Workplace relations

In this issue

We look at whether conduct by an employee out-of-hours can justify dismissal; what adjustments an employer must make to accommodate an employee's disability; what 'obtaining alternative employment' means for employers who want to apply to reduce their redundancy obligation; and obtaining permission to have legal representation before the Fair Work Commission.

Out-of-hours harassment not grounds for dismissal

In brief: The Fair Work Commission has found that out-of-hours harassment of a colleague did not constitute a valid reason to dismiss an employee. Partner Simon Dewberry and Lawyer Dana Rechtman report.

How does it affect you?

• Where harassment occurs outside the workplace and work hours, the conduct must be within the scope of the employee's employment to constitute a valid reason for dismissal.
• Employers should consider how workplace policies and codes of conduct apply to out-of-hours conduct and whether they have been communicated to employees.
• Employers should ensure that all allegations of misconduct are properly put to employees to ensure procedural fairness.

Background

In Stephen Keenan v Leighton Boral Amey NSW Pty Ltd [2015] FWC 3156, Mr Keenan was dismissed from his employment with Leighton Boral Amey NSW Pty Ltd (Leighton) because of his conduct both during and after a work Christmas party. There was unlimited service of alcohol at the function and Mr Keenan quickly became intoxicated. The relevant conduct at the function included swearing at colleagues and asking a female colleague personal questions and for her phone number. After the function ended, Mr Keenan and other employees continued the celebrations at a bar upstairs from the venue, where Mr Keenan, without warning, placed his hands on a colleague's face and kissed her on the lips. He also told her he was going home to dream about her that night and, on the way to another venue, told another colleague that it was his 'mission' to find out the colour of her underpants.

Conduct during the Christmas party

Vice President Hatcher found that there was a valid reason for Mr Keenan's dismissal arising out of his aggressive, intimidatory, intentional and bullying behaviour in asking his 'younger and smaller' female colleague, 'Who the f**k are you? What do you even do here?'. However, his other conduct, including swearing at colleagues and asking his female colleague personal questions and for her phone number, was not sufficiently serious to constitute a valid reason for his dismissal. This was the case even though he was described as having behaved aggressively due to his intoxicated state.

Conduct after the party

Mr Keenan argued that his conduct after the function officially ended was outside the scope of his employment and therefore could not constitute a valid reason for his dismissal. Vice President Hatcher agreed, finding that the conduct in the upstairs bar was not within the scope of his employment because it was essentially a private setting and the social interaction was not organised or authorised by the employer, and so the employer had no right to regulate this conduct. The Commission also found that, although the kissing incident was sexual harassment, the employer could not be vicariously liable because it was not in connection with Mr Keenan's employment.

Was the dismissal unfair?

Despite finding that there was a valid reason for Mr Keenan's dismissal arising out of the relevant conduct at the function, the dismissal was found to be unfair because:

• the dismissal was harsh and unjust, having regard to Leighton's inconsistent treatment of another employee, who had engaged in similarly serious or more serious conduct;
• the dismissal was unjust in circumstances where Mr Keenan was never afforded a proper opportunity to respond to the specific allegation; and
• the dismissal was harsh, having regard to Mr Keenan's good record of continuous service, the isolated and aberrant nature of his conduct, the fact that there was no evidence that his behaviour had any continuing workplace consequences, and because there were substantial disciplinary alternatives available to Leighton.

Vice President Hatcher also considered Mr Keenan's intoxication as a factor that pointed towards the dismissal being harsh, finding that 'it is contradictory and self-defeating for an employer to require compliance with its usual standards of behaviour at a function but at the same time to allow the unlimited service of free alcohol', and that it was 'entirely predictable' that some employees would behave inappropriately as a result.

Disabled employee awarded substantial damages for employer discrimination

In brief: The Federal Circuit Court has determined that a government department's failure to accommodate an employee's disability amounted to discrimination under the Disability Discrimination Act. Senior Associate John Naughton and Lawyer Pip Jones report.

How does it affect you?

• Employers who do not make reasonable adjustments to accommodate employees with a disability, which under the Disability Discrimination Act 1992 (Cth) (DDA) includes a disease or illness, risk breaching the DDA. 
• Employers will not be found to have unlawfully discriminated if the employee cannot perform the inherent requirements of a particular role, even when reasonable adjustments are made.
• However, to rely on the 'inherent requirements' exception, an employer must assess the employee's ability to carry out the inherent requirements of the role at the relevant time.

Background

A probation and parole officer at Corrective Services NSW (CSNSW), Ms Huntley, was diagnosed with Crohn's disease and took sick leave. Upon her return, she was put on an informal return-to-work plan with reduced duties.

CSNSW ceased the informal arrangement due to the constraints it placed on the workplace, and Ms Huntley was assessed by a Government Medical Officer (GMO) who deemed her permanently unfit for the full duties of her substantive position, but able to perform full-time office-based duties where there was unrestricted access to bathroom facilities. Ms Huntley was offered but declined the option of medical retirement, as well as two alternative positions offered to her by CSNSW.

A few months later Ms Huntley obtained a secondment, which she undertook for several months. The decision was made not to extend Ms Huntley's secondment, and CSNSW once again offered her the choices of medical retirement, which she refused, or a further GMO assessment. She was directed to take leave, and her accrued sick and other leave entitlements were deducted from that point, without her consent.

Ms Huntley was diagnosed with Idiopathic Hypersomnolence, which is a condition characterised by excessive sleepiness. She underwent a second GMO assessment, which produced the same findings as the first in relation to her ability to work. She remained on leave.

Ms Huntley's claims and CSNSW's defence

Ms Huntley claimed that CSNSW's treatment of her:

• involved direct and indirect disability discrimination because CSNSW had not made reasonable adjustments for her; and
• breached contractual terms of mutual trust and confidence and good faith and obligations to provide a safe workplace, make reasonable adjustments, and act consistently with its own policies.  

CSNSW argued that its actions in relation to Ms Huntley were exempt on the basis that she was unable to carry out the inherent requirements of her substantive role.

The decision

The Federal Circuit Court found that CSNSW did not involve Ms Huntley in preparing her return-to-work plan, and misinterpreted her condition and circumstances. On these bases, temporarily reducing her duties did not involve reasonable adjustments.

Despite having access to all information relevant to Ms Huntley's illnesses, further misunderstandings by CSNSW led to the decision that there was no suitable work for her at either CSNSW or the agency to which she was seconded.

Also, CSNSW had not determined the inherent requirements of Ms Huntley's substantive position and it had not properly considered what reasonable adjustments could be made on the basis of those requirements.

The court therefore found that CSNSW had discriminated against Ms Huntley by:

• failing to make reasonable adjustments to her substantive role;
• failing to consider, or make, reasonable adjustments to allow her to continue in her secondment; and
• making a determination that she was unfit for her substantive position following the second GMO assessment.

The court also found that CSNSW had breached Ms Huntley's employment contract, giving rise to a substantial damages claim. Ms Huntley had her leave entitlements re-credited and was awarded $98,863.89 in damages for economic loss and $75,000 in general damages for pain, suffering and damage to health, plus interest.

Employers must secure alternative employment for employees in bid to reduce redundancy obligations

In brief: The Full Court of the Federal Court has determined that an employer must procure a job offer for their former employees in order to apply for a variation of redundancy pay. Senior Associate Tristan Garcia and Lawyer Pip Jones report on the decision.

How does it affect you?

• Section 120(2) of the Fair Work Act 2011 (Cth) (the Act) allows an employer to apply for a reduction to the amount of redundancy pay that is otherwise payable to an employee if they 'obtain other acceptable employment for the employee'. 
• The previous test of whether the employer acted as a 'strong moving force towards the creation of the available [employment] opportunity' is no longer applicable. Instead, employers must now show they have actually obtained job offers for employees, and that the employee is free to accept or reject that offer.
• In industries where tendering for contracts is common, this can make it very difficult for an outgoing contractor to vary their obligation to make redundancy payments to employees if they do not obtain definite job offers for their employees from the incoming contractor. This is the case irrespective of whether the employee actually takes up employment with the incoming contractor.

Background

The facts

A security contractor, FBIS, lost its bid to renew a contract to provide security services for Asciano, a freight logistics company. That contract was awarded to another contractor, ACG National (ACG).

FBIS took a number of steps to facilitate the hiring of its employees by ACG once it became aware that it was likely to lose the contract. It provided its employees' contact details to ACG, requested that ACG meet with the employees that had been identified for redundancy (although ultimately that meeting did not take place), attempted to engage ACG in discussions about managing employee leave entitlements, and provided ACG with details of the relevant enterprise agreement.

Of the FBIS employees who participated in the recruitment process, 49 were offered and accepted positions with ACG on the same or similar terms as they had been employed by FBIS.  Four were unsuccessful.

The previous decisions

FBIS brought an application to the Fair Work Commission seeking an order pursuant to section 120(2) of the Act to reduce the amount of redundancy pay it was required to pay to its departing employees. The Commission made the order sought by FBIS¹ and the Maritime Union appealed.

The Full Bench of the Commission upheld the union's appeal on the basis that the Commissioner at the first instance had erred in finding that FBIS's actions constituted 'obtaining' other acceptable employment.²  FBIS appealed to the Full Court of the Federal Court.

The decision

In FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia,³  Justices Jessup, Bromberg and Rangiah reviewed the authorities on the concept of 'obtains' for the purposes of section 120 of the Act. Their Honours affirmed that arranging or obtaining acceptable employment means bringing about an employment opportunity that the employee can choose to accept or refuse.

The court disagreed with previous authorities regarding the extent to which the retrenching employer acted as a 'strong moving force towards the creation of the available opportunity', preferring a simplified interpretation that the offer of employment must be in the employee's possession as a result of the efforts of the retrenching employer.

The court found that, at most, FBIS had facilitated the opportunity for the employees to apply for employment with ACG, but did not obtain offers that they could accept or decline as a matter of choice. Consequently, the appeal was dismissed.

The finding means that in order to vary their obligation to make redundancy payments to employees, employers must now show they have actually obtained job offers for employees, and that the employee is free to accept or reject that offer. This will make it very difficult for an outgoing contractor in industries where tendering for contracts is common, if they do not obtain definite job offers for their employees from the incoming contractor.

No guarantee of permission for legal representation before Fair Work Commission

In brief: Being legally represented in matters before the Fair Work Commission can have a significant impact on preparation for and the outcome of a case. However, it is up to the Fair Work Commission to permit legal representation, and a number of recent decisions demonstrate that a request for permission should not be treated as a procedural formality. Special Counsel Eleanor Jewell reports.

How does it affect you?

• Employers should not rely on being given permission to be legally represented in matters before the Fair Work Commission.
• Employers should prepare for an internal representative conducting the substantive proceedings, including examination-in-chief and cross-examination.

Background

Parties must normally appear on their own behalf before the Fair Work Commission. Before a party can be represented by a lawyer, other than an employee, the Fair Work Commission must grant permission. The Fair Work Commission can only grant permission if it is satisfied that one of three circumstances exist. That is, that:

• representation would enable the matter to be dealt with more efficiently, taking into account how complex it is;
• not allowing a party to be represented would be unfair because that person is unable to effectively represent themselves; or
• not allowing a party to be represented would result in unfairness between the parties to the matter.

Even when one of these circumstances is satisfied, the Fair Work Commission can still decide that permission should not be granted. 

Factors the Fair Work Commission will consider

The Fair Work Commission has found that one of the circumstances is satisfied when the matter has involved:

• complex issues of law and fact, such as a termination of employment for redundancy, resulting in the matter being dealt with more efficiently with legal representation;
• significant differences in the facts alleged by each party, with the parties calling a large number of witnesses and relying on a large volume of documents, resulting in a complexity that would be more efficiently resolved with skilled representation and cross examination;
• the employer demonstrating they did not employ anyone with experience in proceedings before the Fair Work Commission, resulting in unfairness to the employer if they were not permitted representation;
• the only available internal employer advocates being both inexperienced in advocacy and required to give evidence on the facts, while the employee was represented by an experienced union advocate – which meant there would have been unfairness between the parties if the employer was not represented by an external legal representative.

The Fair Work Commission has refused permission for representation when:

• the matter does not involve complex issues of law or fact, for example where the dismissal was for a demonstrated failure to conduct a safety check;
• the employer has access to advice and assistance from a legal representative in the preparation and conduct of the matter; and
• the employer does not lead evidence to show they are unable to represent themselves, particularly if they are a well-resourced organisation with a large legal and human resources department.

In practice

An employer will ordinarily have access to advice and assistance from external legal representatives. Further, it can be difficult to determine in advance whether the Fair Work Commission will consider that the issues involved are complex. In practice, this means it can be difficult to determine in advance whether the Fair Work Commission will grant an employer permission to be legally represented.

Whether an employer will be given permission to be represented will often be determined immediately before the hearing of the substantive matter. This means the employer, and their representative, will often need to prepare for the substantive matter to be conducted by the legal representative, and prepare for the matter to be conducted by an internal representative. Preparing for both possibilities can involve significant time and expense, particularly if the internal representative has little experience in advocacy. It can also mean that the matter needs to be prepared without being able to rely, for example, on the benefit of skilled cross-examination to determine particular critical facts. 

Key Implications

Whether the Fair Work Commission will grant permission to be legally represented will depend on the facts of the matter. It is not a mere procedural formality. If employers want to be legally represented, their representative should thoroughly address the requirements. This should include presenting any facts and evidence relied on.

Permission to be represented is more likely to be granted if:

• the matter is factually and legally complex; or
• the employer demonstrates that they do not have an adequately skilled internal representative, particularly if the employee is represented by an experienced union representative.