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Focus: Workplace Relations

February 2014

In this issue: we look at a union's contravention of the general protection laws; new legislation that will expand the powers of the federal building industry regulator; the Fair Work Commission's ruling on urine testing and its implications for employers; a Fair Work Commission ruling affirming reinstatement as the primary remedy in cases of unfair dismissal; a decision supporting state governments' building and construction codes of conduct; discerning adverse action from lawful industrial action; and guidance on requiring compliance with a social media policy applying outside the workplace.

Union contravenes general protections

In brief: The Federal Court has found that a union and its officers engaged in unlawful adverse action and unlawful industrial action by promoting a policy that restricted overtime. Special Counsel Luke Gattuso and Lawyer Anna Loizou report.

How does it affect you?

  • Unions may be liable for contraventions of the general protections laws.
  • Officers may also be liable if they have been involved in the contravention, including where they are 'knowingly concerned'.

Background

BHP Coal operates the Peak Downs mine in Queensland. A clause in the relevant enterprise agreement (the agreement) enabled BHP Coal to require its employees to work reasonable overtime at the mine, including unrostered overtime, subject to operational requirements.

In around March 2011, a CFMEU document that included an 'overtime policy' was posted in the maintenance bay service area at the mine. The document outlined restrictions on the amount of overtime that could be worked. A CFMEU Peak Downs membership pack also included a document that replicated these restrictions, with additional warnings as to the consequences for any breach of the policy.

The proceeding

BHP Coal brought proceedings in the Federal Court against the CFMEU and four of its officers (the respondents), alleging various contraventions of the Fair Work Act 2009 (Cth).1 The allegations included that the respondents had:

  • taken adverse action against BHP Coal in contravention of s340 of the Act, by depriving it of the benefit of requiring employees to work unrostered overtime in accordance with the agreement;
  • engaged in false and misleading representations, in contravention of ss 345 and 349 of the Act, about BHP Coal's right to require employees to work reasonable unrostered overtime by asserting that the employees had an obligation to refuse such overtime so as not to breach the union's policy; and
  • organised or engaged in industrial action against BHP Coal by imposing a ban, limitation or restriction on the performance of work, before the nominal expiry date of the agreement, in contravention of s417 of the Act.
The decision

The Federal Court found in favour of BHP Coal in relation to these allegations against the CFMEU, and held that the CFMEU's Secretary and Treasurer of the Peak Downs Lodge, who signed a letter to new members annexing the overtime policy, was also in contravention of ss 345, 349 and 417 of the Act. The court will hear separately from the parties regarding the penalties to be imposed.

In finding that the CFMEU's conduct constituted adverse action, the court found that the entitlement of BHP Coal to require employees to work unrostered overtime in prescribed circumstances was a clear benefit, and constituted a relevant workplace right, regardless of the relevant provision also conferring rights on employees.

By electing to call no evidence in the proceeding, the respondents failed to satisfy the onus of proving that the reason for the adverse action was not a prohibited reason. 

Proposed legislation reinstating the ABCC with expanded powers

In brief: Through two new Bills, the Federal Government has moved to re-implement a more powerful Australian Building and Construction Commission to replace Fair Work Building and Construction. If passed, employers will likely receive greater support from the commission and the courts in minimising industrial disruption. Special Counsel Eleanor Jewell reports.

How does it affect you?

  • The Australian Building and Construction Commission's (ABCC) jurisdiction and powers will be broadened including with respect to offshore building and construction projects, preventing unlawful industrial action, and the ABCC's coercive information gathering powers to investigate compliance with building regulations.
  • Employers in the building and construction industry should be able to rely more heavily on the courts and the ABCC to assist in minimising industrial disruption on major projects. This will potentially result in significantly reduced costs associated with such industrial disruption.

Background

The Federal Government appears likely to pass the Building and Construction Industry (Improving Productivity) Bill 2013 (Cth) and the Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013 (Cth) when the new Senate is in place after 1 July 2014.

If the Bills are passed, they would re-instate the ABCC with an extended jurisdiction and significantly broader powers than it had when established in 2005.

The Bills follow the reappointment of the former Commissioner and Deputy Commissioner of the ABCC, John Lloyd and Nigel Hadgkiss respectively, to the current Fair Work Building and Construction (FWBC), and the FWBC's more active approach to investigating and prosecuting unlawful behaviour by militant building unions under their guidance. It has been indicated that their appointments will continue with any replacement of the FWBC with a new ABCC.

Key provisions

The broadened jurisdiction and powers would include:

  • the ABCC's jurisdiction expanding to include offshore building and construction projects and the transport or supply of goods to building sites;
  • the courts having increased powers to issue injunctions to stop or prevent unlawful industrial action and picketing, and to impose significant penalties for breach of the provisions;
  • a reverse onus of proof for picketers, requiring them to prove they have not been industrially motivated in relation to any picketing;
  • introducing a significant civil penalty for 'unlawful picketing'; and
  • the commissioner having extensive coercive powers to require people to give information, documents or attend to give evidence relating to compliance with a building code, the Bill or a designated building law.

Saliva drug testing the most appropriate

In brief: The Fair Work Commission has found that saliva testing is a more appropriate method of detecting recent drug use than urine testing, despite the withdrawal of accreditation for saliva testing by the National Association of Testing Authorities. Unions have indicated an intention to rely on the finding to challenge the use of urine testing by employers on mine sites. Lawyer Dan McDonnell and Vacation Clerk Madeleine Bright report.

How does it affect you?

  • Employers that implement urine testing for drug use should seriously consider replacing that method with saliva testing (if it is readily available) to minimise the risk that their drug testing policy will be considered unjust and unreasonable by the Fair Work Commission (FWC).
  • Following the latest FWC decision, the Australian Manufacturing Workers Union (AMWU) has expressed an intent to take legal action against mining companies that enforce urine testing for drugs.

Background

In Endeavour Energy v CEPU & Ors2, the FWC prevented the employer, Endeavour Energy, from introducing urine testing. This was on the basis that urine testing can detect drug use several weeks prior to the test, thereby unfairly allowing an employer to dictate what employees do in their own time. This decision was upheld after an appeal to the full bench of the FWC.3 (Allens reported on that case in a previous Focus article).

In late 2013, the National Association of Testing Authorities (NATA) withdrew its accreditation of oral drug testing. (Allens reported on this development in a previous Focus article). In light of this development, Energy Australia relaunched its bid to the FWC to have urine testing approved for use in its workplaces.

The decision

Endeavour Energy argued that, as a result of accreditation for saliva testing being withdrawn by NATA, it could no longer comply with the Australian Standard (AS 4760) for oral fluids drug testing and should be permitted to introduce urine drug testing.4

The FWC found that there was no new evidence to require it to overturn its original decision. It found that the revocation of the accreditation did not make the practice of saliva drug testing unreliable, and did not undermine the 2012 decision, noting that AS 4760:

  • did not require testing to be carried out by an accredited agency; and
  • was designed merely as a guide so strict compliance was not required.
The AMWU response

In the wake of the FWC's decision, AMWU representatives in Queensland and Western Australia have indicated publicly that the AMWU plans to commence proceedings against mining companies that use urine drug testing.

Employees reinstated by FWC despite distributing porn

In brief: The Fair Work Commission recently reinstated three employees despite there being valid reasons for their dismissal, reaffirming that reinstatement is the primary remedy when dismissals are held to be unfair. Lawyer Timothy Leschke and Vacation Clerk Alan Phillips report.

How does it affect you?

  • Unless reinstatement is inappropriate, an unfairly dismissed employee will be reinstated even if there was a valid reason for their dismissal.
  • Employee conduct undermining the fundamental trust and confidence in the employment relationship may mean reinstatement is not appropriate. However, mere administrative difficulties with reinstatement will not preclude it being ordered.
  • Employers should carefully consider the risk of reinstatement, as the 'primary remedy', when taking decisions to dismiss.

Background

In B, C and D v Australian Postal Corporation T/A Australia Post,5 the Full Bench of the Fair Work Commission (FWC) held that three Australia Post employees had been unfairly dismissed, even though there was a valid reason for their dismissal. The employees had distributed pornographic material in breach of company policy. (Allens reported on that case in a previous Focus article.)

The Full Bench remitted the case to the FWC to determine remedy, but when doing so indicated that:

  • it was satisfied that reinstatement was an appropriate remedy in the circumstances of the case; and
  • there should also be a significant discount in any order for back-pay to reflect the employees' misconduct.
The decision

Vice President Lawler of the FWC saw no reason to depart from the Full Bench's view and ordered Australian Post to reinstate each of the employees to positions at their existing classification levels (although not necessarily to the specific positions they occupied previously).6

In making this order, the FWC considered whether reinstatement was appropriate having regard to any change in circumstances since the decision at first instance. Critical to this consideration was whether the 'fundamental trust and confidence in the employment relationship' was undermined. The Vice President considered there was nothing to suggest this, highlighting the unlikelihood of the employees repeating their inappropriate conduct. He also added that difficulties associated with continuity of superannuation arrangements, a recruitment 'freeze' implemented by Australia Post, and present staffing situations, did not render reinstatement inappropriate.

The FWC also made orders maintaining the employees' continuity of employment and restoring some of their lost pay (ie a 75 per cent discount was applied to reflect their misconduct).

Implications

It is apparent that a valid reason for dismissal or administrative difficulties in facilitating reinstatement, will not, of themselves, render reinstatement inappropriate. Employers should therefore be conscious that an unfair decision to dismiss might result in reinstatement, and consider the potential consequences if a remedy of that kind was imposed. 

Developments in the building and construction industry

In brief: The ability of state governments to implement building and construction codes and guidelines that discourage certain 'union-friendly' practices has been supported by a recent full Federal Court decision. Special Counsel Eleanor Jewell and Lawyer Arlou Arteta report.

How does it affect you?

  • Employers should familiarise themselves with the relevant state and federal building and construction codes and guidelines.
  • If employers are considering tendering for state or Federal Government-funded projects, they should review their workplace arrangements for consistency with those codes and guidelines.

Background

In May 2013, the Construction, Forestry, Mining and Energy Union (CFMEU) brought proceedings against the Victorian Government. In essence, the CFMEU alleged that the Victorian Government engaged in adverse action and coercion under the Fair Work Act 2009 (Cth) (the FW Act) in its implementation of the Victorian Code of Practice for the Building and Construction Industry (the Code) and the Code's Implementation Guidelines (the Guidelines).

The Code and Guidelines provided that contractors would not be eligible to be engaged for Victorian Government-funded building and construction projects unless their workplace arrangements (including their enterprise agreements) were compliant with the Code and Guidelines. The relevant projects were:

  • the refurbishment project intended to become the new premises for Circus Oz; and
  • the construction of the New Bendigo Hospital (the NBH).

The Victorian Government's Construction Code Compliance Unit (CCCU) found that the enterprise agreements of the respective contractors for the projects did not comply with the Code and Guidelines.

The Circus Oz project

As a result of the CCCU's findings, Eco Recyclers Pty Ltd (Eco) (which was the relevant Circus Oz project contractor) sought to vary its enterprise agreement with the Fair Work Commission (FWC) so that it could comply with the Code and Guidelines. The CFMEU commenced proceedings and sought interim orders restraining the FWC from granting a variation to Eco's enterprise agreement. The CFMEU alleged the Victorian Government took adverse action against Eco's employees and that it had coerced Eco to change its enterprise agreement in order to be Code and Guideline complaint.

The NBH project

For the Victorian Government's development and construction of the NBH, the successful tender was a consortium of companies (known as Exemplar) that included Lend Lease Project Management & Construction (Australia) Pty Ltd (Lend Lease).

Prior to announcing Exemplar's successful tender, the CFMEU alleged that the Victorian Government had initially refused to engage Lend Lease due to the CCCU finding that its enterprise agreement did not comply with the Code and Guidelines. The CFMEU alleged that the Victorian Government threatened to take adverse action against Lend Lease from the time when the CCCU found that Lend Lease's enterprise agreement was not compliant until Exemplar was awarded the tender.

The decision

The Federal Court initially found that the Victorian Government had:

  • coerced Eco to change its enterprise agreement in order to comply with its Code and Guidelines;7 and
  • threatened to take adverse action against Lend Lease.8

The Victorian Government appealed these decisions and the CFMEU lodged a cross-appeal alleging that the Code and the Guidelines were 'invalid and of no effect'.

On appeal to the Full Federal Court, the decision was overturned and the CFMEU's cross-appeal was dismissed.9 The court found that the Victorian Government did not intend to:

  • exert pressure on Eco to vary its enterprise agreement, meaning coercion under the FW Act could not be made out; and
  • enter into a contract for service with Lend Lease, meaning it could not be established that the Victorian Government took adverse action under the FW Act against Lend Lease.
Key implications

Employers should familiarise themselves with the terms of the relevant state and federal building and construction codes and guidelines, as these have implications for any head contractor and/or any subcontractors seeking to obtain state government building and construction work.

When is action not adverse action?

In brief: The Full Federal Court of Australia has determined that it was lawful to terminate an employee because of the offensive manner in which he engaged in lawful industrial action. Lawyer Brent Reading and Vacation Clerk Nicholas Coundouris report.

How does it affect you?

  • In some circumstances, it is possible for employers to discipline or terminate the employment of an employee who engaged in lawful industrial action without breaching the general protections provisions in the Fair Work Act 2009 (Cth).
  • An employee's behaviour while undertaking lawful industrial action may justify dismissal if the way in which the employee undertakes the action breaches company policy.

Background

Between 2011 and 2012, BHP Coal and its employees were engaged in negotiations for a new enterprise agreement. During this period, the company's employees took protected industrial action in support of their bargaining position. At one of the protests, an employee was observed waving a sign that said 'No principles, SCABS, No guts'. The company considered the employee's behaviour to be a breach of its conduct policy and terminated his employment.

The employee applied to be reinstated to his position with the company, arguing that his dismissal was in breach of the general protection provisions under the Fair Work Act.

The Federal Court accepted that the offensive sign waved by the employee had 'unacceptable attributes' in breach of the company's policy. However, the court also found that the sign represented and advanced the interests of the employee's union. The dismissal therefore contravened s346(b) of the Fair Work Act, which prohibits a person taking adverse action because a person engages, or has at any time, engaged in industrial activity.

The appeal

On appeal, the majority of the court held that the general protection provisions of the Fair Work Act did not prohibit the employer from dismissing the employee.

The court found that the primary judge accepted the company's evidence that ruled out the possibility that the employee was dismissed 'because' he participated in the industrial action. Rather, the employee was dismissed by the company because of what he did in the course of participating in the protest.

The court decided that the error in the initial decision was to treat the employee's display of the offensive sign as the same as his participation in a lawful activity organised by the employee's union. It was material that the employee was dismissed for holding and waving the offensive sign, not because he participated in the lawful industrial action. Since the termination was not because he participated in the lawful industrial action (or was representing the views of the union), his dismissal was not unlawful.10

As discussed in the case of Board of Bendigo Institute of Technical and Further Education v Barclay11 (and applied in this case), an employer does not need to prove that the reasons for taking the adverse action were entirely dissociated from the employee's union activities. That is, an employee is not immune from disciplinary action simply because he or she does something in the course of undertaking an otherwise protected activity.

The CMFEU has indicated that it is seeking leave to appeal this decision to the High Court.

Social media policies can apply legitimately outside of the workplace

In brief: The Fair Work Commission recently held that an employee who refused to acknowledge his employer's social media policy was lawfully dismissed. In doing so, the Commission highlighted the role of social media policies in protecting a business's reputation outside of the workplace. Lawyer Timothy Leschke and Vacation Clerk Nicholas Coundouris report.

How does it affect you?

  • Establishing a social media policy that operates outside of (as well as within) the workplace is a legitimate exercise in acting to protect the reputation and security of an employer's business.
  • Employers seeking to enforce their social media policy outside the workplace should ensure it operates no further than to protect its reputation and security, and makes this objective clear to employees.
  • Employers without a social media policy should consider establishing one to help manage their employees' conduct outside of the workplace in circumstances where such conduct might affect the employer's market reputation or security.

Background

In May 2013, and after various warnings, an employee of Linfox Australia (a Mr Pearson) was dismissed for repeatedly failing to comply with policies regarding leave requests and absenteeism from work, safe work procedures, and mobile phone use. However, the tipping point was when he repeatedly refused to sign an acknowledgement that he had read and understood his employer's social media policy. Mr Pearson's objection was that the social media policy was to apply outside working hours.

Mr Pearson brought an unfair dismissal claim, alleging he was targeted by the employer and treated differently to other employees.

The decision

The Fair Work Commission found that Mr Pearson's dismissal was not harsh, unjust, or unreasonable.12 The Commission considered Mr Pearson had exhibited a pattern of behaviour that showed a disregard for, and refusal to comply with, a number of company policies. In aggregate, this conduct was considered a valid reason for his dismissal.

In relation to Mr Pearson's refusal to acknowledge the social media policy, the Commissioner highlighted that, in an employment context, the establishment of a social media policy is a legitimate means of protecting the reputation and security of a business. This was particularly so for the respondent employer in the present case, given that in earlier proceedings this employer had been criticised for unfairly dismissing a different employee based on his social media activity while not having a social media policy in place.

The Commission indicated that where an employer has an interest in protecting its reputation and security:

  • restricting a social media policy to the workplace would not be practical; and
  • it would be difficult to see how, in any event, it could operate effectively in an 'at work' context only.
Implications

There are many circumstances where an employer has either no right or only restricted rights to regulate an employee's activities away from work. However, a social media policy implemented to protect the reputation and security of a business may legitimately require an employee to meet certain basic requirements. Accordingly, an employer with a social media policy applying beyond the workplace, but which is otherwise reasonable, can expect to be able to rely on that policy if it operates to protect its reputation and security.

Footnotes
  1. BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FCA 1291 (2 December 2013).
  2. Endeavour Energy v CEPU & Ors [2012] FWA 1809 (26 March 2012).
  3. Endeavour Energy v CEPU & Ors [2012] FWAFB 4998 (14 August 2012).
  4. Endeavour Energy [2014] FWC 198 (15 January 2014).
  5. B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWCFB 6191 (28 August 2013).
  6. B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWC 9293 (26 November 2013).
  7. Construction, Forestry, Mining and Energy Union v McCorkell Constructions Pty Ltd (No 2) [2013] FCA 446 (17 May 2013).
  8. Construction, Forestry, Mining and Energy Union v State of Victoria [2013] FCA 445 (17 May 2013).
  9. State of Victoria v Construction, Forestry, Mining and Energy Union [2013] FCAFC 160 (19 December 2013).
  10. BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FCAFC 132 (13 December 2013).
  11. Board of Bendigo Institute of Technical and Further Education v Barclay [2012] HCA 32 (7 September 2012).
  12. Malcolm Pearson v Linfox Australia Pty Ltd [2014] FWC 446 (17 January 2013).

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