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Focus: Workplace Relations

20 March 2012

In this issue: we report on a summary dismissal of union delegates case; opt-out clauses in enterprise agreements; an adverse action claim case; and what conduct will constitute sexual harassment.

Summary dismissal of union delegates not unlawful

In brief: The Federal Court has ruled in favour of an employer who summarily dismissed one employee for organising and inciting unprotected industrial action, and another for attempting to do so. Partner Simon Dewberry (view CV) and Lawyer Emily Harvey report.

How does it affect you?

  • There is no doubt that care must be taken when disciplining union officials and members on the basis of conduct that may relate to their union activities. However, it is possible to take disciplinary action without breaching the general protections provisions where the alleged conduct is unlawful and is properly investigated before any disciplinary action is taken.
  • This decision1 concerned the freedom of association provisions under the Workplace Relations Act 1996 (Cth) and not the general protections provisions under the Fair Work Act 2009 (Cth). However, the case is relevant to the current law because both the freedom of association and general protections provisions contain prohibitions on taking adverse action:
    • against another person because they are a union officer or member; and
    • against a person because they organise a lawful activity for, or on behalf of, a union.

Background

The applicants were Qantas employees and Transport Workers Union (TWU) delegates. There was a meeting between TWU officials and Qantas management, and the applicants were not satisfied by its outcome.

Mr Cicciarelli reported back to employees in the lunch room on issues raised at the meeting and then conducted a vote that resulted in a work stoppage. The stoppage caused significant disruption to Qantas's operations.

The other applicant, Mr Inguanti, also conducted a vote for a work stoppage in his work area. The employees voted against the work stoppage.

Qantas conducted an investigation, and found that both applicants had engaged in serious misconduct by encouraging, or attempting to encourage, other employees to take unlawful industrial action. The applicants were summarily dismissed.

The applicants applied to the Federal Court for damages and penalties against Qantas. The applicants argued that they were dismissed for the prohibited reason that they were TWU delegates.

The decision

The court dismissed the application. It accepted evidence on behalf of Qantas that the applicants were dismissed (in Mr Cicciarelli's case) for organising and inciting unprotected industrial action and (in Mr Inguanti's case) for attempting to do so.

Qantas's decision-maker denied he was influenced by the applicants' status as delegates and the court accepted that evidence, finding that he was an honest and reliable witness. Further, the court found that there was nothing in the evidence concerning the investigation that demonstrated that a prohibited reason was part of the reasons for the decisions.

Opt-out clauses in enterprise agreements allowed

In brief: It may be lawful to include in an enterprise agreement a provision that allows employees to opt out of it. Senior Associate Veronica Siow and Lawyer Julia Dean report.

How does it affect you?

  • 'Opt-out' clauses in enterprise agreements allow employees to whom the agreement applies to elect in writing, at any time, not to be covered by it.
  • Fair Work Australia (FWA) may allow the inclusion of opt-out clauses in enterprise agreements, but will scrutinise them carefully to ensure that those who do 'opt out' are suitably protected.

Background

The Newlands Coal Surface Operations Agreement 2010 (the agreement) applied to employees at Xstrata's Newlands coal mine in Queensland. It covered employees engaged in certain classes of work to which the Black Coal Mining Industry Award 2010 (the award) applied.

While the agreement was originally reached between the parties in April 2010, FWA only approved it on 25 January 2012. The lengthy process was due to controversy regarding the inclusion of an 'opt-out' clause in the agreement.

Under the Fair Work Act 2009 (Cth) (the Act), FWA will not approve an enterprise agreement unless it meets the 'better off overall test' (or BOOT test) when assessed against the relevant modern award.

When the agreement first came before FWA, in June 2010, FWA refused to approve it without the employer giving an undertaking that would have effectively rendered the opt-out clause in the agreement inoperative.2

The employer challenged this decision and, in November 2010, an FWA Full Bench overturned it by majority.3 The Construction, Forestry, Mining and Energy Union (the CFMEU) then challenged this Full Bench ruling in the Federal Court, which:

  • held that the FWA majority was wrong in describing the 'opt-out' provision as a benefit when applying the BOOT test; but
  • rejected the CFMEU's central argument that unless an agreement was made with employees who would be covered by it (and not by employees who could opt out of it), it was not valid under the Act.4
The decision

The matter was returned to FWA for further consideration in January 2012. On this occasion, the Full Bench split three ways on the agreement, deciding it was:

  • valid (Deputy President McCarthy);
  • valid with conditions (Senior Deputy President Hamberger); and
  • not valid (Commissioner Blair).5

The agreement was ultimately approved when Newlands made the undertakings that Senior Deputy President Hamberger required, with effect from 1 February 2012.6 The nature of the undertaking required that if an employee elected to opt out of the agreement:

  • they would receive, under their common law contract of employment, a base salary and roster allowance at least equal to the base salary for their employment level under the agreement (rates that were already significantly higher than those contained in the award); and
  • prospective employees would not have their employment made conditional on agreeing to opt out of the agreement, but would be given a free choice as to whether they wanted to be covered by it or not.

The case illustrates that an opt-out provision may be a legitimate term to pursue in the context of enterprise agreement negotiations.

Employee's dismissal not adverse action

In brief: An employee who claimed his employer's decision to dismiss him was affected by the motives of others has had his adverse action claim dismissed. Senior Associate John Naughton reports.

How does it affect you?

  • The reverse onus of proof in adverse action claims requires an employer resisting a claim to show there is no causal connection between their actions and the relevant person having exercised a workplace right.
  • On the basis of the Barclay decision7, even if the employer's subjective intention for taking action is not unlawful, a court may consider whether the objective circumstances point to the employer having held an unlawful motive, even unconsciously.
  • However, Barclay does not go so far as to say that an employer's reasons for taking action can be determined by considering the motivations of others who may have provided information to the employer upon which their action was based.

Background

Mr Stevenson was employed by Airservices Australia from 1 October 2009 until 8 December 2010. Between May and September 2010, he made various complaints, including an allegation that a particular manager was bullying and harassing him.

Airservices appointed an external mediator to resolve the issues between Mr Stevenson and the manager he had accused of bullying and harassing him, but before a mediation took place, Airservices terminated Mr Stevenson's employment on performance grounds.

Mr Stevenson alleged that Airservices had taken adverse action against him, by terminating his employment for reasons related to his having made complaints, while Airservices claimed Mr Stevenson's employment was terminated because he had failed to build and sustain relationships with key stakeholders.

The decision

The court observed that for Mr Stevenson's claim to prevail, he needed to show that the detrimental treatment of him (ie his dismissal) occurred because of his having exercised a workplace right (ie by making complaints).8

The fact Mr Stevenson had made complaints was not disputed. That Airservices had appointed a mediator was evidence of its wish to resolve the issues between him and the relevant manager. However, there was also evidence before the court about Mr Stevenson's capacity to undertake his role effectively. Ultimately, the fact that Mr Stevenson had made complaints did not preclude assessment of his performance in his role, and his being dismissed from his employment on performance grounds.

Mr Stevenson advanced an argument that the Airservices' chief executive officer was influenced by incorrect or prejudicial information provided by other persons, including other Airservices officers. However, this argument was rejected on the basis that:

  • the evidence about Mr Stevenson's performance was not impugned; and
  • the relevant issue was whether the decision-maker's motivation included a prohibited reason, and the decision in Barclay did not require consideration of the motivations of those providing information to the decision-maker as well.

Instead, the court was satisfied in this case that Mr Stevenson's complaints formed no part of the chief executive officer's reasons for dismissing him.

What conduct will constitute sexual harassment?

In brief: The Federal Court has considered a range of conduct that was alleged to constitute sexual harassment. Its findings demonstrate the importance of the context in which the conduct occurred in determining whether a claim of sexual harassment is made out. Partner Tim Frost (view CV) reports.

How does it affect you?

  • This decision9 indicates that a range of conduct has the potential to constitute sexual harassment.
  • Employers should be aware of the breadth of this conduct, and provide training and instruction to employees as to the sort of conduct that will not be acceptable in the workplace.

Background

Ms Kraus was a 20-year-old employee of The Truck Factory Pty Ltd, which was owned by 36-year-old Mr Menzie. Ms Kraus complained that, in the course of her employment with The Truck Factory, she was sexually harassed by Mr Menzie's unwelcome advances and conduct, including inappropriate gifts of 'lingerie, sex toys and scanty clothing'; text and multimedia messaging containing explicit and pornographic content; and Mr Menzie's prevailing on Ms Kraus to take daytrips and overnight 'business trips' with him, during which unwelcome sexual conduct occurred.

Ms Kraus said that she reluctantly tolerated that behaviour because she was afraid of losing her job.

Mr Menzie admitted much of the conduct that was alleged against him, and added that he and Ms Kraus had consensual sex on four occasions. However, he said that Ms Kraus welcomed his conduct and that she was a willing participant.

The Federal Court found that Mr Menzie was generally a more credible witness than Ms Kraus. However, this case is particularly interesting because of the way that each alleged instance of sexual harassment was considered not just by reference to Ms Kraus's and Mr Menzie's evidence, but also with regard to surrounding evidence, such as Ms Kraus's text messages to and from her boyfriend and photos taken during the relevant events.

Justice Mansfield focused on the three key elements of sexual harassment – that there be conduct of a sexual nature; that it be unwelcome; and that a reasonable person would have anticipated in all of the circumstances that the person harassed would be offended, humiliated or intimidated.

The conduct that was found to constitute sexual harassment included:

  • the purchase of Playboy underwear and pyjamas, which was held to be sufficiently intimate to have the necessary sexual nature to constitute sexual harassment, and was not welcome and was likely to offend, humiliate or intimidate;
  • Mr Menzie's efforts in 'badgering' Ms Kraus to remove some of her clothes and swim with him in her underwear while on a work trip;
  • his attempts to share a small cabin bunk with Ms Kraus while she was sleeping in it was found to have the relevant sexual component, to be unwelcome and likely to offend, humiliate or intimidate and, as such, constituted sexual harassment; and
  • sending coarse and sexually explicit images was found to be unwelcome.

The conduct that was found not to constitute sexual harassment included:

  • the purchase of a soft toy and perfume, which was found not to be sufficiently intimate to have the necessary sexual character;
  • the purchase of a helicopter ride, certain gourmet products and a jacket at a trade show, which was held not to have any 'sexual undertones';
  • Mr Menzie rubbing on sunscreen and massaging Ms Kraus's shoulders, which was held to be conduct that, in the circumstances of the day of jet skiing on which it occurred (which Ms Kraus was found to have attended willingly) a reasonable observer would have found not to have been likely to offend, humiliate or intimidate Ms Kraus;
  • various events that occurred on a trip to Melbourne, including the purchase of a friendship ring, sleeping in the same bed and sexual intimacy, were found to be welcome and, as such, did not constitute sexual harassment.

The court found that Ms Kraus had not suffered any economic loss, and awarded $12,000 by way of non-economic damages. It did not award exemplary or aggravated damages.

Footnotes
  1. Cicciarelli v Qantas Airways Ltd [2012] FCA 56 (7 February 2012).
  2. Newlands Coal Pty Ltd [2010] FWA 4811 (29 June 2010); Newlands Coal Pty Ltd [2010] FWA 4986 (7 July 2010).
  3. Newlands Coal Pty Ltd [2010] FWAFB 7401 (1 November 2010).
  4. Construction, Forestry, Mining & Energy Union v Deputy President Hamberger [2011] FCA 719 (24 June 2011).
  5. Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FWAFB 7325 (15 December 2011).
  6. Newlands Coal Surface Operations Agreement 2010 [2012] FWAFB 721 (25 January 2012).
  7. Barclay v The Board of Bendigo Regional Institute of Technology and Further Education [2011] FCAFC 14. This decision is currently the subject of an appeal before the High Court. A hearing has been set down for 29 March 2012.
  8. Stevenson v Airservices Australia [2012] FMCA 55 (1 February 2012).
  9. Kraus v Menzie [2012] FCA (11 January 2012).

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