van Efferen as employer and employee; and
- the parties have a duty to act in good faith toward each other, which is a duty to exercise prudence, caution and diligence or due care to avoid or minimise adverse consequences to the other party.
CMA denied it had breached the AWA or the contract of employment.
Decision
CMA argued that John Holland had specifically requested it to remove Mr Van Efferen from the site, and CMA had simply complied with this request in accordance with the commercial contract it had with John Holland. However, on the evidence the Court was not satisfied that any such request had been made by John Holland. Rather, the Court found that it was Mr Van Efferen’s new supervisor who had him removed from the project, which removal ultimately led to his redundancy.
Mr Van Efferen argued that CMA had failed to follow the grievance procedure in his AWA before he was relocated and subsequently made redundant. The procedure set out the steps the parties were to follow “to deal with CMA’s concerns about the behaviour of its employees”, and required:
- as “Step 1”, discussion of the issue between the employee and their manager;
- as “Step 2”, formal counselling in writing;
- as “Step 3”, a formal written warning; and
- termination as “Step 4”.
Earlier steps could be skipped in serious cases and provision was made for summary dismissal where justified.
CMA did not follow the grievance procedure in relation to Mr Van Efferen.
CMA argued that the grievance procedure only applied once CMA had already decided to take disciplinary action. The Court disagreed, holding that although the provisions of the AWA “lacked precision”, the agreement should be interpreted in line with the principle that workplace instruments should be construed in the context of the industrial relations environment rather than in an environment of “legal niceties or jargon”, and should also be construed in line with general contractual principles. Accordingly, the Court held a provision in the AWA was legally binding if “the hypothetical, reasonable, potential employee to whom the document is presented would have concluded that CMA intended to be contractually bound to follow the procedures”.
In this case, the Court held that:
A reasonable employee would rightly conclude that CMA was committing itself to implementing these protective measures if the need arose. That employee would not conclude that the benefit of [the grievance procedure clause] would be dependent on the favourable exercise of CMA’s unfettered discretion.
It was also relevant that an AWA is binding on an employer by force of federal legislation. Further, the term “grievance procedure” suggested that the procedures were intended to be used to address all employee concerns, not merely those with disciplinary implications, and must be read and applied in a “sensible and practical manner”.
The Court concluded that Mr Van Efferen’s claim that CMA had breached the grievance procedure clause in the AWA should succeed.
Calculation of damages for breach of the AWA
Section 721(1) of the Workplace Relations Act 1996 (Cth) provides that a person suffering loss as a result of a breach of an AWA may recover the loss in court.
Given the Act provides no guidance on the calculation of damages for breach of an AWA, the Court determined that damages should be assessed on the “normal contractual basis”: that is, by - as far as “money will do it” - restoring Mr Van Efferen to the position he would have been in had the breach not occurred.
The Court was satisfied that had the AWA grievance procedure been followed, Mr Van Efferen would not have been removed from the John Holland project before its completion, and therefore that his redundancy was premature. However, the Court also found that Mr Van Efferen would have been made redundant at the end of the Port Hedland project, as CMA had no further work requiring his skills.
The Court calculated what Mr Van Efferen would have received in salary and superannuation had his employment continued until completion of the Port Hedland project, and then deducted the amount of Mr Van Efferen’s earnings since his termination. The Court considered it remote that Mr Van Efferen would have resigned or been validly terminated prior to completion of the project, so only reduced the total loss amount by 10% to account for this contingency. Accordingly, the total damages award was calculated at $274,288.
Implied duties
The Court had already determined that Mr Van Efferen was entitled to damages assessed according to contractual principles, in respect of breach of the grievance procedure. However, the Court still took the opportunity to discuss Mr Van Efferen’s claims that CMA had breached an alleged duty of mutual trust and confidence and duty of good faith implied into the common law contract of employment.
The Court noted that the question whether such terms may be implied into employment contracts is “one of some controversy on which the High Court has yet to make definitive pronouncement”. Ultimately, the Court considered itself bound by existing Federal Court authority that queried whether the alleged term of mutual trust and confidence could be implied in light of the principles for implications of terms into contract. The Court also agreed with an earlier decision that found the alleged term of good faith does not apply to employment contracts. In any case, his Honour found that such implied duties would not, in the circumstances, have imposed any additional obligations on CMA beyond those in the grievance procedure.
Van Efferen v CMA Corporation Limited [2009] FCA 597 (4 June 2009)
Author
Kathleen Kelly, Solicitor
The Federal Court of Australia has ordered the delay of a vote to approve a proposed employee collective agreement, to allow a union to conduct a ballot on types of industrial action that could be adopted by its members in support of the proposed agreement.
Implications for employers
When negotiating a collective agreement, employers must ensure:
- they provide a reasonable opportunity to employees to consider the terms of the proposed agreement, and
- the time given to employees to consider the agreement is not compromised, affected or diminished by matters which may distract employees from considering the actual effect of the agreement.
Background
Caelli Constructions (Caelli) performs construction work on commercial sites across Victoria and Queensland. Caelli and the CFMEU were bound by the Caelli Constructions(Vic) Pty Ltd t/as Caelli Constructions in the CFMEU Building and Construction Industry Enterprise Agreement 2005 - 2008 which had a nominal expiry date of 31 March 2008.
In late 2008, Caelli and the CFMEU entered into negotiations for a new collective agreement. Negotiations broke down, and the CFMEU successfully applied to the Australian Industrial Relations Commission to hold a secret ballot in relation to proposed types of industrial action that would, if approved, be taken by CFMEU members in support of the new agreement. The secret ballot was scheduled to take place between 12 June and 22 June 2009 with results to be published on 23 June.
On 10 June 2009, Caelli initiated steps to hold an employee vote on a proposed non-union collective agreement, to occur on 18 and 19 June. Documentation was circulated by Caelli to employees between 10 and 13 June 2009, which noted that both votes were being conducted. The documentation recommended that employees vote “no” to the CFMEU protected action ballot and “yes” to the non-union agreement.
In response, the CFMEU commenced interlocutory proceedings in the Federal Court to prevent the vote for the non-union agreement taking place prior to the completion of the secret ballot on protected industrial action.
Decision
The Court ordered Caelli to delay the employee vote on the non-union agreement until after the conclusion of the CFMEU’s secret ballot on 29 June 2009. In reaching this conclusion, the Court considered:
- whether there was a serious question to be tried that as a result of the overlapping ballots, the employees would not be afforded a reasonable opportunity to decide whether they wanted to approve the agreement as required under s340(2) of the Workplace Relations Act 1996 (Cth). The Court noted that the consideration period provided by an employer may be affected or diminished by circumstances which have the potential to distract an employee from voting on the agreement and considering its effect. In this instance, the Court found there was a serious question to be tried that any reasonable opportunity given to employees to consider the agreement had been compromised due to the simultaneous operation of the ballots;
- the balance of convenience between delaying the agreement vote until the secret ballot had been completed and allowing the votes to be conducted simultaneously. The Court concluded the inconvenience to Caelli in delaying the vote for a short time to allow the protected action ballot to occur was insignificant compared to the difficulty in assessing whether the running of two ballots together had compromised particular employees’ decision making process in relation to the agreement; and
- Caelli’s failure to inform the Commission of its intention to hold a vote on the agreement concurrently with the secret ballot. The Court viewed Caelli’s “lack of candour” as the reason the current application was before the Court. In the Court’s view, Caelli had revealed its intentions to the Commission, the matter would have been “resolved expeditiously and appropriately by the Commission”.
Construction, Forestry, Mining and Energy Union v Caelli Constructions (Vic) Pty Ltd [2009] FCA 655 (18 June 2009)
Author
Andrew Gray, Partner
The Workplace Relations Ministers’ Council (WRMC) has released a communiqué announcing that South Australia, Tasmania and Queensland have agreed to join Victoria in referring their industrial relations law-making powers to the Commonwealth.
Implications for employers
Once effective, the States’ referrals to the Commonwealth of powers to make laws about industrial relations will provide greater certainty and consistency for employers, effectively reducing compliance red tape for interstate and national businesses operating in those jurisdictions. The referrals will also bring the Commonwealth Government closer to creating a unitary, national industrial relations system.
Current arrangements
The scope of the Fair Work Act 2009 (Cth) is limited by the Commonwealth’s constitutional law-making powers. Accordingly, the Act only affects employment by, generally, foreign, trading or financial corporations; the Commonwealth Government and Commonwealth authorities; flight crew, maritime and waterside workers; and employment in the territories. This leaves many other employers, such as unincorporated entities, partnerships and sole traders, as well as various State public sector employees, subject to State workplace relations regimes.
The Commonwealth Government must rely on the States to refer their industrial relations powers to it, in order to secure a comprehensive national industrial relations regime. To date, Victoria has been the only State to refer the bulk of its powers to the Commonwealth, such that all private sector employees in Victoria have for years been covered by the Commonwealth regime in respect of most industrial relations matters (excepting specified matters such as long service leave and occupational health and safety, in relation to which Victorian law still applies).
The referrals
South Australia and Tasmania have both agreed “in principle” to refer their industrial relations powers to the Commonwealth from 1 January 2010, with the exclusion of industrial relations in connection with State public sector employees.
In addition, Victoria has already legislated to continue refer its powers to the Commonwealth: like its predecessor referral legislation, the Fair Work (Commonwealth Powers) Act 2009 (Vic) excludes certain subject matter from the referral (such as occupational health and safety, workers’ compensation, and anti-discrimination). The referral generally excludes only senior executives in the public sector, ministerial and parliamentary officers and the judicial and tribunal members from coverage under the Commonwealth regime.
The Queensland government has also reached an “in principle” agreement to refer its powers, although this commitment was more qualified, and is “subject to a number of key issues being resolved”.
The remaining States appear to be more reluctant to refer their powers. New South Wales is still involved in negotiations with the Commonwealth, but declared that it would not determine its position until after the remaining Fair Work legislation is enacted. Its concerns include the future of New South Wales Industrial Relations Commission members, support for small business and pressure from unions to retain State legislation that may provide greater employee protection. Western Australia is currently conducting a review of its workplace laws and is considered to be unlikely to refer its powers; however, the Government has stated that it will consider “opportunities for harmonisation”.
Both the Australian Capital Territory and the Northern Territory agree in principle with a consistent national approach to workplace relations, although they are already subject to the Commonwealth regime.
The Commonwealth has enacted the Fair Work (State Referral and Consequential and Other Amendments) Act 2009 (Cth) to provide a framework to receive the referrals from the States.
Author
Murray Kellock, Partner
The Administrative Appeals Tribunal has ordered an employer to pay compensation to an employee who acquired a psychiatric illness from “perceived” sexual harassment. The compensation was ordered despite the Tribunal finding the sexual harassment did not occur, and the employee’s perception that it did occur was “objectively unreasonable”.
Implications for employers
This decision confirms that employees of the Commonwealth Government and licensed government authorities can claim compensation for injuries that are “contributed to” by the person’s employment, even if the injury is caused by an employee’s misinterpretation of the actual events. The decision requires Commonwealth government employers to consider employees’ particular susceptibilities and how particular conduct may be interpreted by them.
Although non-Commonwealth employers should note the decision, private sector employers are subject to a different test to determine liability for employees’ injuries, according to the applicable legislation. For example, in Victoria, employers are liable for injuries “arising out of or in the course of” the employment, and compensation is not payable for psychological illnesses arising predominantly from an employer’s reasonable actions.
Background
The applicant was employed by Australia Post. She suffered a shoulder injury in the course of her employment and was placed on restricted duties. During a shift, the applicant complained of shoulder pain and was told by her supervisor to sit in an office and apply a heat pack.
As the office had no high-backed chairs that were appropriate for application of the heat pack, the applicant sat on the floor against a filing cabinet. Over the course of the shift, other employees entered the room and were forced to step over her. The applicant alleged that one co-worker reached into to a pigeon hole above her, and stood, straddling her legs, with his groin near her face.
The applicant alleged some days later that the co-worker had “dangled” his genitals in her face. The co-worker denied the allegation, claiming to have only stepped over the applicant’s feet and legs.
The applicant subsequently developed a psychiatric condition which she said was due to the alleged incident of sexual harassment and claimed workers’ compensation for the psychiatric injury.
Australia Post denied that the alleged incident of sexual harassment had occurred, and on that basis rejected the applicant’s claim for compensation.
The applicant sought a review of that decision from the Tribunal.
Compensation payable even though alleged incident did not occur
Under the Safety, Rehabilitation and Compensation Act 1988 (Cth), Commonwealth agencies such as Australia Post are liable to compensate employees for injuries resulting in incapacity for work which were “contributed to, to a significant degree, by the employee’s employment”.
The Tribunal found that the general circumstances alleged by the applicant were accurate, in that she had suffered shoulder pain, been told to sit in an office, had sat on the floor, and other employees had walked over her causing her some embarrassment and humiliation.
However, the Tribunal found on the evidence before it that the critical incident of alleged sexual harassment did not occur.
The Tribunal also found that the applicant’s supervisor, although acting unwisely in sending the applicant to an office to recuperate, could not have expected the applicant to react in the way she did.
However, the question for the Tribunal under the legislation was whether the injuries were “contributed to” by the applicant’s employment, and considered the applicant’s perceptions of the events that did occur to be “critical” in resolving this matter.
Importantly, a psychiatrist who gave evidence before the Tribunal concluded that the applicant had a tendency to overinterpret or misinterpret others’ conduct, and that the applicant’s psychiatric disorder was indeed contributed to by the “incidents at her work place” on the relevant day.
In essence, the Tribunal concluded the applicant genuinely perceived what happened to have been an incident of sexual harassment, even though when viewed objectively, it was not. Ultimately, the Tribunal held that “an employee’s perception of events, even a flawed perception, may provide the requisite causal relationship” with the employment, and that in this case it was the flawed perception that had led to the applicant’s illness.
Accordingly, the applicant was entitled to compensation for her psychiatric illness.
Solway and Australian Postal Corporation [2009] AATA 386 (29 May 2009).
Author
Annamarie Rooding, Senior Associate