Employment Law

In this issue

We look at whether employers have a right to direct employees to perform higher duties; an employer's consultation obligations during a redundancy process; how an employer's failure to give a balanced view to employees resulted in it being forced to the bargaining table; and a decision that casts doubt on the effectiveness of set-off clauses in contracts for employees who are covered by a modern award.

Dismissal for refusal to perform higher duties not a breach

In brief: The Full Court of the Federal Court has decided that the dismissal of an employee who refused a direction to perform higher duties was not a breach of the general protections provisions in the Fair Work Act. Senior Associate Tarsha Gavin and Lawyer Tom Kavanagh report.

How does it affect you?

• Employers wanting to direct employees to perform higher duties should consider whether they have a legal entitlement to do so (eg in an award or enterprise agreement).
• An employee's refusal to comply with a reasonable direction is unlikely to constitute a workplace right for the purposes of the general protections provisions in the Fair Work Act.

Background

Qube Ports Pty Ltd (Qube) employed Mr McMaster in the position of Stevedore Grade 3 at the Port of Melbourne. His employment was covered by an enterprise agreement. The enterprise agreement incorporated the job classifications of the Stevedoring Industry Award 2010.

In June 2013, Mr McMaster refused a direction from Qube to perform the duties of Stevedore Grade 5 for a particular shift, despite having agreed to do so on several previous shifts.

Qube subsequently dismissed Mr McMaster for this refusal and he commenced a general protections claim. Mr McMaster claimed that Qube dismissed him because of his exercise of a workplace right (ie his refusal to follow Qube's direction).

The trial judge decided that Qube had no legal right under the award or the enterprise agreement to require Mr McMaster to perform higher duties, and 'as an inevitable consequence' Mr McMaster was entitled to refuse this direction. The trial judge concluded that the right of refusal was a workplace right. Since Qube did not dispute that the failure to comply with its direction was the reason for dismissal, the trial judge concluded that the dismissal breached the general protections.

Decision

On appeal¹, the Full Court considered the relevant provisions of the enterprise agreement concerning higher duties and directions to perform work. Those provisions stated that each employee would carry out all work within their recognised and required competency as reasonably directed by Qube. Further, nothing in the enterprise agreement prevented Qube from directing an employee to perform any work for which they were appropriately skilled. Although each member of the Full Court adopted slightly different reasoning, each concluded that this provision permitted Qube to direct Mr McMaster to perform higher duties.

Consequently, Mr McMaster did not have a workplace right to refuse the direction and his dismissal was not a breach of the general protections. The court also commented that even if an employer did not have the express authority to require an employee to perform higher duties (or give any other direction), it was not necessarily the logical or legal consequence that there is a 'workplace right' under the Fair Work Act to resist that requirement.

Consultation by email?

In brief: The Federal Court of Australia recently clarified an employer's obligation to consult with employees when it dismissed an application made by the CFMEU against BHP Coal. Senior Associate Chloe Wilton reports.

How does it affect you?

• When planning a consultation process, employers should ensure its representatives are well-informed about the potential ramifications of the decision and are receptive to being influenced and informed.
• The consultation format must allow the other parties a genuine opportunity to engage in consultation.
• Employers are not required to provide all information that employees or their representatives request during consultation. Unless an applicable enterprise agreement says otherwise, employers are only required to provide such information as is reasonably necessary to allow the other parties to make suggestions in respect of the subject for consultation.

Background

In September 2014, BHP Coal decided it needed to reduce about 700 budgeted positions across several BMA coal mines. This included a decision that 562 employees (EA employees) covered by the BMA Enterprise Agreement 2012 (the Agreement) were surplus to requirements. BHP Coal proceeded to consult with its employees and the CFMEU regarding that decision and the possible need for redundancies.

The CFMEU alleged that BHP Coal's consultation process did not comply with the Agreement, including because:

• BHP Coal did not consult about the decision to reduce 700 budgeted positions;
• the consultation process was not conducted by a person who had the authority to do so; and
• BHP Coal failed to provide the CFMEU with required information.

Decision

The court decided that BHP Coal had genuinely consulted with the CFMEU in accordance with the Agreement. In particular, the court found that:

• the Agreement allowed BHP Coal to decide it needed to reduce its workforce by 700 positions, including 562 EA employees, before commencing consultation;
• BHP Coal was appropriately represented throughout the consultation process. Its representative was well informed about the potential ramifications of the decision and receptive to being influenced and informed during the process. It was not necessary for the BHP Coal decision maker to directly participate in the consultation process; and
• although BHP Coal had not provided all information requested by the CFMEU during consultation, it was not required to do so. BHP Coal had furnished such information as was reasonably necessary to afford the employees and the CFMEU a genuine opportunity to engage in consultation.

The court also observed that there is no fixed format for consultation. It commented that unless an applicable enterprise agreement requires something specific, meetings are not necessarily required. The court said that in some cases an exchange of emails might suffice, provided the requisite opportunity to genuinely consult has been extended.

Beware of gilding the lily with swinging majority support voters

In brief: A recent Fair Work Commission decision to make a majority support determination in favour of the AWU stands as a warning to employers not to provide one-sided views when communicating to employees about proposed bargaining. Associate Laura Miller reports.

How does it affect you?

• The Commission has a broad discretion to conclude a majority of employees want to bargain for an enterprise agreement.
• Employers should be careful that any employee briefings ahead of a vote to determine whether they wish to initiate bargaining presents a balanced view about the enterprise bargaining system and the employer's preferred approach to bargaining. Employers should also ensure that any questions employees vote on will provide a clear expression of their views about bargaining. 

Background

In the course of a number of right of entry visits to Martogg & Company (Martogg), the AWU collected signatures of Martogg's employees on a majority support petition (the initial petition). The initial petition showed that a majority of employees wanted to bargain for an enterprise agreement. The AWU then wrote to Martogg indicating that it wished to commence bargaining for an enterprise agreement.
In response, Martogg held a compulsory ballot of all of its employees in June. The ballot required employees to indicate whether they:

• wished to bargain for an enterprise agreement;
• did not wish to bargain; or
• abstained from voting.

The results of this ballot were 30 votes against bargaining, 38 votes in favour and 31 votes abstaining. Shortly afterwards, the AWU circulated a new petition in support of enterprise bargaining, but only collected 22 signatures.

The AWU applied to the Commission for a majority support determination, relying on its initial petition to establish that a majority of Martogg's employees wanted to bargain. Martogg resisted the AWU's application on the basis that the AWU no longer had majority support, as demonstrated by the results of Martogg's ballot. Martogg also relied on the employees who voted to abstain from bargaining as further votes against bargaining.

Decision

The Commission made a majority support determination in favour of the AWU. This decision was made notwithstanding:

• Martogg's ballot, which showed that some of Martogg's employees who signed the initial petition reversed their support for enterprise bargaining; and
• the Commission's view that Martogg's compulsory ballot represented the most sound method of determining whether a majority of employees wanted to bargain.

In reaching its decision, the Commission placed significant emphasis on the briefing employees were given by Martogg before the compulsory ballot. The Commission decided that it could not attach any significance to the results of the ballot because it occurred shortly after a 'one-sided' briefing from Martogg's management. Also, giving employees the option to abstain from voting made it impossible for the Commission to decide whether a majority of the relevant employees wanted to bargain. On that basis, the initial petition was seen to more accurately reflect the views of Martogg's employees in favour of enterprise bargaining.

The decision did not attach any significance to the petition the AWU subsequently asked employees to sign after the compulsory ballot. 

With respect, it is difficult to reconcile the Commission's decision with the evidence it had before it. However, the decision provides some important lessons for employers who organise employee votes to try to resist a majority support determination.

Doubt cast on set-off clauses for award employees

In brief: A Magistrates Court decision in Western Australia has cast doubt about the effectiveness of set-off clauses where a modern award provides for annualised salaries. Senior Associate John Naughton reports.

Background

The claimant, Ms Stewart, was employed as an administration coordinator until termination of her employment in January 2016. Her employment was governed by the Clerks – Private Sector Award 2010 (the Clerks Modern Award), and she was paid an annual salary of $78,000.

The day after her employment ceased, Ms Stewart filed a claim for nearly $30,000 alleging that she was not paid her overtime or lunch breaks when she was required to work them. Her employer denied the claim, disputing the hours Ms Stewart claimed to have worked and arguing that, in any event, she had already been compensated for those through an annual salary arrangement.

Employment terms

Ms Stewart's contract contained a clause providing that '(y)our salary is inclusive of any award provisions/entitlements that may be payable under an award'.

The Clerks Modern Award contains a provision allowing an employer to pay an employee an annual salary in satisfaction of minimum weekly wages, allowances, overtime and penalty rates, and annual leave loading.

However, the relevant clause in the Clerks Modern Award also notes that 'where an annual salary is paid the employer must advise the employee in writing of the annual salary that is payable and which of the provisions of this award will be satisfied by payment of the annual salary'.

Decision

The Western Australian Industrial Magistrates Court was asked to consider, as a preliminary matter, whether the annual salary under the employment contract was a complete answer to Ms Stewart's claim.²

The court noted it was common for employers, for administrative ease, to pay an 'all-inclusive rate' intended to compensate employees for all award entitlements in relation to their work.

But the court also noted that if an employer wished the payment of an annual salary to satisfy particular award entitlements, the Clerks Modern Award provided that these needed to be identified with specificity. As Ms Stewart's contract of employment did not, the court determined the claimant could proceed.

Analysis

It has been a long-standing practice of employers to include set-off provisions in employment contracts, with the object of providing a single rate intended to compensate a person fully for any payment obligations arising under an award or at law. Set-off provisions are also used where the employer provides some but not all financial entitlements under the award.

This decision shows there will be risk in relying on general set-off clauses for award-covered employees. While this decision is not binding on other courts, employers might consider reviewing their employment contracts to ensure they reflect:

• the relevant award that applies; and
• the specific provisions of that award that are intended to be satisfied by the annual salary.