• Blog Topics

  • Enter your email address to follow the CompliSpace blog and receive email notifications of new posts.

    Join 3,142 other followers

  • Twitter Feed

  • Archives

30 October: Workplace Relations Update for Executives On-the-Go

In this edition:

  • Fair Work Commission finds defriending on Facebook can contribute to workplace bullying;
  • More than $20,000 in penalties awarded for an employee’s $181 loss; and
  • Gender pay gap measure proposed for Fair Work Act.

Fair Work Commission finds defriending on Facebook can contribute to workplace bullying

While defriending a colleague on Facebook won’t alone satisfy the threshold of ‘bullying’ under the Act, a recent decision by the Fair Work Commission (FWC) makes it clear that in addition to other, repeated unreasonable behaviour, it may contribute to a finding that bullying has occurred at work.

In this case an application for a ‘stop bullying order’ under the Fair Work Act 2009, was made by RR, a real estate agent who alleged to have been repeatedly bullied by two superiors in her workplace, culminating in the ‘defriending’ of RR after a heated dispute between herself and the co-director.

The allegations

RR alleged 18 separate instances of unreasonable bullying behaviour experienced at work from November 2013 to January 2015.

The FWC found that eight of these allegations were substantiated. They included:

  • RR felt belittled and humiliated when she attempted to sign for a package at the workplace and the co-director aggressively said that RR was not to sign for parcels;
  • the co-director’s deliberate and unreasonable delay in performing administrative work for RR’s property listings;
  • the co-director was rude and hostile towards RR in reply to her verbal offer to answer the telephone after being told that she was not to answer the phone when the co-director was in the office;
  • the co-director acted unreasonably to damage the reputation of RR with one of RR’s clients by directly going against an agreement to afford a special dispensation to one of RR’s clients;
  • RR was consistently ignored in the morning when she entered the office and treated differently to other employees in this respect;
  • the principal made inappropriate comments about a possible same-sex relationship between RR and a client that caused RR embarrassment and were found to be unreasonable;
  • the co-director had a belittling attitude towards RR and made unreasonable comments to RR during the final confrontation between the two women before RR left the workplace – the co-director accused RR of being a ‘naughty little school girl running to teacher’ when RR went over the co-director’s head to the principal; and
  • the co-director had acted in a belittling and aggressive way towards RR by defriending RR on Facebook immediately after that final confrontation.

Following the final confrontation between the co-director and RR, RR left the workplace immediately and took two weeks’ sick leave.

RR provided a medical certificate stating that she was ‘unfit for work’, noted that she had prescriptions for medication from her GP and was receiving treatment from a psychologist for an inability to sleep, depression and high anxiety resulting from the bullying behaviour.

A recap on anti-bullying legislation

The FWC has the power to make anti-bullying orders if the FWC is satisfied that:

    • the worker has been repeatedly bullied at work by an individual or a group of individuals;
    • there is a risk that the worker will continue to be bullied at work by the individual or group; and
    • the behaviour creates a risk to health and safety.

If an application has met this criteria, the FWC may make an order it considers appropriate to prevent the worker from being bullied at work.

As previous FWC decisions have shown, it is not always easy to establish that ‘bullying’ has occurred, and is likely to continue.

The FWC’s decision

Deputy President Wells of the FWC was satisfied that the behaviour carried out by the co-director constituted bullying at work.

Counsel for the employer contended that because an anti-bullying policy and manual had been established since RR had left work, there was no risk of bullying behaviour occurring at work in the future. The FWC disagreed.

Deputy President Wells stated that ‘a lack of understanding as to the nature of the behaviour displayed at work has the proclivity to see the behaviour repeated in the future by the co-director’ and concluded that a stop bullying at work order should be made.

Having an anti-bulling policy and training are crucial 

In this case, the failure of RR’s employer (being her bullying superiors) to have an anti-bullying policy in place before the bullying occurred meant that it had failed to meet its WHS compliance requirements.

Further, the employer’s inability to recognise behaviours as ‘bullying’ emphasises the need for all workers, at all levels of an organisation, to be aware of what conduct will constitute unreasonable bullying behaviour for the purposes of the anti-bullying legislation.

In its decision, the FWC cited a list from a previous case that identified the types of behaviour that could be considered unreasonable for the purposes of the Act, these include: intimidation, coercion, threats, humiliation, shouting, sarcasm, victimisation, terrorising, singling-out, malicious pranks, physical abuse, verbal abuse, emotional abuse, belittling, bad faith, harassment, conspiracy to harm, ganging-up, isolation, freezing-out, ostracism, innuendo, rumour-mongering, disrespect, mobbing, mocking, victim-blaming and discrimination.

Do your anti-bullying policy and staff training procedures recognise these behaviours?

More than $20,000 in penalties awarded for an employee’s $181 loss

The Federal Circuit Court has fined a human resources manager $1020 for failing to provide an employee with five weeks’ notice of termination, or pay in lieu thereof, in breach of the National Employment Standards. The employee was given two days less notice than he should have been by his employer – representing the equivalent of $181.66 in losses to the terminated employee.

The employer also received a penalty of $20,400 from the Court.

This case is a reminder that even those people within the organisations who may not necessarily have ultimate decision making authority, such as an HR manager, can still be found liable for contraventions of the Act. Section 550 states that a person who has been ‘involved in’ a contravention can be taken to have contravened the Act themselves. ‘Involved in’ can mean aiding, abetting, counselling, procuring, inducing or being knowingly concerned in the offending act.

The decision to terminate with two days less notice was deemed ‘bizarre’ by the Court especially since the HR manager admitted to being aware of the requirements under the Act.

In his decision which was clearly designed to act as a deterrent to others, Justice Simpson pointed out that the loss to the employee ($181.66) paled into insignificance compared to the time and expense of litigation not only for the parties involved but also to the public purse stating ‘without knowing the industrial tactics of this dispute, from the court’s point of view, it would seem to be a storm in a tea cup that should have been resolved at a very early stage.’

Gender pay equality measure proposed for Fair Work Act 

The Greens have introduced a Bill into Federal Parliament seeking to remove prohibitions on workers discussing their own pay with colleagues and others. Many employment agreements include clauses prohibiting such discussions.The Greens, who introduced the Bill, see wage transparency as being an important measure in exposing gender pay inequality, and hence to reducing its incidence.

The Bill would make sure that workers are allowed to tell their colleagues what they are paid if they wish to, without fear of retaliation from their employer. Pay secrecy can help hide discrimination, unconscious bias and bad decision making such as where two people are paid differently for doing the same job without obvious justification. Of course there can also be good reasons for pay differences for performing the same work, and pay secrecy has been known to give HR managers some small measure of peace from people complaining about unfair remuneration.

A new section 333B would be added to the Act under this proposed Bill to render any term of a modern award, enterprise agreement or contract of employment ineffectual if it:

  • prohibits an employee from disclosing the amount of, or information about, the employee’s pay or earnings; or
  • permits, or has the effect of permitting, an employer to take adverse action against an employee if the employee discloses the information about their pay or earnings.

The explanatory memorandum for the Bill states that this new section is to be read broadly and is intended to remove restrictions on employees’ rights in terms of pay or earnings disclosures. The memo also dictates that ‘pay and earnings’ will extend to entitlements such as bonuses, superannuation, share allocations, paid parental lease, allowance, professional memberships, paid overtime, and company cars or parking spaces.

Queensland Greens Senator Larissa Waters who sponsored the Bill has said that while gender inequality can seem like an all-encompassing problem, outlawing these gag clauses is a practical step to take to reduce the gender pay gap.


Resilience, efficiency, innovation and fairness: The Federal Government responds to the Murray Report

The Federal Government has issued its response to the final report of the Financial System Inquiry led by David Murray, which was published in December 2014 (the Report).

The Government has accepted all but one of the Report’s recommendations and has created a timeline for the enforcement of key goals. The only recommendation rejected by the Government was the recommendation to prohibit limited recourse borrowing arrangements by superannuation funds.

In addition to agreeing to the majority of the Inquiry’s recommendations, the Government’s response sets out an agenda for improving the financial system to achieve its commitment to the recommendations.

Common features of its response and how to achieve change include:

  • an increase in legislation across various sectors of the industry to enhance confidence and resilience including introducing a professional standards regime for advisers;
  • revised mandates for regulators including expanding ASIC’s mandate to include competition in the financial sector; and
  • multiple projects for the Productivity Commission.

An increase in legislation, including the introduction of a professional standards framework for financial advisers will be beneficial to consumers but it will also increase the legal and compliance obligations of financial services entities.

Five key priorities for its agenda

The Government’s improvement agenda identifies five key priorities to achieve:

  • the resilience of the financial system;
  • the efficiency of the superannuation system;
  • innovation in the financial system;
  • fairness in the treatment of consumers of financial products; and
  • regulatory capabilities and accountability.

In the press conference to present the response, Prime Minister Malcolm Turnbull, Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer highlighted the changes to superannuation regulations and the crackdown on credit card fees as key Government priorities.


Although the Government acknowledged that our current financial system is strong when compared to other similar economies, we cannot be complacent in light of certain features which are vulnerabilities. For example, the concentration of risk resulting from the large proportion of domestic lending that is made up of home mortgages.

The specific measures proposed by the Government to improve resilience in the financial system are:

  • the development of legislation to facilitate the participation of Australian entities in international derivative markets;
  • consultation on measures needed by regulators to manage a financial crisis; and
  • APRA taking additional steps to ensure that banks have strong capital ratios, total loss-absorbing capacity and leverage ratios in place.

The Government plans to begin developing legislation on these matters by the end of 2015. It has already announced a review of the Cyber Security Strategy which was one of the Report’s recommendations.

Improving confidence in superannuation

Superannuation is the second largest part of the financial sector in Australia, representing $2 trillion in assets, and as such it must be competitive, transparent and efficient.

The response criticises the current system, stating that it is “fragmented, costly, complex and suffers from a lack of member engagement”. There is ample room for improvement across the board to improve governance of the system to better enable people to understand and engage with the superannuation system.

The key proposals relating to superannuation are to:

  • develop legislation to improve governance and transparency;
  • progress the Retirement Income Streams Review;
  • task the Productivity Commission to develop and release criteria to assess the efficiency and competitiveness of the system and to develop alternative models for a formal competitive process for allocating default fund members to products;
  • enshrine the objectives of the superannuation system in legislation;
  • consult on legislation to facilitate the provision of pre-selected comprehensive income products for retirement;
  • create legislation to introduce director penalties;
  • consult on legislation to improve member engagement; and
  • monitor leverage and risk in the industry.

The development of improved governance and transparency legislation is projected to begin by the end of 2015. Other measures are to be implemented by 2016 “and beyond”.

Innovation: capitalising on technology is imperative

Technology and the increase in cross-border interaction have led to increased opportunities for innovation in the financial sector and the Government wants to capitalise on these trends. The Government aims to increase efficiency and clarity in areas such as credit card surcharges, and decrease regulatory burdens on companies through technology-neutral laws and regulations.

The measures aimed to promote innovation include:

  • consultation on legislation to support crowd-sourced equity funding and consult on crowd-sourced debt-financing;
  • tasking the Productivity Commission to review access to and use of data;
  • developing legislation to ban excessive card surcharges, to better protect consumers using electronic payment systems and to reduce disclosure requirements for issuers of ‘simple’ corporate bonds;
  • establishing the Innovation Collaboration Committee which will be linked with ASIC’s Digital Finance Advisory Committee;
  • giving legal effect to the Asian Region Funds Passport Initiative;
  • considering technology neutrality in financial sector regulation; and
  • facilitating the rationalisation of life insurance and managed investment scheme legacy products.

A Trusted Digital Identity Framework will also be developed to support the Government’s Digital Transformation Agenda. To date the Government has passed legislation to extend the period before unclaimed monies in the banking and insurance sector are captured from three to seven years, and plans to begin consultations on legislation to support crowd-sourced equity funding by the end of 2015.

Consumer outcomes: protection is key

The Government’s aim is to ensure that consumers are treated fairly. As there has been recent evidence of financial products and advice that are defective, the Government aims to lift the overall standard within the system to ensure that consumers are adequately protected.

The response identifies the commercial interests of advisers and distributors as a barrier to fairness and consumer protection, and extensive consultation will be carried out by the Government to develop a balance between these competing interests. The Government has raised the possibility of giving ASIC the power to amend or remove harmful products from the market if it is deemed necessary.

The actions proposed by the Government include:

  • developing measures to address the misalignment of incentives in life insurance;
  • developing legislation to provide a professional standards framework for financial advisers requiring them to hold a degree, pass an exam, undertake continuous professional development, subscribe to a code of ethics and undertake a professional year;
  • consulting on development of accountabilities for issuers and developers of financial products and ASIC product intervention powers;
  • giving ASIC the power to ban individuals from managing financial firms;
  • consulting on strengthening ASIC’s enforcement tools in relation to financial service and credit licencing schemes;
  • mandating ASIC review of remuneration arrangements in the mortgage broking industry and of stockbroking remuneration arrangements; and
  • consulting on legislation to enable innovative disclosure for financial products and to improve the regulation of managed investment schemes.

The Government plans to put the first of these actions into motion by the end of 2015 continuing throughout 2016.

Regulatory regime: needs to improve costly compliance

The Government has identified the growing compliance costs for businesses as they struggle to adjust to increased and complex regulatory changes in the industry.

In response, the Government has stated that it will work with APRA, ASIC and the Payments System Board to ensure that businesses have adequate time to adjust to changes.

A capability review of ASIC is currently being conducted and the Government will wait for the conclusion of this review before making any further recommendations regarding ASIC’s capability.

Other specific measures proposed are:

  • consulting on industry funding arrangements for regulatory activities undertaken by ASIC;
  • appointing new members and reviewing the Terms of Reference of the Financial Sector Advisory Council;
  • updating the Statement of Expectations for APRA, ASIC and the Payments System Board to give guidance regarding the Government’s expectations and to improve accountability;
  • considering the ASIC capability review and introduce changes as needed;
  • introducing competition into ASIC’s mandate;
  • reviewing ASIC’s enforcement regime; and
  • tasking the Productivity Commission to review the state of competition in the financial system.

The capability review of ASIC is set to be completed by the end of 2015 and the update of the Statement of Expectations for APRA, ASIC and the Payments System Board is to be completed by mid-2016 to allow competition to be introduced to ASIC’s mandate by the end of 2016.

Timing of changes

Generally, the Government aims to implement changes from 2015 (or what remains of it!) through 2016. Changes will also occur ‘beyond 2016’. In some cases the Government has already reacted to the recommendations in the Report by:

  • announcing a review of the Cyber Security Strategy;
  • passing legislation to extend the period before unclaimed monies in the banking and insurance sector are captured from three to seven years; and
  • APRA releasing an international capital comparison study.

What do these changes mean?

These changes are broadly in line with the shift towards competition, innovation and an efficient economic regulatory regime that have been the focus of the Federal Government under Prime Minister Turnbull.

The new Treasurer and Assistant Treasurer have a broad agenda to achieve change over the next two years and the wheels are in motion as steps have already been taken in furtherance of the Government’s resilience and innovation priorities.

There is a focus on increased accountability of all parties, from the financial advisers to the regulators, which aligns with the broad trend of regulation in this area following evidence of systematic issues with the financial advice being given by major banks.

The decision of the Government to increase capital ratios was not surprising, given the Murray Review was published over a year ago. Nevertheless, the speculation will increase on the extent to which this will lead to a burden on consumers.

Volkswagen’s diesel crisis: Are you prepared for a business disruption-related risk event?

As the Volkswagen ‘diesel scandal’ continues to unfold, taking corporate scalps as it goes, its consequences starkly demonstrate the old adage that an organisation’s reputation can take decades to build but a moment to destroy.

While Volkswagen’s crisis management response has been praised by some as a ‘textbook’ response, this praise is in the context of another scandal suffered by the company two years ago when its response was less satisfactory. The fact that Volkswagen has had two global crises in three years is a statistic that no organisation would like to be able to claim. And despite Volkswagen’s non-disastrous handling of the recent crisis, there is a consensus that significant reputational damage has already occurred and will continue to plague the company for years to come.

The organisation’s handling of this ongoing global crisis is a reminder to all organisations to test their own Business Continuity Management (BCM) plans or, if they don’t have a Plan, develop and implement one as a matter of risk-management priority.

The crisis

In what some have called the ‘diesel dupe’ Volkswagen has admitted to cheating the emissions tests for 11 million of their diesel cars across the world. The German car giant developed and installed devices in diesel engines that could detect when they were being tested, changing the performance accordingly to improve emission results and bypass compliance standards.

While full details about how the device worked have not been provided yet, the Environmental Protection Agency (EPA) in the US, where almost half a million cars are fitted with the device, has said that the engines had computer software that could sense when test scenarios were being carried out by monitoring speed, engine operation and air pressure.

Essentially, the device, upon sensing that the car was under test conditions, switched to a safety mode in which the engine ran below normal power and performance and switched back to full power when the car was back on the road.

The result of this software programming is that Volkswagen diesel engines are emitting up to 40 times more pollutants than allowed by the US emission standards. Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance Cynthia Giles has said ‘using a defeat device in cars to evade clean air standards is illegal and a threat to public health’. The device has left Volkswagen open to multi-billion dollar fines, reputational damage and class action lawsuits from consumers around the world, including Australia.

Volkswagen’s crisis management: it’s happened before

Just two years ago Volkswagen was forced to recall 34,000 cars that had defective direct-shift gearboxes.

In 2013, despite hundreds of complaints and an investigation by Fairfax newspapers, Volkswagen initially denied that there was any problem with the gearboxes. This is the number one ‘do not’ in crisis management. At the time Senior Lecture in Branding and Marketing at Deakin University Dr Paul Harrison said that after the poor handling of the 2013 crisis, it would ‘definitely be used as a case study of how not to do it’. He commented that ‘if Volkswagen had said ‘we got it wrong, we’re recalling our cars now’, it would have had an effect on the brand but it would have given people resolve – it would have put trust in the brand.’

In comparison, Associate Professor Mark Ritson of the Melbourne Business School has commended Volkswagen on its 2015 crisis management of the ‘diesel dupe’, saying that it has followed the three simple rules of crisis management: act fast, take responsibility and declare the crisis over by taking action to rebuild trust and brand equity as quickly as possible. Mr Ritson has said that while this latest crisis for Volkswagen, despite effective management, will likely have significant legal and reputational repercussions for the company, it has given them an opportunity to manage this crisis more effectively than the last.

Volkswagen managed to get ahead of the scandal this time around. Within 48 hours of news breaking that the company had installed ‘defeat devices’ in 500,000 American diesel cars, Volkswagen released a statement from CEO Mark Winterkon in which he admitted the use of the devices, took full responsibility, apologised and promised action. Within the week, Mr Winterkon resigned, announcing that ‘Volkswagen needs a fresh start – also in terms of personnel’.

Since then Volkswagen Australia has confirmed that approximately 90,000 Australian vehicles feature the defeat software and have launched an online tool via which owners can determine whether their cars are affected. VW Australia assured consumers that all vehicles remain technically safe and driveable and are not being recalled at this stage. The car manufacturer has advised that they will contact the car owners when a corporate strategy for recall is confirmed.

Denial of the problem, delayed reactions and keeping consumers in the dark were the nails in Volkswagen’s crisis coffin back in 2013. The management of this year’s diesel engine crisis has been praised as a comparatively better approach.

That said, two crises in three years should be seen as two ‘too many’ for any organisation that cares about its consumers and its reputation.

Patties Pies and VW Cars: a bad year for berry and diesel lovers

The Volkswagen crisis is the second major consumer related product crisis to impact Australian consumers so far this year. At least in the Volkswagon crisis, the health of its consumers was not directly at stake.

In February this year, Patties Foods recalled various varieties of frozen berries because of known cases of Hepatitis A contamination. The Patties Chief Executive went on Sydney radio in the days following the announcement to discuss the problem, however little was communicated by the company after that. As a consumer driven brand, Patties employed the use of its social media accounts to communicate the warning and recall, and to answer consumer inquiries.According to Stuart White of the Public Relations Institute of Australia, this strategy was poorly executed.

Patties share price plummeted on the day of the recall and has not recovered since. Marketing industry leaders pointed to poor communication with the public as the sole reason for long term damage. Social media and digital communications specialist, Venessa Paech said ‘it seemed as though the company had no social media strategy, no social media staff, no professional moderators and no crisis management plan.’

Patties’ initial media releases lacked sufficient detail, and the combination of a poor response on social media and a lack of communication from the company’s executives revealed a poor crisis management plan, which in turn has left Patties Foods still suffering from lower sales and a battered share price.

Lessons in BCM – A Risk Perspective

We’ve previously written blogs explaining the importance of pre-planning in the BCM process to improve the chances that an organisation will survive a major business disruption event.

For those new to BCM the concept is pretty simple. By anticipating what types of disruptions may occur (e.g. office fire, flood or major product recall) a BCM Plan can be developed to ensure that, as far as possible, the likelihood of the disruption event happening is reduced, and if it does occur, critical functions can be maintained or restored in a timely fashion, thus minimising the operational, financial, legal, reputational and other consequences arising from the disruption.

The Australian Business Continuity Standard AS/NZS 5050:2010 provides useful guidance for organisations that have already taken steps to implement an enterprise risk management framework based on ISO 31000, or its precedessor AS/NZ 4360.

The ‘risk based’ focus of AS/NZS 5050:2010 is an approach also adopted by subsequent standards, including the recently introduced compliance standard AS/ISO 19600:2015 (AS/ISO 19600).

We believe that AS/NZS 5050 provides a good roadmap for effectively integrating business continuity management practices into existing corporate governance infrastructure.

So if your organisation is in the mindset that ‘the Volkswagen/Patties scandal couldn’t or wouldn’t happen to us’ and glosses over how it could learn from Volkswagen’s experiences, your governance, risk and compliance approach and culture could do with a rethink.

Importantly, your BCM plan should not be left languishing on a shelf or in an isolated folder on a hard drive – it should be tested regularly and  be accessible to key personnel in the BCM program.

How Can CompliSpace Help?

CompliSpace combines specialist governance, risk and compliance (GRC) consulting services with practical, technology-enabled solutions. Our BCM module has been built in-line with AS/NZS 5050:2010 to ensure that clients are provided with a best practice solution.

If you have any questions about topics raised in this blog, or if you would like to find out how CompliSpace can assist you to streamline your existing governance, risk or compliance programs and make them more relevant to your organisation please feel free to contact us on 02 9299 6105 or email contactus@complispace.com.au.

6 October: Workplace Relations Update for Executives On-the-Go

In this edition:

  • Tackling the 2015 Rugby World Cup in the workplace;
  • The Fair Work Commission urges workers to make bullying claims through alternative channels; and
  • Compensation for unfair dismissal reduced by one third due to ‘significant and repeated misconduct’.

Tackling the 2015 Rugby World Cup in the workplace

The Rugby World Cup is upon us again, and with it the endless speculation, celebration and commiseration that every major sporting tournament inevitably brings. Events of this scale almost inevitably intrude into the workplace, whether in the form of debate between colleagues, fatigue in the office the morning following a 1:30AM Wallabies match, or personal leave for the truly dedicated fans. As always, workplace managers should be mindful of the opportunities presented and risks posed by an event such as this.

Respectful patriotism 

Firstly, although the performance and quality of the various teams is a hot topic globally, these discussions must be kept respectful in the workplace. This is especially true given that the teams represent nations, and comments can be seen as insensitive or offensive to office members of different nationalities. Negative comments about a team’s performance are inevitable in such a large tournament, but comments that are unnecessarily harsh or directed towards a country as a whole are inappropriate. Managers should clearly outline what behaviour is acceptable and what will not be tolerated in the workplace, and ensure that this is communicated to staff. Passionate rugby fans should be allowed to express their opinions on the tournament, but discriminatory and hurtful comments must be avoided.

Rules around touchline fatigue 

Managers should not require their workers to lie to them about reasons for leave or lateness to work, and instead should be prepared to have an open discussion with their employees about their expectations. Rugby World Cups are a cause for huge excitement amongst fans, and many will inevitably skip sleep to watch the most important matches live. Managers should acknowledge this, rather than ignore it, as this will best allow them to adjust to the risks present in the workplace.

The United Kingdom is the host of the World Cup (and England is nursing its pride following a Wallabies defeat!) meaning that several matches will take place in the middle of the night in Australia. As the competition heats up, more fans are likely to stay up to watch the games live. This can lead to fatigue in the workplace, which harms productivity and can create potential safety hazards. Managers must communicate their expectations of workers and may consider allowing:

  • workers to start later;
  • changes to the work roster; or
  • workers to take personal leave.

There must be a balance between the recognition of the excitement caused by the World Cup and reminders of the standards of behaviour required in the workforce.

Companies should have a drug and alcohol policy in place, and if workers violate this policy, there should be clear consequences. These policies should deal with a range of circumstances so that differing levels of contravention are responded to in an appropriate manner.

Next matches

Managers should be aware of the time and dates of the following matches:

  • Quarter-Final 4: 1AM Monday 18 October
  • Semi-Final 2: 1AM Monday 26 October


Fair Work Commission urges workers to make bullying claims through alternative channels

A recent decision by the Fair Work Commission (FWC) reminds workers that there are other avenues for seeking a remedy (besides the Commission) for workplace bullying where their claims may not meet the statutory threshold for a ‘stop-bullying’ order to be made.

The FWC recently heard an application for an order to stop bullying under section 789FC of the Fair Work Act 2009 (Cth) (Act) in which the applicant alleged bullying behaviour by a co-worker, Mr A.

In making its determination to reject the claim the FWC reiterated that where workers allege bullying, but fail to establish a pattern of ‘repeated, unreasonable behaviour’ as is required by the Act, the FWC does not have the power to make an order to stop the bullying.

The alleged bullying

Mr S alleged a single incident of unreasonable behaviour in which Mr A physically and verbally assaulted him. There was a verbal altercation between the two workers on New Years’ Eve 2014 after which their employer took steps to ensure that the two were not rostered to work together again.

Mr S claimed that Mr A had attempted to give him instructions without authority and had done so in a very rude manner. He also claimed that Mr A has pushed him and made certain threats to his health and safety. Mr S acknowledged that although this was not repeated unreasonable behaviour it was still bullying behaviour.

Commissioner Peter Hampton dismissed Mr S’s application commenting that there was little doubt that the conduct was objectively unreasonable and capable of creating a risk to health and safety. However, there was no evidence in Mr S’s allegations that there was any other incident or form of unreasonable conduct by Mr A capable of constituting repeated unreasonable behaviour.

To refresh our readers, the FWC may find that bullying at work has occurred where:

  • a person or a group of people repeatedly behaves unreasonably towards a worker or a group of workers at work; and
  • the behaviour creates a risk to health and safety.

In this case, Mr A could not satisfy the first limb of the test and accordingly, could not establish that Mr S had bullied him at work, as recognised under the Fair Work Act.

Narrowing the availability of orders from the FWC

This case clearly illustrates one of the limits of the FWC’s capacity to stop bullying under section 789FC of the Act. We have previously written about another decision in which the FWC narrowed the definition of what constitutes bullying ‘at work’ in relation to these claims under the Act.

The FWC urge employees to understand the ‘particular parameters’ of the anti-bullying provisions of the Act and, instead of relying solely on these provisions, to look to the General Protections afforded to employees under Part 3-1 of the Act when searching for remedy or redress to alleged ‘workplace bullying’. These General Protections protect employees’ workplace rights and provide protection from workplace discrimination, were the discrimination is based on specified grounds.

Employers should ensure that they have clear and effective procedures in place to address employee grievances whether they relate to bullying or other issues, to avoid escalation to external agencies.

Compensation for unfair dismissal reduced by one third due to ‘significant and repeated misconduct’

A former employee of the Asia Pacific International College Pty Ltd (APIC) has been successful in their unfair dismissal claim, but has had their compensation reduced based on their own misconduct.

Commissioner Roe of the Fair Work Commission (FWC) found that the employee’s conduct was unacceptable and breached APIC’s Code of Conduct, but because the employer’s termination email did not provide the employee with sufficient details or opportunities to respond, the unfair dismissal claim succeeded.

This is the latest in a series of FWC cases which has seen compensation made available under a legitimate unfair dismissal claims giving weight to both:

  • the employer’s failure to provide procedural fairness to the dismissed employee; and
  • the employee’s actual misconduct.

The facts

The employee began their employment as a full time course coordinator at APIC in March 2014 and was dismissed by email on 5 October 2014. The FWC was presented with extensive email correspondence during this period which demonstrated the mutual dissatisfaction in the employment relationship. The employee sent multiple emails which demonstrated a lack of courtesy and respect to colleagues and students at the College.

The emails included multiple ones directed toward the IT department after the employee had been informed that there were limitations on the IT system and efforts were being made to improve services. The tone of these emails was insulting and accusatory. One email sent to both an IT worker and a range of colleagues referred to the systems as ‘crap’ and asked ‘could somebody do the job properly?’. These emails led to complaints about the employee’s ‘abusive attitude’ from other staff. The employee described these complaints as ‘childish charges’. His communication style led to a warning in September.

In addition, informal complaints were made by students about the conduct of the employee. Emails were sent to students which were described as sarcastic, accusatory and threatening. Other data and observations were used beyond the text of the emails to support these concerns. The employee was also accused of making comments with racial connotations. This accusation was rejected by the employee, and the Principal of APIC agreed to undertake an independent investigation. The investigation did not take place due to the Principal’s busy schedule and the belief that the employee had moved on.

The decision

Commissioner Roe first established that although there was valid reason for the dismissal based on the misconduct of the employee, APIC had breached the Fair Work Act 2009 by failing to notify the employee of the reasons for his termination and not providing an opportunity to respond.

The employee was entitled to 6 weeks’ pay as compensation, based on the estimated time he would have remained at the company. This award was then reduced by one third based on his misconduct.

Employee’s bad behaviour doesn’t justify breaches of the Fair Work Act 

The Fair Work Act 2009 outlines clear factors that will be taken into consideration when determining whether a dismissal is harsh. Section 387 states that the employer must give reasons for the termination. This did not occur in this case. Although the employee had been made aware of concerns and had been warned about his conduct, he was not told that his employment was at risk and was not given an opportunity to respond to the concerns.

APIC argued that the communications with the employee demonstrated that he would respond in an aggressive and defensive manner if issues about his conduct were raised. They therefore stated that providing the employee with an opportunity to respond would not have made any difference. Commissioner Coe did not accept this argument, stating that is was sufficient to prove that there was a real possibility that the employee would have made a constructive response if it had been made clear that his employment was at risk.

Employee misconduct

Although the dismissal was unfair, Commissioner Coe stated that there was ‘no excuse for the abusive and highly critical communications’ which were copied to external lecturers and other staff members. Although employees have a right to raise legitimate issues in the workplace, the employee’s communication style failed to show basic courtesy and respect which is essential to an employment relationship. His communications were not only disrespectful and inappropriate, they also breached APIC’s Code of Conduct. This suggested that the reasons for the dismissal were fair, even though the process used to effect the termination was not.

Procedural issue

An additional matter which supported the finding that the termination was harsh or disproportionate was the failure of APIC to conduct a formal investigation into allegations of racial discrimination after the Principal undertook to do so. The FWC held that the Principal should have consulted with the employee before making the decision not to proceed with the investigation.

Employee misconduct: a mitigating factor in unfair dismissal claims 

The principles derived from the FWC’s decision have been reinforced by another recent case where the compensation for unfair dismissal was limited to six week’s pay due to employee misconduct. In that case, which involved a librarian working in the town of Walkerville, the employee criticised management in text messages and on Facebook prior to his dismissal. Similar to the APIC situation, the unfair nature of the librarian’s dismissal was based on the procedural unfairness of the termination process. A failure to allow the worker to respond to all reasons for the dismissal and the limited time given for the response were highlighted by Commissioner McMahon as being unfair, especially since the employer was aware of the particular vulnerability of the employee. Given these cases have both found unfair dismissal but reduced the quantum of damage based on employee conduct, there are several lessons for employers.

First, an employee must have clear guidance on procedural fairness when considering the termination of employees. These processes must ensure that all employees are given an adequate opportunity to respond and where appropriate, an opportunity to improve their conduct. It is not enough that there is a sufficient reason to terminate an employee, there must also be procedural fairness in the steps taken prior to termination. Although APIC were able to demonstrate that they had a valid reason to terminate the employment agreement, it failed to follow the requirements of the Fair Work Act 2009 and therefore was required to compensate the employee.

Second, companies must have clear mechanisms for dealing with employee complaints. Although the Principal of APIC was acknowledged to have made many attempts to address the concerns of the employee, there was a failure to conduct an investigation, even though it was agreed to on two occasions. Complaints handling procedures must be consultative with those affected and if the employer has agreed to a course of action, they must either abide by it or explain why they have chosen another path.

21 September: Workplace Relations Update for Executives On-the-Go

In this edition:

  • Cyberbullying and the workplace: do you have policies and training in place?;
  • Employee’s child sexual offences justified school’s termination of employment
  • Court of Appeal overturns $2.2 million Workers’ Compensation payout.

Cyberbullying ‘at work’ and what it means for employers

Recent research produced by Edith Cowan University in Western Australia emphasises the importance of employers taking a ‘zero-tolerance’ approach to cyberbullying in the workplace and introducing training to help employees identify and manage cyberbullying if it occurs.

The question is, when does cyberbullying occur ‘at work’?

We previously wrote a blog on a recent decision by the Fair Work Commission (FWC) which has shed some light on how to answer this difficult question. In addition to the University’s research, that FWC decision provides some important guidance for employers on the steps to take to help address the issue of cyberbullying in the workplace.

What is ‘cyberbullying’?

The researchers from the University defined ‘cyberbullying’ as repeated acts of intentional aggression perpetuated by an individual or group against a victim using digital technologies and communication tools such as email, mobile phones, instant text messaging and social networking sites. Cyberbullying is a particularly insidious form of bullying because it can happen anonymously, at any hour, anywhere and reach a vast audience.

The choice of anonymity afforded to cyberbullies means that there is disconnectedness from the repercussions of their actions. Because cyberbullying can cause a harmful message to reach a large number of viewers instantly for maximum damage, the research reports that cyberbullying is now a recognised contributor to work-related stress.

At work, employers may have social media policies in place to inform employees about what sort of social media use is sanctioned during work hours using personal or work technology. They may also have anti-bullying policies and procedures in place to inform employees about what behaviours are appropriate at work.

But do existing policies recognise that cyberbullying that occurs outside work hours can still, in certain cases, be considered workplace bullying and subject to the anti-bullying provisions under the the Fair Work Act 2009 (the Act)?

The FWC and bullying ‘at work’

In a recent decision, the FWC confirmed a narrow definition of what constitutes bulling ‘at work’ in relation to claims under the Act. The case involved three employees who applied to the FWC for an order to stop bullying alleging that they were the subject of repeated unreasonable behaviour by other staff. One issue for determination was whether offensive and insulting Facebook posts made about the employees constituted bullying ‘at work’.

Importantly for future cases of cyberbullying in the workplace, the FWC found that bullying ‘at work’ includes:

  • bullying that occurs outside of the confines of the physical workplace; and
  • extends to meal times and work breaks, as well as when the worker is participating in activities authorised or permitted by the employer (i.e. accessing social media while performing work).

The Full Bench of the FWC held that: ‘The relevant behaviour is not limited to the point in time when the comments are first posted on Facebook. The behaviour continues for as long as the comments remain on Facebook…It follows that the worker need not be ‘at work’ at the time the comments are posted, it would suffice if they accessed the comments later while ‘at work’.’

This decision is important for employers and employees because it demonstrates that cyberbullying is just as serious as physical or emotional bullying face-to-face in the workplace.

Most importantly, employees should understand that even if the bullying conduct doesn’t occur within the physical workplace it can still be classified as ‘workplace bullying’. Also, employees should note the FWC’s comment about the permanency of comments on Facebook and understand that as long as the bullying material is available for others to view, the victim can still suffer harm.

How the University’s research findings can help employers

The University research concluded that, after surveying white collar employees between the ages of 18 and 57, organisations should have a zero tolerance policy and offer training in resilience and etiquette to reduce the impact of cyberbullying on employees. The survey was conducted to investigate the mediating role of optimism in the relationship between cyberbullying and job related outcomes.

The University’s researchers recommend that all organisations implement a zero tolerance policy in their workplace that:

  • establishes the organisation’s position on cyberbullying;
  • defines cyberbullying;
  • outlines the consequences for cyberbullying in the workplace; and
  • details the penalties for perpetrators i.e. disciplinary actions.

The study also revealed that it is equally important for employers to train employees to become optimistic and resilient in the face of these kinds of attacks, as it is to deter workplace bullying.

The study dictates that ‘it is highly beneficial for organisations and employers to set up training programs that can detect and manage stress by increasing the awareness and an individual’s ability to cope with stressful situations’. The researchers also explained that this approach will improve the adaptability of employees to stressful environments whilst at the same time reducing the severity of symptoms before they lead to a psychological injury.

What to do next?

Employers should:

  • ensure that their organisation has anti-bullying policies that clearly identify how social media use after work hours can still have legal or disciplinary consequences;
  • implement employee training in how to identify, report and cope with workplace bullying, both in the real life office and through technology; and
  • have visible signage so workers are aware of their obligations under the organisation’s policies, and comprehend the consequences of a breach of that policy.

Implementing a system of policies, training and consequences for cyberbullying, as well promoting an optimistic workplace can help to reduce work-related stress in employees which can only benefit an organisation.


Employee’s child sexual offences justified school’s termination of employment

The Royal Commission into Institutional Responses into Child Sexual Abuse and its inquiries into various child abuse allegations are the subject of current media attention.  Many schools have been the subject of the Royal Commission’s inquiries into how they responded to historical sexual abuse claims by students, including how they handled employment matters relating to employees at the school who may have committed the sexual abuse.

The Royal Commission’s ongoing work highlights a difficult area for employers who provide child services and engage employees for child related work.  A recent decision by the FWC has provided some clarity for employers who find themselves in the difficult position of navigating employment law issues when an employee has been involved in alleged child sexual offences.

The FWC found that an employer who terminated the employment agreement of an employee who was charged with criminal offences which prevented him from receiving working with children check clearance did so legally and that the employee had no grounds for an unfair dismissal claim.

The offences and legal changes

Mr M was employed by the Catholic Education Office (CEO) and worked as a teacher and religious education coordinator in high schools in NSW. In 2012 he was arrested and charged with the indecent and sexual assault of an underage girl. Mr M pleaded not guilty to the charges and was released on bail.

As a result of these charges, the CEO suspended him from work with pay until the determination of the criminal trial. On 15 June 2013, the Child Protection (Working with Children) Act 2012 (NSW) (the Child Protection Act) commenced. Under the new Child Protection Act Mr M could not obtain a working with children check clearance as he would be categorised as a ‘disqualified person’ and therefore could not engage in the work for which he was employed.

At the point that Mr M became a ‘disqualified person’ for the purposes of the Child Protection Act it effectively became illegal for the CEO to employ him in child-related work.

The CEO’s reaction

In November 2013, despite the criminal proceedings having not been concluded, the CEO requested that Mr M change his employment status from ‘suspended with pay’ to ‘voluntary leave without pay.’ Mr M refused to take leave without pay claiming that he would not be able to fund his defence in the criminal proceedings.

In December 2013, the CEO terminated Mr M’s employment.

Mr M filed an application for an unfair dismissal remedy with the FWC and in response the CEO lodged a counterclaim against him.  The CEO’s counterclaim submitted that:

  • Mr M’s termination had not be at the CEO’s initiative (in accordance with section 386 of the Fair Work Act); and
  • instead, Mr M’s employment agreement came to an end as it had been frustrated by his inability to obtain a working with children check clearance.

A contract can be frustrated if performance of the contract becomes impossible for reasons outside the parties’ control, and it results in the contract ending automatically.

The CEO asserted that there was no ‘dismissal’ as defined by the Fair Work Act and therefore Mr M had no jurisdiction to make an unfair dismissal claim under the Fair Work Act.

The FWC’s initial decision

At first instance the Commission found in favour of Mr M.  The Commission held that Mr M’s contract of employment could have continued after the commencement of the Child Protection Act, despite his ‘disqualified person’ status, provided that he didn’t engage in child-related work that involved direct contact with children. According to the FWC, the factual circumstances of the case meant that the CEO terminated his employment on its own initiative, justifying the unfair dismissal application.

On appeal to the Full Bench

The CEO appealed the decision and on appeal, placed less emphasis on the frustration argument. The CEO argued that rather than frustration causing the contract to be terminated, the continuation of the employment was not permissible as it would have amounted to illegality.

On appeal, the FWC agreed with the CEO.  In a short judgment (seven paragraphs in total!) it found that:

  • Mr M’s continued employment would have been illegal due to the operation of the Child Protection Act and accordingly, the contract was not terminated on the initiative of the CEO; and
  • the continuation of Mr M’s employment was inconsistent with the new legislation meaning that the CEO had not ‘dismissed’ him (irrespective of whether it was fair or not).

What does this mean for employers?

This decision means that employees who are subject to criminal proceedings under child protection laws may see their employment legally terminated where those laws make it illegal for their employment to continue. Although the FWC decision in this case was made in relation to NSW child protection laws, the decision might operate as a precedent for FWC decisions where other State or Territory child protection laws apply.

The case also provides a precedent for organisations who choose to terminate an employee’s contract on the basis that they are ineligible to be employed under legislation, or that continuing their employment would be illegal or inconsistent with legislation. Organisations should however keep in mind that the FWC did suggest at first instance that the termination did constitute unfair dismissal as the employee could have been reassigned to work that was not child-related.


Court of Appeal overturns $2.2 million Workers’ Compensation payout

The NSW Court of Appeal has overturned a decision of the NSW Supreme Court to award $2.2 million in damages to a security guard who was injured at work. The employee was awarded the sum after he slipped at work and injured his lower back and his employers were found liable.

There was no dispute as to whether the employee fell at work and significantly injured his lower back, or that he was owed a duty of care by both the occupier of the work site Patrick Stevedores (PS) and his employer FBIS.

However PS and FBIS, who shared payment of the sum, both submitted that they not acted negligently and were not at fault.

The facts

The worker had been patrolling the PS site at night in March 2005 and returned to the demountable guardhouse where the security guards were stationed. It had been raining and the area around the gatehouse was wet. When the worker stepped up into the gatehouse he slipped and fell, injuring his lower back.

The worker commenced proceedings four years later alleging that he was entitled to damages for a breach of the duty of care owed to him by both FBIS and PS. He contended that the step from the ground up into the guardhouse was too high and that there should’ve been measures to prevent the step from becoming wet during inclement weather.

Importantly, since the accident, PS had installed an intermediate step and an awning at the entrance to the guardhouse to prevent the same accident occurring again.

According to the injured employee, the changes made by PS were reasonable precautions that should’ve been taken before his accident and would’ve prevented his fall, thus justifying his negligence claim.

The Court’s original decision

The Supreme Court was satisfied that PS and FBIS were negligent in failing to inspect the work site and guardhouse to determine its suitability as a place of work. Justice Campbell attributed the risk to which the employee was exposed (the risk of slipping while entering the guardhouse in wet weather) to the ‘awkward’ height of the entrance step and the slippery nature of the doorway when wet.

The appeal decision

The Court of Appeal concluded that the worker had failed to establish negligence on the part of PS and FBIS. This was decided by examining the trial judge’s ruling on:

  • the ‘reasonable’ precautions that should’ve been taken;
  • the height of the step that caused the fall; and
  • the application of the Civil Liability Act 2002 (NSW) (Act).

‘Reasonable’ precautions

The Court of Appeal took issue with Justice Campbell’s finding that an intermediate step and an awning were reasonable precautions to take with respect to the risk of stepping up into the guardhouse during wet weather.

A reasonable person in the position of PS or FBIS would not have identified that the height of the step a risk factor and would not have thought to put in an intermediate step to mitigate the risk.

The Court made the point that stepping from any surface to another can be dangerous but most able-bodied people do so every day as they climb stairs, board buses and enter homes or other buildings without injury. Leeming JA said that ‘the mere fact of a fall on wet steps is not sufficient to establish that an occupier has been negligent’, and that stairs are inherently dangerous.

The Court held that ‘the evidence did not establish that a reasonable person in the position of either appellant would have identified the height of the step as a risk factor which required the construction of an intermediate step.’

Uncertainty of the height of the step

Due to the passage of time between the accident and the court proceedings and there were evidentiary issues when assessing the suitability of the height of the step.

However importantly, the Court held that even though PS installed an intermediate step in the time since the accident, this action did not provide evidence that this was a reasonable precaution that should’ve been taken previously.

What does this case mean for workplace safety?

The message here is two-fold: accident-free work environments are a fallacy and appeals can be worth it.

Employers can take some comfort from the Court’s finding on the basis that that when an employee injures themselves at work, it does not automatically result in a breach of duty of care.

It is impossible to have a risk-free and incident-free work site as accidents will inevitably happen. This case reminds employers that they need to be aware of their obligations under the relevant legislation to remove foreseeable, not insignificant risks by taking reasonable precautions.

The Court confirmed that employers should not be afraid of making improvements to the work site because acting to prevent or mitigate risk proves that a risk was present. Fixing risky areas where accidents have occurred is not, according to the Court, proof of fault for those accidents.

This case also demonstrates that an appeal process can be worthwhile for employers who believe that they have not breached their duty of care. Going to court can be daunting and extremely expensive, however where employers have evidence of a WHS program, and documents showing WHS audits, risk assessments, inspections and staff training, it may be a viable option for those who believe they were not at fault.

ASIC fires compliance warning at responsible entities and superannuation trustees

ASIC has fired a warning to responsible entities (REs) and superannuation trustees highlighting various compliance issues following recent surveillance activities.

Perhaps most importantly for REs, ASIC found notable concerns regarding:

  • the adequacy of internal processes;
  • failures to comply with established internal procedures;
  • inconsistencies between funds’ governing documents and internal policies; and
  • inadequate record keeping to demonstrate compliance with licensee obligations.

Responsible Entities

Taking a closer look at the RE sector, ASIC highlighted three key compliance concerns.

Disclosure and Advertising Materials –  As part of its surveillance, ASIC found more examples of misleading or deceptive marketing materials. ASIC’s current focus on advertising materials seems to be a common trend across the financial services sector in general, although ASIC seems to think that the problem within the RE sector was exacerbated by the absence of effective controls over the authorisation and review of promotional materials.

So, what is an effective control according to ASIC?

In the first instance the regulator expects that licensees “develop, maintain and comply with documented processes”. These processes should include methods to review and approve advertising material to ensure that they fully comply with legal requirements and best practice.

This sounds straightforward enough but the objective test of whether certain material is misleading and deceptive, coupled with the rapid expansion and availability of media tools used to communicate marketing messages (Facebook, LinkedIn, YouTube, Twitter etc), has made the management of risks in this area even more challenging.

In practice, documented policies alone won’t be enough. Additional controls are required such as ongoing training for any representative involved in the communication of information to ensure that the documented processes are clearly understood and followed. This should be an ongoing training procedure and not a ‘train and forget’ approach.

Compliance Deficiencies – Secondly, and perhaps more worryingly, ASIC highlighted a range of deficiencies in compliance and governance frameworks, including:

  • inadequate internal processes;
  • failures to comply with existing internal processes;
  • inconsistencies within organisational frameworks; and
  • a lack of adequate record keeping.

It is not clear whether these failures related to scheme compliance issues or whether the weaknesses were in relation to overall compliance controls, including non-scheme controls. It is an important distinction as the adequacy of scheme compliance is subject to various tests including, of course, external audit. Any weaknesses identified by ASIC which also relate to scheme compliance would presumably also point to weaknesses in external auditing.

Published Returns – Thirdly, there were inconsistencies between the returns information provided by certain REs and the returns published by third party data aggregators. ASIC reiterated that all licensees are expected to have periodic reconciliation controls on returns to prevent the occurrence of material discrepancies.

Next steps for REs

ASIC expects licensees to document their compliance measures, fully implement them, monitor and report on their use, regularly review the effectiveness of these measures and ensure they are up-to-date. In ASIC’s view, failure to do this will make it more difficult to comply with the general obligations and to demonstrate compliance with them.

As a result of its surveillance activity ASIC also directed some REs to make changes to their risk management arrangements and implement additional measures to monitor the reporting of returns.

It is a challenging time for the sector and, as covered in previous blogs, REs are still waiting for more prescriptive guidance on risk requirements for the sector, via proposed Class Order and ASIC Regulatory Guides. It is not clear when these enhanced RE risk requirements will become effective, particularly as the draft requirements were first due to be released in August 2013.

How can CompliSpace help?

In summary, ASIC expects REs to have up to date policies and procedures and a system of assurance to monitor and report on compliance performance. This is the model on which our core services are delivered, providing REs with tailored content, tools and services designed to meet these ASIC expectations and requirements.

For more information on how we can help contact James Cozens, Director Commercial, on 02 9299 6105 or email contactus@complispace.com.au.

Financial Services Update: Fraudulent services provided by AFSL holder lead to tragedy

In this edition:

  • Fraudulent services provided by AFSL holder lead to tragedy;
  • Sustainable investments are more important than ever; and
  • September is the last month for transitional arrangements for financial adviser register.

Fraudulant services provided by AFSL holder lead to tragedy

In June this year, the Executive Chairman of Oceanic Asset Management (OAM) David Jones and his wife Jeanette took their own lives leaving a suicide note admitting they had been defrauding investors for years.

OAM holds an Australian Financial Services licence and is licensed to provide funds mangagement advice to wholesale clients. According to ASIC, OAM appears to have been operating a number of unregistered managed investment schemes.

The Joneses ran Mulato Nominees out of the same office building as OAM, a company marketed as a ‘highly successful private investment company specialising in unearthing investment opportunities at the smaller end of the Australian quoted market, predominantly resources orientated’.

The Joneses defrauded numerous UK-based investors who had put their life savings through Mulato Nominees and associated companies.  The local press reported that in the suicide note found at their home in Perth,  the couple said that they had tried to overcome the losses they had caused in the hope of a recovery, but this was without success and they could not live with the guilt and shame. It was also reported that as recently as 2014 Mulato was described as a ‘$100 million private investment company’.

ASIC has successfully applied to the Federal Court under the Corporations Act 2001 (Cth) to have a provisional liquidator appointed to OAM, Mulato and four other associated companies linked to Jones’ fraudulent activity.  The Federal Court’s judgement referred to previous case law which establishes that the appointment of a provisional liquidator is  a ‘drastic measure’ but one that may be required to preserve the status quo.

In a media release, ASIC attributed the application as a result of concerns arising from complaints made to the regulator and the West Australian Police Services Major Fraud Squad by a large number of UK-based investors.  ASIC is currently investigating various breaches of the Corporations Act by OAM and the other five companies, including the making of false or misleading statements and engaging in misleading or deceptive conduct.

Theft and fraud offences under the Criminal Code Compilation Act 1913 (WA) are also being investigated.

In the Federal Court, ASIC also successfully obtained asset preservation orders and the appointment of a Trustee to the deceased estate of Mr Jones. This will come as a relief to UK couple Thomas and Lynda Briers who lost more than $1 million after they were conned by the Joneses and took issue with relatives of the family keeping ill-gotten gains such as luxury cars and jewellery.

While ASIC and the ATO continue to investigate the affairs of OAM and associated entities, the appointment of the provisional liquidator will  protect the interests of shareholders, investors and creditors.

Sustainable investments are more important than ever

An increase in the number of reports and initiatives in the past year that focus on environmental, social and governance (ESG) scores of financial institutions reflects the increasing importance of sustainable investment in the financial sector.

ESG scores for global managed funds

In line with this trend, Morningstar, a leading independent investment research group that provides research for stocks, funds, EFT’s, credit and LIC’s, has announced that it will launch the industry’s first ESG scores for global managed funds and exchange-traded funds.

The research house also provides financial data, news, and investing articles for North America, Europe, Australia and Asia and it will base its new scores on ESG company ratings supplied by Sustainalytics for release later this year, applauding Morningstar for its innovation.

The two research groups will work together to release the new fund scores in the fourth quarter of 2015. The combination of the groups’ portfolios will allow Morningstar to create asset-weighted composite ESG fund scores based on company-level Sustainalytics ESG ratings.

Morningstar Director of Manager Research – North America, Jon Hale, has said that ESG ratings will bring more transparency and accountability to the investment industry.

Sustainable Investing

Investors are placing more importance on ESG policies and practices. The Morgan Stanley Institute for Sustainable Investing released a study in February this year that found that 71% of individual investors are interested in sustainable investing and that this type of investing doesn’t require financial sacrifice.

There has also been a 29% increase in the past year in the number of financial institutions that have signed the UN-supported Principles for Responsible Investment Initiative, bringing the total to almost 1,400 firms, managing in excess of $59 trillion, joining together to promote responsible investment.

The new ratings are said to, for the first time, provide investors with a fund comparison across categories, relative to benchmarks, and over time using ESG factors with the ability to examine the scores for the environmental, social and governance pillars. Also, investors will be able to ‘drill down’ to see scores for each of the three pillars.

September is the last month for transitional arrangements for AFS licensees

Transitional arrangements allowing AFS licensees to ensure that their financial advisers’ and authorised representatives’ details are up to date will end on 30 September 2015. From 1 October 2015, new fees and notification periods will apply for updating or changing the details of AFSL financial advisers and authorised representatives.

This will mean that AFSL holders from October this year will have no more than 30 business days from the effective date of change to notify appointments or updates. In addition, AFSL holders will have to pay a fee of $29 to do so and late fees of up to $312 will apply to those who fail to make a notification within the 30 day period.

Also from 1 October, AFSL holders will be able to notify ASIC of all changes for representatives online. This means that licensees will no longer need to use paper forms to:

  • update addresses for authorised representatives;
  • nominate a business name for authorised representatives;
  • update representative names and ABNs for authorised representatives and financial advisers; or
  • cease an authorised lodger so they can no longer lodge for a licensee or authorised representative.

Licensees should take advantage of the transitional arrangements and ensure their details are correct before September 30.

More information is available on the ASIC website.



Get every new post delivered to your Inbox.

Join 3,142 other followers

%d bloggers like this: