24 August 2015: Workplace Relations Update for Executives On-the-Go

In this edition:

  •  Fair Work Commission issues another (rare) ‘stop bullying’ order;
  • ‘Repair, Not Replacement’: Productivity Commission  Draft Report; and
  •  Employee unsuccessful in compensation claim following party held at    employer’s premises

Fair Work Commission issues ‘stop bullying’ order

The Fair Work Commission (FWC) has issued another of its very rare ‘stop bullying’ orders, a power it was given in January 2014, to make anti-bullying findings and orders. While the vast majority of claims made to the FWC are conciliated at an early stage, the few matters that have made it to a hearing have led to decisions which identify what does not constitute bullying within the FWC’s purview. The most notable of these is that the FWC will only consider matters where the bullying is still ongoing, and it is work-related.

This new case appears to be a textbook illustration of what constitutes bullying.  It also illustrates the multi-pronged approach that the FWC uses to ensure that the bullying is stopped and does not recur in that organisation.

In this case the parties have not been identified; their anonymity was agreed as the parties supported the outcome, it ensured their acceptance of the admission, and the anonymity was conducive to the resumption and continuation of ongoing working relationships between the applicants and the employer.

The application

There were two applicants, both employees at a small real estate business. They alleged that there had been several instances in which a manager engaged in bullying conduct. The behaviour was said to include:

  • belittling conduct;
  • swearing, yelling and use of otherwise inappropriate language;
  • daily interfering and undermining the applicants’ work;
  • physical intimidation and ‘slamming’ of objects on the applicants’ desks;
  • attempts to incite the applicants to victimise other staff members; and
  • threats of violence.

The employees raised concerns about the conduct of the manager with the employer, and these concerns were the subject of an informal investigation and an attempted workplace mediation. The manager subsequently resigned with the support of the employer, but took up a position in a related company with the potential for future interaction with the applicants.

The employer contended that at least one of the applicants was provided with the opportunity to put their allegations in writing and failed to do so. In addition, the employer stated that the allegations were denied or substantially qualified by the manager and that the applicants have acted unreasonably in certain respects.

The orders

An order in relation to workplace bullying may only be made by the FWC where it finds that there is a risk of the bullying continuing.

Commissioner Hampton found that there was sufficient evidence that there had been “workplace culture where unprofessional and unreasonable conduct and interactions had taken place and that such had created a risk to the health and safety of a number of the workers involved”. As such, the applicant workers were found to have been bullied within the meaning of s 789FD of the Fair Work Act 2009 (Cth) (the Act).

The stop bullying orders contained two main elements: firstly, the applicants and the former manager must not approach each other or attend the other’s business premises. Secondly, a number of initiatives have been ordered to improve the culture of and conduct within the workplace.Significantly, Commissioner Hampton ordered the employer to implement anti-bullying measures in order to prevent similar instances from occurring: this includes the establishment and implementation of anti-bullying policies, procedures and training, as well as clarifying reporting arrangements.

Warning for Employers.

This matter emphasises the importance of creating and promoting a positive and safe workplace culture. Employers should ensure that they have training and policies in place, including reporting procedures,  to prevent and manage any potential instances of bullying in the workplace.

‘Repair, Not Replacement’: Productivity Commission Draft Report

The Productivity Commission (PC) has released its first draft report on Australia’s workplace relations framework, concluding that there are several deficiencies that need to be addressed. Overall, the PC found that the workplace relations framework was “not dysfunctional” but was in need of repair. The PC’s general concerns include that the current system is overly legalistic, and at times has too great an emphasis on procedures over substance.

Submissions are welcome in response to the draft before 18 September and the final report is due in November.

Recommended changes

The Report contains a broad range of recommended changes. Some key areas targeted for change include:

  • structural changes to the FWC;
  • enterprise bargaining;
  • unfair dismissal;
  • awards and minimum wages; and
  • industrial action.

Structural changes to the FWC

The Report contains the following recommendations regarding the FWC:

  • the establishment of a Minimum Standards Division and Tribunal Division;
  • a new process for appointing members of the FWC;
  • creation of a process to ensure adequate resourcing to assist the FWC to cope with emerging ‘hot spots’ (e.g. problems for 417 visa holders); and
  • Publication of more detailed information about conciliation outcomes and processes, as well as an independent performance review of the processes and their outcomes.

Enterprise bargaining

The PC has made several key recommendations in the Report concerning the enterprise agreement process, including:

  • allowing the FWC to have more discretion to approve an agreement with a procedural defect which poses no risk to employees;
  • replacing the ‘better off overall test’ with a new ‘no-disadvantage test’;
  • permitting individual flexible arrangements to deal with all the matters listed in the model flexibility term and any additional material agreed to by the parties;
  • allowing an enterprise agreement to specify a nominal expiry date that can be up to 5 years or matches the life of a greenfields project;
  • applying good faith bargaining requirements to greenfields negotiations; and
  • requiring individual (non-union) bargaining representatives to have the support of at least 5% of the workforce.

The PC has also looked at individual agreements and has recommended that:

  • the Fair Work Act 2009 (Cth) should specify that the default termination notice period should be 13 weeks, but in the negotiation of an agreement, employers and employees could agree to extend this up to the new maximum;
  • a new ‘no-disadvantage test’ should replace the ‘better off overall test’ for assessment of individual flexibility arrangements; and
  • the FW Ombudsman should develop an information package on individual flexibility arrangements and distribute it to employers, particularly small businesses, with the objective of increasing employer and employee awareness of individual flexibility arrangements.

In addition, the PC is seeking feedback on the creation of an ‘enterprise contract’, which would “vary an award for entire classes of employees… without having to negotiate with each party individually or to form an enterprise agreement’.

Unfair dismissal

The Report also contains the following recommendations in relation to the unfair dismissal regime:

  • greater discretion for the FWC to consider unfair dismissal applications ‘on the papers’ before conciliation or a more merit focused conciliation process;
  • no compensation for employees where there was reasonable evidence of persistent under-performance or serious misconduct;
  • remove the possibility for reinstatement or compensation on the basis of procedural errors in termination (financial penalties may still apply);
  • remove the emphasis on reinstatement as the primary goal in unfair dismissal cases; and
  • remove Small Business Fair Dismissal Code.

Awards and minimum wage

The PC has made numerous recommendations in this area, including applying the same penalty rates for Saturdays and Sundays for those working in hospitality, entertainment and retail and tightening up requirements to reduce the incidents of sham contracting (where employers misclassify employees to minimise their entitlements). It also recommended a review of apprenticeships and traineeships.

Why is this significant for employers?

If the federal government chooses to adopt these recommendations, it will form the basis of its workplace relations policy in the lead-up to the 2016 election. Going beyond the realm of government policy, the PC added that current issues could also be explained by poor management, as opposed to structural issues with the formal framework. On this basis, employers should ensure that they are effectively managing all workplace issues and ensuring that their conduct complies with the current law.


Employee unsuccessful in compensation claim following party held at employer’s premises

The NSW Court of Appeal (Court) has decided that  an injury sustained by an employee at a function on work premises (but held after normal work hours) was not in the course of her employment. The Court found that an employee’s subjective opinion that she was expected by her employer to go to a function after her work had finished for the day, did not outweigh the contrary position held by the director of the company, her immediate supervisor, and other employees, that attending was not a work requirement.

The facts

In early March 2004 the appellant, Kathryn Hills, began working at Pioneer, a business which provided studio space and rented out photographic equipment mainly for the fashion industry. Jennifer Martel, the employee in charge of training Ms Hills, told her that another employee, Alistair Buchanan, was hosting a party on Saturday 13 March 2004. Mr Buchanan had approached the director of the business to use the space as a joint birthday party for himself and his two roommates. The director suggested that Mr Buchanan also have the party as a farewell, as he was about to leave the business.

Pioneer had no role in organising or inviting guests to the party. Ms Martel said that it would be “a nice idea” to go to the party “in order to meet the other employees”, as employees generally did not have opportunities to see each other in the course of the business. Ms Hills believed that the party was a work function and made a statement that “I felt that it was important for me to be at the party.” At 2:30 am on Sunday 14 March, Ms Hills fell over a balustrade when leaving the party and sustained serious injuries. After some months of treatment, Ms Hills was able to return to work, though she did not return to Pioneer.

Ms Hills made an application for worker’s compensation under the Workplace Injury Management and Workers Compensation Act 1998 (NSW) on the grounds that her injury was one that “arose out of or in the course of employment”.

The law

Attending a social event after work hours is an area which has a a large body of cases which do not provide a clear direction for employers, as to the limits of their responsibility.

The law is clear that the employment must be ” a substantial contributing factor” to the injury. In assessing an injury which occurred after normal work had finished, the courts have been looking at the relationship between the  employment and why the employee was in the place where the incident occurred,  and what activity they were engaging in at the time. Did the employer induce or encourage the employee to engage in that activity?

Quite a few cases over the years demonstrate that if an employee is on a work trip then many of the activities they engage in would be considered in the course of employment, as they would not be there if it were not for the requirement of the employer. This approach has been pushed to the extent that an employee who was working at a work camp at a remote location, who was encouraged by his employer to go sightseeing using work vehicles in between shifts, and who was subsequently injured, was covered by workers compensation.

However, much to the relief of employers, in the recent highly-publicised case of an injury incurred during sex.. while on a business trip, the High Court established that merely being at a location required by the employer, such as a business trip or a conference, did not make every activity the employee engaged in until their return, ” in the course of the employment”.  The High Court took a common sense approach finding that the employer’s expectations and requirements of the employee while they were away was the determining factor. We can expect that a normal employer would expect an employee away for a conference or business trip would stay in a hotel and eat meals, but would not normally induce or encourage them to be quite so friendly as part of their employment.

In this case the Court looked at to what extent the employer expressly or impliedly induced or encouraged the employee to attend the social function after normal work had finished, rather than what the employee thought she was expected ore required to do.

The findings

Ms Hills argued that she was induced to attend the party by Ms Martel or the director, and the injury was therefore causally connected to her work. However, the majority of the Court held that the fact that she was encouraged or induced to attend the party was not sufficient to render it part of her employment, when the company director, her supervisor, and the other employees who attended, clearly understood that it was not a work function and that attendance was purely voluntary, and in fact by invitation issued by someone other than the employer.

What it means for employers

Employers should be aware that their liability can extend beyond the hours in which the employee is engaged exclusively in work related activities. Work social functions or attending client functions where the employer expected the employee to attend, are likely to be considered “in the course of employment”. Employers should have reasonable policies to address safety issues in those matters, such as alcohol policies, and ensuring the employee is able to get home safely.

An employer’s liability is also quite broad when dealing with an employee who is away on a work trip, so they should consider safety aspects of  transport, accommodation, and meals.  However, as this case illustrates, where an employee who works regular hours and  returns home at the end of the day, an employer should bear in mind that if they suggest an employee attends an after- hours function, it would be a good idea if the employer lets the employee know whether their attendance at a function is expected as part of their work responsibilities, or whether their attendance  is purely voluntary, on a “nice to do ” basis.


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