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Focus: Workplace Relations

9 July 2010

In this issue: we look at whether a dismissal is a redundancy when the work is still being performed by others; where Fair Work Australia may still approve an agreement without good faith bargaining; Fair Work Australia having clarified the scope of flexibility terms; enterprise agreements should not cover positions an employer has yet to fill; notification of enterprise agreements in the digital age; and Fair Work Australia upholds the termination of an employee for refusing to work as directed.

Is a dismissal a redundancy when the work is still being performed?

In brief: Fair Work Australia has confirmed that genuine redundancy can arise when duties of a previous job are redistributed to other positions. Special Counsel Rowan Kelly and Law Graduate Kate Naude report on a recent decision of the Full Bench of Fair Work Australia.

How does it affect you?

  • An employee's position can still be redundant even when some aspect of their duties remains to be performed by another employee.
  • A genuine redundancy will occur if a workforce restructuring leads to an overall reduction in the number of jobs required, despite the remaining jobs having similarities with the redundant positions.
  • Consideration needs to be given, on a case-by-case basis, to any consultation requirements.

Background

Ulan Coal Mines Limited appealed against a decision of Fair Work Australia (FWA) that held the dismissal of 10 former employees (the applicants) was not a case of genuine redundancy for the purposes of the Fair Work Act 2009 (Cth).1

In 2009, Ulan conducted a review of its operations, which determined that 38 mineworker positions were surplus to requirements and there was a need to increase trade-qualified mineworker positions by 11. As a result, 14 permanent non-trade mineworkers were dismissed, based on seniority, in accordance with the relevant enterprise agreement (the agreement).

At first instance, FWA held the reductions in the workforce that resulted from an increase in trade-qualified mineworkers did not diminish the fact that the work performed by all mineworkers (including the applicants) was essentially the same. As such, the dismissals were not cases of genuine redundancy.

Further, the agreement stated that Ulan would hold discussions with the employees directly affected and with the employees' representative. FWA held the obligation did not relate to employees generally, but to the particular mineworkers who were dismissed. As Ulan did not hold specific discussions with the applicants before the dismissals occurred, this amounted to a failure to comply with the consultation obligations. A termination qualifies as a genuine redundancy only if consultation obligations in an industrial instrument are met.

The decision

Ulan's appeal was successful, with the Full Bench finding that the dismissals were cases of genuine redundancy. The Full Bench held that the restructure led to an overall reduction in the size of the non-trade workforce, and distinguished between the jobs of mineworkers who were retrenched and the functions performed by those mineworkers.

The Full Bench also held that Ulan had complied with the consultation obligation in the agreement. Ulan had held discussions about the restructure and consequent redundancies with the Construction, Forestry, Mining and Energy Union and the entire workforce, including the applicants. The Full Bench considered that, in some cases, separate consultation with the proposed employees to be dismissed may be worthwhile and appropriate, particularly if those discussions cover the selection process. However, that was not necessary in the present case because selection was 'determined by the Agreement to be according to seniority'.

Conclusion

Genuine redundancies can occur when a workforce is downsized to improve efficiency and productivity. However, employers should be mindful that they must adhere to any obligations to consult about redundancies, as set out in the relevant award or agreement.

Good faith bargaining not unlimited

In brief: Failure to bargain in good faith may not prevent the approval of an enterprise agreement. Lawyer Naomi Sadler reports on a recent Fair Work Australia case.2

How does it affect you?

  • Fair Work Australia (FWA) may approve an enterprise agreement when good faith bargaining obligations have not been adhered to, if no scope order has been made.
  • Procedural irregularities in bringing applications can be overlooked by FWA if there is no material disadvantage arising.

Background

Aegis Aged Care Staff Pty Ltd applied to FWA for approval of an enterprise agreement. The application was supported by two bargaining representatives – the Liquor, Hospitality and Miscellaneous Union (the LHMU), and the Heath Services Union (the HSU).

The application was opposed by the Australian Nursing Federation (the ANF) on three grounds:

  • the agreement was unlawful because it only allowed for the representation of employees by the LHMU and the HSU;
  • the agreement was not bargained in good faith because the ANF had been excluded from the bargaining process by the employer; and
  • the application was not accompanied by a declaration from the ANF, as required by the procedural rules.
The decision

FWA indicated that it would approve the agreement on the basis of an undertaking by the employer to amend the term limiting representation of employees.

FWA considered the requirement in section 187(2) of the Fair Work Act 2009 (Cth) that approval was not inconsistent with good faith bargaining. The requirement is stated to apply to enterprise agreements in relation to which a scope order is in operation. No such order had been made by FWA in relation to this agreement. Based on the clear wording of the section, it was therefore held that the good faith bargaining obligations did not affect approval of this agreement.

FWA accepted that there had been procedural deficiencies associated with the application. However, since there had not been any material disadvantage to the ANF, it decided to overlook the irregularities in granting approval.

Conclusion

While employers should always try to bargain in good faith, and risk orders during the bargaining process if they do not, failure may not affect approval by FWA.

Procedural irregularities in bringing an application to FWA may be overlooked if no material disadvantage arises.

Fair Work Australia clarifies the scope of flexibility terms

In brief: A purposive, liberal approach should be used in interpreting flexibility terms. Law Graduate Naomi Snyder and Senior Associate Luke Gattuso report on a decision of Fair Work Australia.

How does it affect you?

  • An individual flexibility arrangement made under a flexibility term in an enterprise agreement alters the rights of the parties to the arrangement, but does not alter the terms of the agreement itself.
  • A well drafted flexibility term should provide for a change in the effect of at least one of the terms of the enterprise agreement.
  • If an enterprise agreement does not include a flexibility term, or includes a term not meeting the legislative requirements, then the model flexibility term is taken to be a term of the agreement.

Background

Enterprise agreements made under the Fair Work Act 2009 (Cth) must include a flexibility term to enable an employee and the employer to enter into an individual flexibility arrangement that varies the effect of the agreement.

In a recent decision, Fair Work Australia (FWA) found that a flexibility term in a proposed enterprise agreement (the Trimus agreement) was invalid.3 FWA found that the proposed flexibility term was not consistent with the legislation and that, as a result, the model flexibility term applied. The decision was based on a distinction between varying the effects of the terms in the agreement, and varying the terms themselves.

The Minister for Employment and Workplace Relations appealed FWA's decision on the basis that the decision was contrary to public interest.

The review decision

The Full Bench of FWA held that the flexibility term was valid for various reasons4, including that:

  • an individual flexibility arrangement made under the flexibility term would not vary the terms of the enterprise agreement, but would only alter the legal rights of the individual employee and the employer (ie the effect of the terms); and
  • when interpreting enterprise agreements, a purposive approach should be adopted. In this case, it was highly likely that the flexibility term was intended to comply with the legislative requirements, and the imprecise language of the flexibility term – expressed in language describing variation of terms of the enterprise agreement – was not fatal.
Conclusion

A well drafted enterprise agreement should include a flexibility term that provides for variation of the effect of at least one of the terms of the agreement. The appeal reveals a commonsense approach to the appeal process. However, imprecise language can lead to far more serious risks than complications in the approval process. Despite FWA's willingness to deal with the issue in a practical way, some drafting problems cannot be so easily remedied, and FWA's approach will vary from case to case.

Enterprise agreement coverage not fairly chosen

In brief: Enterprise agreements should not cover positions an employer is yet to fill. Lawyer Andrew Stirling reports on a recent Fair Work Australia case.

How does it affect you?

  • Before approving an enterprise agreement, Fair Work Australia (FWA) must be satisfied that it has been genuinely agreed to by a group of employees that was fairly chosen to be covered by the agreement.
  • FWA is unlikely to be satisfied with this if the agreement covers positions that are not, and never have been, filled by the employer.

Background

Melbourne Nursing Agency Pty Ltd (the employer) is a labour hire agency that supplies health professionals. The employer sought FWA's approval of an enterprise agreement covering its clerical and trainee patient services employees.5

At the time the agreement was made, the employer had four employees who would be covered by the agreement. These four employees were all part-time clerical employees. The employer had no full-time or casual clerical employees, and had no trainee patient services employees (whether that be casual, part-time, or full-time). Despite this, the enterprise agreement included classifications for those unfilled positions (eg full-time trainee patient services). The four part-time clerical employees were invited to vote for the agreement, and the two that voted supported it.

Decisions

FWA refused to approve the enterprise agreement. It was not satisfied that the enterprise agreement had been genuinely agreed to, or that the group of employees covered by the agreement was fairly chosen.

The Commissioner described the agreement as a 'beach head' because it applied to employee classifications in which the employer did not engage anyone. Of particular concern was that:

  • the employer didn't employ any trainee patient services employees; and
  • the clerical employees had voted to accept terms that would apply to the trainee patient services employees, even though the conditions of employment of those categories of employee were referrable to different modern awards.
Conclusion

When considering the coverage of an enterprise agreement, employers should take care to ensure that the positions to be covered by the agreement are fairly chosen and not part of a strategy to establish binding terms in relation to other roles.

Notification of enterprise agreements in the digital age

In brief: Fair Work Australia has refused to approve an enterprise agreement because the employer did not take reasonable steps to comply with its notification obligations under the Fair Work Act 2009 (Cth). Lawyer Rachel Chua reports.

How does it affect you?

  • Where an employer proposes to enter into an enterprise agreement, it must take all reasonable steps to notify each employee of their right to be represented by a bargaining representative; and to provide all employees with copies of the agreement and any other supporting material.
  • Employers can notify employees via SMS, but only if the SMS refers clearly to a proposed enterprise agreement.
  • An employer may not be found to have taken all reasonable steps if it provides access to the proposed agreement and supporting materials via a website.

Background

Under section 173(1) of the Fair Work Act 2009 (Cth) (the FW Act), an employer proposing to enter into an enterprise agreement must notify each employee that will be covered by the agreement of their right to be represented by a bargaining representative. These employees must also be provided with a copy of the agreement and any other material incorporated by reference to the agreement (s180(2)).

Workpac Pty Ltd made an application to Fair Work Australia (FWA) to approve its proposed National Healthcare Enterprise Agreement 2010. Workpac told FWA that it had satisfied s173(1) of the FW Act by sending an SMS to all staff covered by the proposed agreement. The SMS directed the employees to a website where 'important documents' could be viewed. Workpac submitted that its employees were frequently contacted via SMS to convey, among other things, shift hours and work allocations.

The decision

The application was dismissed. Although FWA accepted SMS as a legitimate form of notification, it did not accept the notification was reasonable because there was 'insufficient evidence that employees have ready access to computers or a website' and also that the SMS 'made no reference to the fact that a proposed agreement was the subject matter'.

FWA also noted that only 10 of the 204 eligible employees voted. Though not a critical issue, FWA stated that this corroborated its concerns about the Internet as an effective method of communication.

Conclusion

Employers may use SMS to notify employees of a proposed enterprise agreement. However, the notification should be sufficiently detailed about the proposed agreement and where and how an employee can access it. In addition, employers should exercise caution in directing employees to a copy of the agreement online, if there is doubt about employees' access to computers and/or the Internet.

Fair Work Australia considers termination of Australia Post employee

In brief: Fair Work Australia recently considered whether an Australia Post employee had been unfairly dismissed from his employment for refusing to work as directed. Lawyer Greg Stirling reports.

How does it affect you?

  • Differential treatment of employees can render an otherwise justified termination harsh, unjust or unreasonable.
  • When more than one employee is involved in certain conduct, but an employer proposes to dismiss only one employee because of that conduct, the employer should ensure there are sufficient reasons to explain the inconsistent approach.

Background

Mr Darvell was employed by Australia Post, undertaking truck driving and associated duties. He was also an OH&S officer. His employment was summarily terminated by Australia Post after almost 20 years of service for refusing to work as directed. Mr Darvell justified his refusal to work by relying on safety concerns.

Mr Darvell brought an unfair dismissal application under the Fair Work Act 2009 (Cth). When Fair Work Australia (FWA) dismissed this initial application,6 Mr Darvell appealed to a FWA Full Bench, challenging FWA's findings that:

  • he did not genuinely and reasonably believe that he was entitled, on occupational health and safety grounds, to refuse to unload his truck; and
  • the termination was not harsh, unjust or unreasonable, given that other employees had engaged in similar conduct, but were not dismissed.
Decision

Both of Mr Darvell's grounds for challenge were dismissed.7 On the first point, Mr Darvell contended that there was no consultation with OH&S representatives regarding Australia Post's decision to require drivers to load and unload their trucks and therefore drivers should not be required to do so until that consultation took place. However, the Full Bench noted that Mr Darvell had declined opportunities to be involved in consultations with Australia Post regarding the decision. Therefore, it concluded that he could not have reasonably believed that he was entitled to refuse to unload his truck on occupational health and safety grounds.

On the second point, the Full Bench accepted the original FWA finding that the termination was not harsh, unjust or unreasonable. The Full Bench acknowledged that differential treatment of employees can render an otherwise justified termination harsh, unjust or unreasonable. However, the Full Bench also accepted that employees' different work histories, performance records and individual situations may warrant different action in spite of similar employee conduct.

Also, the Full Bench considered that:

  • it was up to Mr Darvell to demonstrate that each instance of inconsistent treatment was not relevantly different to his case; and
  • he could not do so, given both his own poor performance record and the different work histories of the other employees.
Footnotes
  1. Ulan Coal Mines Limited v Howarth & Ors [2010] FWAFB 3488 (10 May 2010).
  2. Aegis Aged Care Staff Pty Ltd [2010] FWA 3715 (12 May 2010).
  3. Trimas Operations Waterview Close Collective Bargaining Agreement 2009 [2010] FWAA 1485 (23 February 2009).
  4. Minister for Employment and Workplace Relations [2010] FWAFB 3552 (19 May 2010).
  5. Melbourne Nursing Agency Pty Ltd [2010] FWA 4133.
  6. Mr Wayne Darvell v Australian Postal Corporation [2010] FWA1406 (2 March 2010).
  7. Mr Wayne Darvell v Australian Postal Corporation [2010] FWAFB 4082 (1 June 2010).

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