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Focus: Workplace Relations

13 October 2015

In this issue: we look at what 'reasonable management action' is; when a complaint will be 'in relation to' employment; the personal liability of human resources managers and other senior employees; the FWC's approach to dismissals resulting from serious safety breaches; and the validity of a safety regulator's directive that a coal mine only use light vehicles retrofitted with roll protection.

Actively managing performance issues not bullying

In brief: In considering the reasonableness of management action, the Fair Work Commission has confirmed that employers can place reasonable demands on employees and actively manage performance issues. Senior Associate Emily Harvey reports.

 
 

How does it affect you?

  • The Fair Work Commission (the FWC) recognises that employers are entitled to set reasonable standards and actively manage employees who do not meet those standards.
  • Whether the action that is taken is 'reasonable' will be determined objectively and by reference to the surrounding circumstances. The treatment of other employees may be relevant.

Background

The applicant applied for stop bullying orders against his employer, CommSec, and two managers. He alleged that he was unnecessarily micro-managed, placed on performance improvement plans without justification and held to a higher standard than other employees.

CommSec took action in relation to a number of performance issues. The action included informal counselling, action plans and two formal performance improvement plans. As part of the second improvement plan, the applicant was required to attend weekly meetings with his manager. As he was also required to meet with his manager once a week for coaching (as part of his normal duties), on two-thirds of his working days he had to attend meetings with his manager.

Was the action 'reasonable management action'?

In finding that the action was reasonable in the circumstances, the FWC took into account that the applicant was:

  • aware of the requirements of his position and CommSec's procedural rules;
  • offered support and assistance in reaching the required standards; and
  • treated consistently with other employees who had performance issues.1

The FWC found that there was no evidence the applicant was held to a higher standard than other employees. CommSec had established key performance indicators and measured all customer assistance officers against the same standards.

Commissioner Bissett commented on the applicant's failure to accept the right his managers had to set reasonable standards. She indicated that it was not bullying to require an underperforming employee to meet specified standards, or to commence an improvement plan.

Key strategies

To ensure performance management action is considered reasonable, employers should:

  • ensure that job requirements and standards are clear and communicated to the employee;
  • offer support and training to assist an employee to meet requirements;
  • adopt a consistent approach to performance management; and
  • keep detailed records of performance meetings and discussions.

When is a right to make a complaint NOT a workplace right?

In brief: A court has refused to dismiss an adverse action claim that was based on an employee's internal complaints about financial reporting issues. Partner Simon Dewberry and Lawyer Dana Rechtman report.

 
 

How does it affect you?

  • The inconsistent application of the requirement that a complaint or inquiry be 'in relation to' employment poses a risk for employers facing adverse action claims brought by employees.
  • Courts may interpret the requirement that a complaint be 'in relation to' employment broadly, such that any complaint about a subject that has the potential to cause prejudice to an employee may involve a workplace right.

Background

Mr Henry, who worked in Leighton's risk team, made internal complaints about alleged financial reporting and other issues at Leighton. Mr Henry was not responsible for financial reporting, but he was under a contractual obligation to promptly raise known or suspected breaches of Leighton's code of conduct, its rules or the law. After being retrenched, he brought a general protections claim, arguing he was dismissed because of his complaints. Leighton asked the court to throw out Mr Henry's claims, arguing that his complaints did not relate to his employment, but instead related to Leighton's financial reporting.

The decision

The court accepted that a complaint may be directly or indirectly related to the employee's employment. It found that the expression 'in relation to' is broad enough to capture complaints or inquiries about things that can cause prejudice to an employee in his or her employment.2 In this case, Mr Henry would have been prejudiced if he did not make the complaints, because he would have been in breach of his employment contract.

A similarly broad interpretation of 'in relation to' employment was taken in Evans v Trilab.3 In that matter, an employee's complaint that the particular testing methods used by his employer were not of a sufficient standard was found to be a protected complaint.

It is notable that in both of these decisions, the employer was seeking summary judgment of the employee's claim, so the court was only required to determine whether the employee had no reasonable prospect of success. The substantive proceedings are yet to be determined.

The interpretation in these cases is contrary to the narrower interpretation applied in some previous cases. For example, in Harrison v In Control Pty Limited,4 an employee's complaints that the business he worked for lacked direction and that his manager did not possess the leadership skills necessary to run the business, were considered to be complaints about the business generally and not 'in relation to' his employment.

Unfortunately, these inconsistent cases leave employers with little certainty about the limits of complaints 'in relation to' employment.

Managers personally liable for adverse action

In brief: The Federal Court has found a construction company and two of its HR managers liable for adverse action against an employee. Notably, the HR managers were held personally liable, despite acting under the direction of an operations manager. Special Counsel Eleanor Jewell and Lawyer Darcy Doyle report.

 
 

How does it affect you?

  • Human resources managers, or other senior company employees, may be personally liable if they are involved in conduct that contravenes the Fair Work Act 2009 (Cth) (the Act).
  • A finding of personal liability exposes employees to pecuniary penalties imposed under the Act.
  • That employees were acting under the direction of senior management will not be a mitigating factor if no evidence is led to show there was a risk to the employee of them refusing to implement the direction.

Background

Mr Teariki, a construction and safety worker employed by Baulderstone on a salary contract, ceased being a CFMEU member. Shortly afterwards, Mr Stavrinos (the Baulderstone NSW operations manager), Ms Kidman (the Baulderstone NSW and ACT human resources manager) and Mr Razlog (the Baulderstone employee relations manager), held a meeting at which Mr Stavrinos determined that Mr Teariki would be taken off his salary contract and placed on a wages contract.

Ms Kidman and Mr Razlog implemented the decision. The Director of the Fair Work Building Industry Inspectorate claimed that Baulderstone, Ms Kidman and Mr Razlog contravened the prohibition against a person taking adverse action against another person because the other person has engaged in industrial action. Industrial action includes ceasing to be a union member.

Liability for adverse action

Baulderstone could not show that the adverse action was for a reason other than Mr Teariki's industrial activity and was found to have contravened the Act.

The court found that Ms Kidman and Mr Razlog were involved in the contravention. Their meeting with Mr Stavrinos and awareness that Mr Teariki had ceased being a CFMEU member meant they knew the reason for the adverse action and were found to be liable for the contravention.5

That the decision and direction as to the contravening conduct originated from Mr Stavrinos, rather than Ms Kidman and Mr Razlog, would, the court held, ordinarily be a mitigating factor. In this case, however, there was insufficient evidence to show that Ms Kidman or Mr Razlog believed their conduct was lawful or proper. They were found to have had the choice of opposing or not implementing Mr Stavrinos' decision. The court recognised that practical realities of power within an organisation may mean that there is a risk in employees expressing disagreement with a superior. There was no evidence, however, that Ms Kidman or Mr Razlog considered disagreeing with Mr Stavrinos' decision or evidence of why they did not. The court therefore held that not implementing the decision was an option that was available to the employees but was not taken. Accordingly, Ms Kidman and Mr Razlog were each ordered to pay personal penalties of $3,500.

Safety breach warrants financial penalty, but not dismissal

In brief: The Full Bench of the FWC has decided that an employee's reinstatement was appropriate, given that his dismissal was harsh, but took away his compensation as a sanction for his serious safety breach. Associate Tegan Ayling reports.

 
 

How does it affect you?

  • The inconsistent approach of the FWC to dismissals resulting from serious safety breaches continues. Reinstatement is still a risk.
  • Even so, the FWC may consider lost remuneration an appropriate penalty for serious safety breaches and refuse to order back pay.

Background

Mr Rogers was employed by Chevron Australia Pty Ltd as acting permit coordinator on Barrow Island. He was responsible for issuing and closing off permits for maintenance or repair works. Mr Rogers had issued multiple permits in relation to maintenance work on a compressor. However, he failed to:

  • properly record these permits; and
  • ensure the compressor's gas detection system was back in operation before the compressor was reactivated.

These failures ultimately resulted in a gas leak going undetected. Chevron's investigation held Mr Rogers responsible and he was dismissed.

In the FWC, the Deputy President initially ruled that Mr Rogers' serious safety breach constituted a valid reason for his dismissal, but that the dismissal was harsh, considering his long service, lack of prior safety breaches, recent positive performance review and inability to find other work.6 The Deputy President's opinion was that Mr Rogers did not consciously disobey procedure and was not properly trained. She identified a serious failure in Chevron's safety systems and considered it relevant that another permit coordinator involved in the breach had not been dismissed.

The Deputy President ordered that Mr Rogers be reinstated, and awarded compensation for lost remuneration and entitlements. The compensation did not include field and transport allowances. She considered their non-payment to be sufficient penalty for the safety breach. Chevron appealed.

The appeal

Chevron argued that because Mr Rogers had been reinstated and received compensation, he had received no penalty, or at least a disproportionate one, for his serious breach of safety.

The Full Bench did not find any error in the Deputy President's finding that the dismissal was harsh or in Mr Rogers' reinstatement.7 However, the award of compensation in addition to reinstatement was inconsistent with the fact that there was a valid reason for dismissing Mr Rogers and it did not reflect the importance of safe work practices. On appeal, the Full Bench took away all compensation, deeming the loss of remuneration and entitlements a sufficient penalty for Mr Rogers' conduct.

Coal mine safety representative's directive rejected

In brief: The Industrial Court of Queensland has ruled invalid a safety representative's directive that a coal mine only use light vehicles retrofitted with roll protection. Managing Associate Andrew Stirling reports.

 
 

How does it affect you?

  • As with the model WHS Act, the Coal Mining Safety and Health Act 1999 (Qld) (the CMSH Act) provides for worker representation regarding safety matters. Safety representatives are empowered to issue directives or notices about how work must be safely performed.
  • If requested to do so, safety regulators may reconsider the matters on which the directives / notices were based. The regulator may overturn a directive / notice if it does not meet the requirements of the legislation.

Background

BM Alliance Coal Operations Pty Ltd (BMA) operates the Peak Downs coal mine. Given the dimensions of the mine, BMA has a fleet of light vehicles to transport its employees from location to location. All of the existing fleet had a retrofitted roll protection system (either a roll cage within the vehicle or an external cage).

In 2012, BMA proposed to discontinue its practice of retrofitting roll protection on new fleet vehicles. Those vehicles would instead be ANCAP 5 star rated (the highest rating available). ANCAP is a system for testing a vehicle's capacity to withstand impacts.

An Industry Safety and Health Representative (ISHR) for the mine issued BMA with a directive under the CMSH Act that BMA 'stop the use of any mobile plant that is not protected by a protective structure shown to be of an equivalent (or better) engineered standard than in place at the mine prior to the change'. BMA asked the Chief Inspector of Coal Mines to overturn the directive, which he did. The ISHR appealed the Chief Inspector's decision to the Industrial Court of Queensland.

The case

The Industrial Court rejected the ISHR's appeal.8 In doing so, the court decided:

  • The ISHR had standing to bring an appeal against the Chief Inspector's decision to overturn the directive.
  • The CMSH Act gives ISHRs the power to 'suspend operations'. This includes suspending some, but not all, of the activities on the coal mine (eg the use of light vehicles).
  • An ISHR's directive to suspend operations may be subject to conditions, provided those conditions were consistent with the objects of the legislation. The court gave as an example that a suspension might be conditioned to end once a flood had abated.
  • However, in this case the directive was subject to a condition that gave BMA insufficient information as to how to satisfy it. For example, the condition did not say how new light vehicles could be 'shown' to be of a particular standard, who should be shown, or even what the standard was. The condition was ruled invalid and, as a result, so was the directive.
  • Use of the replacement light vehicles without further roll protection was within an acceptable level of risk (ie within acceptable limits and as low as reasonably achievable) as required by the CMSH Act.
Footnotes
  1. Aly [2015] FWC 4419.
  2. Henry v Leighton Admin Services Pty Ltd & Anor [2015] FCCA 1923.
  3. Evans v Trilab [2014] FCCA 2464.
  4. Harrison v In Control Pty Limited [2013] FMCA 149.
  5. Director of the Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors (No. 2) [2015] FCCA 2129.
  6. Rogers v Chevron Australia Pty Ltd [2015] FWC 897.
  7. Chevron Australia Pty Ltd v Rogers [2015] FWCFB 5354.
  8. Dalliston v Taylor & Anor [2015] ICQ 017.

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