Welcome to our Workplace Relations & Safety Q1 Update for the new financial year, where we explore some of the leading cases, legislative changes and industry trends impacting workplace relations.
We held this update back a bit longer than usual to try and gauge:
- how quickly the new Federal Government would set about implementing its election commitments on workplace relations, and
- just how little or how much those planned changes could be pulled to the left or to the right as a result of the final form of the Parliament.
For us, the experience of the last few months indicates that the changes will be pushed through much faster than expected, and if there is any movement from the extent of the commitment it will be far more likely pro employee rather than pro employer. However, if the agreed outcome on the climate targets are anything to go by, it seems that the Prime Minister is determined to stay the course of the election platform commitments rather than be taken down a slippery slope of horse trading over more radical measures.
Preliminary – current and next events!
- Next breakfast seminar: Claire Brown will be joined by Monica Blizzard, head of our Family & Relationship Law team, to talk about employer obligations in relation to employees who are impacted by family violence. Monica has extensive experience in supporting those escaping family violence, and no doubt she will provide valuable insight on issues about which employers need to be aware. Please keep an eye out for the flyer coming out shortly for an early September seminar date.
- Coffee Series: Federal Government election commitment update – Friday 16 September at 11am on Zoom.
Let’s delve into the update!
1. Minimum wages
On 15 June 2022, the Full Bench of the Fair Work Commission issued its decision in respect of the annual wage review (Annual Wage Review 2021–22 [2022] FWCFB 3500). Key aspects of this decision are contained in paragraphs [448] – [461].
The decision is particularly important in relation to award and agreement free employees. Key features are:
- Increase to award wages: 6% increase to modern award minimum wages equating to $40 per week, based on a 38-hour week, for adult award classifications.
- Casual loading for award/agreement free employees: 25% casual loading for award/agreement free employees.
- National minimum wage: An increase to the national minimum wage to $21.38 per hour or $812.60 per week.
- Minimum wages for award/agreement free employees with a disability: Specific minimum wages for award/agreement free employees with a disability, whose productivity is not affected by the disability, at the rate of $812 per week or $21.38 per hour. The minimum way for those whose disability does affect productivity will be based on an assessment under the Supported Wage System Schedule.
- Minimum wages for award/agreement free junior employees: Wage provisions for award/agreement free junior employees based on the percentages for juniors in the Miscellaneous Award 2020, applied to the national minimum wage.
- Apprentice wages for award/agreement free apprentices: Apprentice wage provisions and the National Training Wage Schedule in the Miscellaneous Award 2020 for award/agreement free employees to whom training arrangements apply, incorporated by reference, and a provision providing transitional arrangements for first year award/agreement free adult apprentices engaged before 1 July 2014.
2. High income threshold for unfair dismissals
The high-income threshold for unfair dismissals has been increased to $162,000 for dismissals which occur on or after 1 July 2022. This amount is exclusive of superannuation or any discretionary incentives/amounts.
3. Unpaid pandemic leave
The Fair Work Commission in COVID-19 Award Flexibility – applications to vary Schedule X [2022] FWCFB 130 has extended the operation of the Schedule X unpaid pandemic leave provisions in several modern awards until 31 December 2022.
Affected modern awards are for the most at-risk and vulnerable sectors, namely the health care, aged care, and other care sectors. Affected awards are:
- Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020;
- Aged Care Award 2010;
- Ambulance and Patient Transport Industry Award 2020;
- Health Professionals and Support Services Award 2020;
- Supported Employment Services Award 2020; and
- Social, Community, Home Care and Disability Services Industry Award 2010.
4. Scope of the Professional Employees Award – you can be at risk of it being broader than you think!
In Lingli Zheng v Poten & Partners (Australia) Pty Ltd [2021] FWCFB 6041), the Full Bench of the Fair Work Commission considered that an employee, despite earning over the high income threshold, was still protected from unfair dismissal on the basis that some aspects of her role came within the classifications of the Professional Employees Award 2020 (PE Award).
The facts
In this case, Ms Zheng was employed as a Technical Consultant and aspects of her role “encompassed commercial, technical, and marketing aspects of the LNG supply chain”. She therefore alleged that she had qualifications which fell within the “Experienced Engineer” classification in the PE Award and possessed the necessary qualifications and skills required by an employee performing work within this classification of the PE Award.
The Full Bench of the Fair Work Commission’s decision
The Full Bench of the Fair Work Commission considered that Ms Zheng was covered by the PE Award on the basis that the principal purpose for which she had been employed was to “professional engineering duties” within the meaning of the Award and that the PE Award’s classifications apply where “the adequate discharge of any portion of the duties requires qualifications of the employee” (our emphasis): see definitions in clause 2 of the Award.
In assessing Ms Zheng’s contract of employment and job description, the Full Bench held that while her job responsibilities placed less emphasis on the technical aspects of her role, it nevertheless “included work with a technical team, preparing technical analysis and consulting reports in the development of LNG export and import facilities, providing technical support along the LNG value chain to the Asia Pacific team in LNG-related assignments, and researching, analysing and advising clients on technology”. The Full Bench considered that this portion of her duties required engineering qualifications and therefore she was covered by the PE Award.
The implications for employers
A key consideration for employers with technical professional employees is whether they might inadvertently fall within the classifications of the PE Award due to their employment contracts and job descriptions. Now is a good time to be reviewing these to ensure they don’t inadvertently create unintended liability.
5. “I’d like to return a decision please”
Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156
Deliveroo appears to have delivered a successful appeal against Commissioner Cambridge’s original decision concerning the unfair dismissal of Diego Franco. In the original decision, the Commissioner found that Mr Franco had been an employee of the popular driver/delivery service, Deliveroo, which meant he was protected under unfair dismissal jurisdiction. Commissioner Cambridge determined that Mr Franco had been unfairly dismissed and he should be reinstated. Click here to read our article on the original case.
In an interesting turn of events, the Full Bench has overturned Commissioner Cambridge’s decision on the basis of the highly publicised Personnel Contracting and Jamsek determinations. As a refresher, the Personnel Contracting and Jamsek determinations solidified what the Commission and Court will consider in whether a worker is an employee or independent contractor, namely that it will be the wording and context of the contractual terms that will give rise to the identification of the employment relationship.
On appeal, the Full Bench considered the relevant 2019 Agreement which existed between the parties. While the Full Bench identified that clauses within the Agreement, such as Mr Franco being able to accept or decline work offered to him (as set out in Personnel Contracting) was indicative of a casual employment relationship, it was the fact that Mr Franco was able to log in and out and provide services where he wanted to which favoured a determination of an independent contractor relationship – that Mr Franco was free to pick where he worked, and therefore could determine his parameters of work, was the biggest determining factor. The Full Bench also considered that Mr Franco was able to determine the route in which he takes and the requirements for deliveries to be made within a certain time period were typical for independent contracting arrangements.
While the Full Bench did overturn Commissioner Cambridge’s decision, they did comment that the Commissioner “erred” only in the formal sense, as Personnel Contracting had not been decided so as to guide the Commissioners decision. This is another interesting turn in the employee vs independent contractor debate, however the decisions of Personnel Contracting and Jamsek continue to provide some much needed guidance.
6. Workplace investigations, and lawful and reasonable directions to participate in investigations, as opposed to investigations for the dominant purpose of privileged legal advice
It has become common practice for employers to seek to investigate workplace issues “under privilege”. The case of Stephen v Seahill Enterprises Pty Ltd [2022] FCAFC 85 (Seahill) recently considered the extent to which legal professional privilege can reside over investigation documents. Significantly, the Full Court refused to overturn a Fair Work Commission finding that a direction to answer questions for the purposes of privileged legal advice is unlikely to be a lawful and reasonable direction.
The facts
Seahill concerned an employee who had applied to the Fair Work Commission for an order to stop bullying, directed at his employer. In defending the application, the employer objected to the production of documents sought by the employee on the basis that these documents were the subject of legal professional privilege. The documents related to an investigation that the employer’s lawyer had requested on its behalf to enable provision of legal advice in relation to the employee’s bullying claim.
In resisting the claim for privilege, the employee pointed to several factors inconsistent with the maintenance of privilege. For example, the investigator had told the employee that he was conducting the investigation in accordance with a direction from the Fair Work Commission, and the employer had told the employee that the investigation was for the purpose of independently investigating his allegations as this was required by company policy.
The Full Bench of the Fair Work Commission noted that if the employer’s direction for the employee to participate in the investigation was to enable it to obtain legal advice to defend his bullying claim, this was not a lawful and reasonable direction as it was not a requirement under the employee’s employment contract and “would amount to an extra-curial interrogatory or deposition process under which (the employee) could be required, contrary to his legal interests…to make admissions or to disclose confidential information in an unprotected way”.
However, to the extent that the employer required the employee to participate in a “fair, independent and transparent investigation” into his bullying complaints, this was a lawful and reasonable direction.
On this basis, the Full Bench of the Fair Work Commission only upheld privilege in respect of certain categories of documents.
Appeal to the Full Federal Court
The employee’s appeal to the Full Federal Court contended that the Full Bench’s decision to uphold privilege in respect of certain investigation documents was “illogical, irrational, or unreasonable” and that the Full Bench had fallen into jurisdictional error by not considering that the employer had waived privilege in respect of the documents it was claiming privilege for, or, on the basis of its representations to him, and those of the investigator, that no privilege existed.
The decision of the Full Federal Court
In considering the whether the Full Bench had fallen into jurisdictional error, the Full Court considered that, even if the Full Bench had “made a mistake of law, even as to the proper construction of a statute”, provided that this mistake was within jurisdiction, this would not justify a writ of mandamus to hear and determine the matter according to law, such that this would only be available if there had been a mistake made that fell outside the jurisdiction of the Fair Work Commission (ie that they had misapprehended the nature of their jurisdiction, applied a wrong and inadmissible test or not applied themselves to the question prescribed by the law or misunderstood the nature of the option to be formed).
Resultingly, the Full Federal Court considered that the Full Bench had not misunderstood their task, which, firstly, was to decide whether to grant permission to appeal, conduct a re-hearing and decide by reference to the grounds of appeal, whether the first instance decision was in error.
The Full Court also considered that the Full Bench had correctly considered that legal professional privilege was a basis for the employer’s resistance to produce documents under s 590 of the Fair Work Act 2009 (Cth) (Fair Work Act) and likewise, the Full Bench correctly apprehended the circumstances in which privilege could be waived.
On this basis, the employee’s appeal was dismissed, with costs.
Key takeaways
The key takeaways for employers are to:
- Establish the investigation regime: Consider the appropriateness of conducting independent investigations in the context of obtaining legal advice, and ensure that the documentary evidence reflects this;
- Internal communications: Consider the internal communications of human resources and management personnel to ensure that their communication about the purpose of the investigation is consistent with the maintenance of privilege; and
- Amendments to employment contracts: Consider amendments to employment contracts to include the ability to direct employees to cooperate in instances of actual or threatened litigation.
7. Full Federal Court affirms that Qantas’s outsourcing constituted unlawful adverse action
On 4 May 2022, the Full Federal Court handed down its decision in Qantas Airways Ltd v Transport Workers’ Union of Australia [2022] FCAFC 71. This appeal concerned an earlier decision whereby the Transport Workers Union (TWU) alleged that Qantas took unlawful adverse action by deciding to outsource its ground handling operations at various Australian airports and therefore sought reinstatement of the employees who had lost their jobs as a result of the outsourcing.
First instance decision
In the first instance, the primary judge conducted four hearings, resulting in four judgments establishing Qantas’s liability, the Court finding that a substantial and operative reason for Qantas’ decision to outsource their ground handling work to labour hire providers was to prevent their employees from taking industrial action following the expiration of an enterprise agreement covering these employees on 31 December 2020. However, the primary judge dismissed the TWU’s application for the employees to be reinstated.
The appeals
There were subsequent appeals against the Qantas liability declaration and dismissal of the TWU’s application for the employees to be reinstated.
Qantas’s first ground of appeal was that because the enterprise agreement which covered its ground handling operations employees had not expired at the time it made its decision to outsource this work in November 2020, these employees did not have a “workplace right” to take protected industrial action, the exercising of which Qantas could have sought to prevent. The Full Federal Court rejected this argument on the basis that it considered there was nothing in s 341 of the Fair Work Act to require workplace rights to be in the present tense.
Qantas’s second ground of appeal was to challenge the finding that a key decision maker decided to outsource its ground operations for reasons which included prohibited reasons. This ground of appeal was rejected by the Full Federal Court.
Qantas’s third ground of appeal was that even if it did outsource its work to avoid disruptions or uncertainty to its ground handling operations once the relevant enterprise agreement expired on 31 December 2021, it should not follow that the outsourcing of this work was motivated by the desire to prevent its ground handling employees taking protected industrial action once the enterprise agreement had passed its nominal expiry date. This ground of appeal was rejected by the Full Federal Court on the basis that this distinction had already been considered and rejected by the primary judge.
Qantas’s fourth ground of appeal asserted that the primary judge went too far in considering that the substantial and operative reason of a key decision maker was to endorse a recommendation to outsource its ground handling work to prevent employees taking industrial action and participating in enterprise bargaining in 2021, once the relevant enterprise agreement expired in December 2020. This ground of appeal was rejected by the Full Federal Court.
Qantas’s fifth ground of appeal was that the primary judge erred in considering that it had taken adverse action in respect of non-union members (eg to prevent these employees from engaging in bargaining in a protected action ballot, or from taking protected industrial action). This ground of appeal was rejected.
On the basis that all its grounds of appeal were rejected, Qantas’s appeal was dismissed. The TWU’s grounds of appeal also did not succeed, and as a result both the Qantas appeal and the TWU appeal were dismissed.
Implications
This case is now on appeal to the High Court, which will test important questions as to the scope and extent of workplace rights.
That said, the decision reaffirms once again that:
- Major change decisions should be made by one decision maker.
- While a lawful motivation needs to be disassociated from the exercise of a workplace right, the decision maker must still have clearly lawful reasons in their entirety that are accepted by a judge at first instance as being the only reasons – ie. adverse action can be found to be unlawful if a judge accepts as a question of fact that even just one part of the reasons is because of a prohibited ground.
- A decision maker should be careful to still have supporting data and consistent paper trail evidencing the lawful reasons for their decision so as to best seek to prevent the drawing of an inference that the stated legitimate reason is not actually the real reason, but rather than the real reason is a prohibited reason.
8. Can a demotion permitted by a contract of employment or enterprise agreement still trigger unfair dismissal exposure?
A recent 5 member Full Bench of the Fair Work Commission recently considered this question in NSW Trains v James [2022] FWCFB 55 . This decision arose in the context of jurisdictional objection to an unfair dismissal claim brought by a demoted employee, when their employer claimed that this demotion did not amount to a “dismissal” for the purposes of section 386 of the Fair Work Act. In the first instance, Deputy President Saunders rejected the jurisdictional objection by the employer on the basis that a significant reduction in remuneration was sufficient to trigger a “demotion” amounting to a “dismissal” of the employee.
In legal terms, the Full Bench overturned the first instance decision on the basis that:
- s386(1)(a) of the Fair Work Act (ie that a dismissal occurs if it is at the initiative of the employer) exclusively regulates when a “dismissal” occurs – ie the fact of a demotion does not give rise to a separate ability to claim that a dismissal has occurred; and
- for a demotion to be a dismissal, the demotion must have the effect of terminating either or both of the employment contract or the employment relationship as whole – ie in circumstances where the relationship remained on foot and that the enterprise agreement authorised the demotion and the employer acted consistently with that enterprise agreement power, this did not terminate the employment contract and therefore was not a “dismissal”.
Implications
It seems clear to us that:
- A term of demotion can be included in a contract of employment or enterprise agreement.
- If such terms are not included in those instruments, an involuntary reduction in remuneration of 10% or a similar-sized reduction in duties will invariably still trigger a “dismissal” and therefore be capable of being the subject of a claim for unfair dismissal.
9. Federal legislative change – Progressive Update!
Thus far, the new Federal Government has implemented the following measures:
- Introduction of 10 days’ paid family and domestic violence leave into the National Employment Standard.
- The abolition of the Code for the Tendering and Performance of Building Work 2016 (Building Code), except for the following provisions:
- the obligation on code-covered entities to undertake labour market testing;
- the obligation on funding entities to ensure that specified information is provided by the preferred tenderer before a contract is entered into; and
- the obligation on funding entities to only enter into a contract for building work that complies with relevant Australian standards published by, or on behalf of, Standards Australia.
It would seem that the next cabs off the rank are likely to be:
- The Jobs Summit scheduled for September 2022.
- The implementation of the “Respect At Work” recommendations.
- The filling of three vacancies on the Fair Work Commission.
One would think that the “Secure Work” changes and the implementation of a new Commonwealth Procurement Code will more likely occur after the Jobs Summit, rather than before it.
We will of course update you on the detail of these in due course!
If you have any questions in relation to matters raised in this update, please contact a member of our Workplace Relations & Safety team.
This article was written by Nikita Dang, Sapphire Parsons & Chris Gianatti.
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