Focus: Workplace Relations
29 February 2016
In this issue: we look at a dismissal case emanating from poor behaviour at a company Christmas party; the importance of the employment contract in determining whether a reduction in an employee's pay and duties results in dismissal; an employer's difficulty in justifying a summary dismissal; and the implications of a company's redeployment policy.
- Dismissal not unfair after Christmas party brawl
- Demotion not dismissal where changes authorised by employment contract
- Federal Circuit Court sets a high bar for summary dismissal
- Common law principle of 'no right to work' trumped by redeployment policy
In brief: The Fair Work Commission has upheld an employer's dismissal of an employee because of harassment occurring while inebriated at a work Christmas party. Senior Associate John Naughton reports.
How does it affect you?
- An employer that provides alcohol at a work function, but takes no steps to ensure responsible consumption, may not always escape responsibility for an inebriated employee's actions.
- However, employees who drink will also be responsible for the consequences of their own actions, especially in circumstances when they engage in physical violence.
At Future Engineering and Communications Pty Ltd's (FEC's) Christmas party in December 2014, unlimited alcohol was provided to employees. There were no controls over the amount individuals consumed.
Mr McDaid, a project manager, became inebriated and engaged in physically and verbally aggressive conduct towards two fellow employees. On one occasion he poked and pushed a senior engineer in an aggressive manner before eventually pushing him into a pool fully clothed. He then stayed on the premises after being asked to leave by the General Manager, and was verbally aggressive towards him. Mr McDaid later initiated a physical altercation with the General Manager, which developed into brawling.
Mr McDaid was called into work for a meeting in January 2015. There was initially no comment about his conduct at the Christmas party, although he was told to find a new job by the end of the month. He was not provided with an opportunity to explain his conduct. He was offered several financial settlement offers, which he rejected.
Two months later, after returning from continuous sick leave, Mr McDaid attended another meeting where he was asked to explain his actions in December 2014. A support person present at this meeting confirmed Mr McDaid was given every opportunity to explain his conduct. His responses were found to be unsatisfactory and his employment was terminated at the end of that meeting, effective immediately.
Mr McDaid made an unfair dismissal application to the Fair Work Commission (the Commission). Mr McDaid was, in his application, critical of FEC for its actions in supplying the alcohol. The Commissioner upheld the employer's decision to terminate Mr McDaid's employment and found the dismissal was not harsh, unjust or unreasonable. The Commissioner observed that:
- in some cases employers providing alcohol may be culpable for events attributable to its consumption; but that
- employees who drink will also be held responsible for their own actions, particularly where there is physical violence.1
This decision can be contrasted with a Commission decision last year,2 in which the applicant had also engaged in aggressive, intimidating and bullying behaviour. In that case, the Commission found the applicant employee's intoxication was a mitigating factor and contributed towards the finding that the dismissal was unfair. In that decision, the Commission observed that excessive consumption and inappropriate behaviour was an entirely predictable consequence of providing unlimited alcohol with no managerial supervision.
The two decisions do not sit together easily. While it can be concluded that employers risk responsibility if they indiscriminately provide alcohol at work functions, employees will be held responsible in some circumstances.
In brief: The Full Bench of the Fair Work Commission recently decided that changing an employee's pay and duties did not constitute a dismissal, by way of demotion, where the change was authorised by the employment contract. Associate Tegan Ayling reports.
How does it affect you?
- Reducing an employee's remuneration and duties may not amount to dismissal if those changes were contemplated by the employment contract.
- Employers should provide for the possibility of changes in employees' terms of employment, such as their location or duties, when drafting employment contracts.
Mr Moyle was employed by MSS Security Pty Ltd and worked as a team leader for two years, after which he was transferred to a different worksite. The transfer resulted in him losing his previous supervisor duties and reduced his pay by $1 per hour. Mr Moyle lodged an unfair dismissal application, claiming that he had been demoted and therefore dismissed.
The Fair Work Commission (the Commission) rejected Mr Moyle's application because he was still employed by MSS and his pay and duties had not been significantly reduced, so he had not been 'demoted' within the meaning of that term in the Fair Work Act 2009 (Cth). The Commission saw the matter as a dispute about the allocation of duties, rather than one about whether Mr Moyle had been demoted.3
When Mr Moyle appealed, the Full Bench disagreed with the Commissioner's interpretation of the legislation, observing that:
- it is not for an employee alleging dismissal by way of demotion to show that there has been a significant reduction in their pay or duties and that they are no longer employed by the employer; and
- it is for the employer who is denying that a dismissal has occurred who must show that there has not been a significant reduction in pay or duties and that the employee is still employed by the employer.4
Notwithstanding this reversal of onus, the Full Bench still concluded that, in this case, Mr Moyle had not been dismissed. The change in his pay and duties was contemplated by his employment contract. The Full Bench considered that Mr Moyle's contract:
- required him to work as a security guard at any site where MSS held a security services contract;
- required him to perform any duties as a security guard that he was qualified and trained to perform; and
- entitled him to the minimum pay under the award for the role and duties he performed at any particular time.
The Full Bench therefore accepted that Mr Moyle's transfer was simply a work assignment, made consistent with the terms of his employment contract. It was not a demotion constituting dismissal.
In brief: The Federal Circuit Court recently reiterated the high bar that employers must reach to justify a summary dismissal. What is needed is clear and compelling proof of the alleged misconduct. The decision also raises a number of potential issues that should be considered by employers when drafting employment contracts, making employees available during due diligence processes, and dealing with negative comments by employees. Special Counsel Eleanor Taylor, Associate Tom Langdon and Lawyer James Illich report.
How does it affect you?
- Employers bear a heavy burden in justifying summary dismissal.
- Employment contracts should clearly set out the circumstances in which an employee can be summarily dismissed.
- A finding of serious misconduct justifying summary dismissal should not be made lightly. Clear and compelling proof of the alleged misconduct is needed.
- Misconduct may not be serious misconduct if it doesn't clearly demonstrate a repudiation of the employment contract or a breakdown of the relationship of trust between employer and employee.
- Highly disparaging remarks about the employer or its directors is not necessarily sufficient to justify summary dismissal. The court will look at the circumstances of the conduct.
Mr Jeavons was employed as a general manager by Entram. His employment contract was silent as to:
- his overall obligations;
- the notice periods for termination; and
- the circumstances in which he could be dismissed without notice.
In 2012, Entram negotiated the sale of the business to a competitor and supplier of the company. The sale contract, which provided for the continuation of all Entram staff with the purchaser, was subject to due diligence. During due diligence meetings with the purchaser, Mr Jeavons:
- made a number of disparaging comments about Entram's directors and the state of the business;
- overstated his importance to the business by suggesting the business couldn't run without him;
- sought to negotiate better employment conditions with the purchaser; and
- expressed resentment that the directors would get a 'truckload of money' from the sale while he got nothing.
The sale ultimately did not proceed.
The directors of Entram subsequently discovered Mr Jeavons' behaviour and dismissed him without notice. The directors believed he had tried to scuttle the sale, as he had previously tried to buy the business himself.
The court found that Entram was not entitled to summarily dismiss Mr Jeavons.
The court found that there was an implied term in the contract that Mr Jeavons could be dismissed without notice in the event of serious misconduct. The onus of proving serious misconduct was on Entram, and the court said that a finding of serious misconduct should not be made lightly.
The court held that, while his conduct was disparaging, self-interested and amounted to misconduct, it was not serious misconduct, primarily because:
- the disparaging remarks about the directors were misconduct, but could not have scuttled the sale as the directors would not have had an ongoing role in the business after the sale;
- the directors knew Mr Jeavons would attempt to negotiate a better contract with the purchaser, and his motivation in overstating his importance was a desire for improved conditions, rather than to scuttle the sale;
- the comments in relation to the state of the business were directed at suggesting possible improvements in response to the purchaser's questions, as he had been told by the directors to answer honestly; and
- there was no wilful dishonesty, gross disloyalty or anything else that struck at the heart of the relationship of trust between Mr Jeavons and Entram.5
In brief: The Fair Work Commission has held that an employer's redundancy and redeployment policy did not permit it to direct redundant employees, who were awaiting redeployment, to not attend work until there was a meaningful work placement available for them. Associate Tarsha Gavin reports.
How does it affect you?
- Employers should be cautious when devising redundancy and redeployment policies.
- Employers should avoid making onerous or restrictive representations to employees about the support or work activities that will be provided to them while they are awaiting redeployment.
In October 2015, Essential Energy (Essential) wrote to approximately 57 of its employees advising them that their positions were to be made redundant and that they would be redeployed. In the letter, employees were told that there were two options available to them:
- to no longer attend for work, as there was no meaningful work for them to perform; or
- to complete a four-week career transition program.
Essential's redundancy and redeployment policy (the Policy), which was incorporated into the Essential Enterprise Agreement 2013 (Essential's EA), required that an employee who:
- was made redundant;
- was not placed into an acceptable alternative permanent position; and
- did not take a voluntary redundancy,
The USU, ETU and APESMA (the Unions) made an application to the Fair Work Commission (the Commission) under the dispute settlement procedure of Essential's EA, asserting that given the wording of the Policy, Essential was not entitled to issue a direction to the 57 redeployees not to attend work in circumstances where it said there was no meaningful work placement for them.
Commissioner Johns considered the Union's submissions and held that Essential was not entitled to direct the employees not to attend for work in circumstances where it contended that there was no meaningful work placement.
In reaching this decision6, Commissioner Johns noted that the Policy expressly defined 'meaningful work placement' to be 'any position that the Company feels is suitable for the redeployee prior to a permanent position becoming available through redeployment' and that this definition included a list of possible activities including acting temporarily in a vacant position, or undertaking specific activities to enhance an employee's current knowledge, skills and expertise, such as workshops.
Commissioner Johns held that, having regard to the plain and ordinary meaning of the words in the Essential's EA, there was an obligation on Essential to place redeployees into a meaningful work placement, as that concept was defined in the Policy. The non-attendance of employees at work was not a 'position' as contemplated by the Policy, and therefore redeployees could not be directed to not attend work.
Importantly, Commissioner Johns rejected Essential's reliance on the legal principle that there is no common law right for an employee to be provided with work, and Essential's argument that this meant it had no obligation to provide the redeployees with work. The Commission held that the Policy contained a clear promise from Essential that it would provide a meaningful work placement to redeployees in these circumstances. As such, Essential's Policy was an exception to the general common law position.
- McDaid v Future Engineering and Communication Pty Ltd  FWC 343 (22 January 2016).
- Keenan v Leighton Boral Amey Joint Venture  FWC 3156 (26 June 2015).
- Moyle v MSS Security Pty Ltd  FWC 8330 (8 December 2015).
- Moyle v MSS Security Pty Ltd  FWCFB 372 (3 February 2016).
- Jeavons v Entram Pty Ltd  FCCA 3457.
- Australian Municipal, Administrative, Clerical and Services Union; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Association of Professional Engineers, Scientists and Managers v Essential Energy  FWC 8971.
- Simon DewberryPartner,
Ph: +61 3 9613 8110
- Veronica SiowPartner,
Ph: +61 2 9230 4135
- Peter ArthurSenior Employment Counsel,
Ph: +61 2 9230 4728
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