Commissioner John Lewin, Fair Work Australia Commissioner David Gregory, Fair Work Australia 18 June...

Commissioner John Lewin, Fair Work Australia

Commissioner David Gregory, Fair Work Australia

18 June 2012

Termination of Employment

Introduction

The subject

Statutory Regulation under the Fair Work Act 2009 of termination of employment in relation to:

Unlawful termination of employment

Unfair dismissal

The scope

Unlawful termination of employment of all employees subject to the Fair Work Act 2009

Termination of employment in respect of which an employee whose employment has been terminated by their employer may make an application to the Federal Tribunal – Fair Work Australia

© Commonwealth of Australia — Fair Work Australia 2


Challenging the legality or fairness of a dismissal: legislative avenues under the Fair Work Act 2009

• Application for FWA to deal with an unlawful termination dispute under s.773 Fair Work Act 2009

• Application for FWA to deal with a General Protections Dispute under s.365 Fair Work Act 2009

• Application for Unfair Dismissal remedy under s.394 Fair Work Act 2009

Unlawful Termination

s.771 The object of unlawful termination provisions is to give effect to numerous ILO

Conventions/Recommendations including:

Discrimination in respect of Employment and Occupation (ILO Convention No. 111)

Equal Opportunities and Equal Treatment for men and women workers: Workers with Family Responsibilities (ILO Convention No.156)

Termination of Employment at the initiative of the Employer (ILO convention No.158)

Termination of Employment Recommendation(Recommendation No. R166)


Unlawful Termination (Cont’d)

s.772 An employer must not terminate an employee’s employment for one or more of the following reasons, or for reasons including

one or more of the following reasons:

(a) A temporary absence from work because of illness or injury;

(b) Trade union membership or participation;

(c) Non-membership of a trade union;

(d) Seeking office or acting as a representative of employees;

(e) Complaint or proceedings against an employer involving alleged violations of laws;

(f) Race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin;

(g) Absence from work during maternity or other parental leave;

(h) Temporary absence from work for voluntary emergency management activity.


General Protections Disputes

The general protections provisions of the Fair Work Act 2009 (the Act) aim to protect workplace rights and freedom of association and to provide protection from workplace discrimination.

Freedom of Association is a principle originally enshrined in the Convention concerning Freedom of Association and Protection of the Right to Organise, 1948 (ILO Convention No. 87).

The general protections provisions under the Act now cover a breath of issues in order to prevent various forms of victimisation in the workplace.

i.e. dismissing an employee for a prohibited reason, otherwise known as protection against adverse action.



Protection against adverse action s.340

• An employer must not take any adverse action against an employee because the other person:

– has a workplace right;

– has exercised a workplace right; or

– proposes to exercise a workplace right.

Adverse Action Process



What is adverse action?

s.342(1) defines adverse action and may include:

• Dismissal

• Injuring another person in his/her employment

• Altering a person’s position to their prejudice; or

• Discriminating between the employee and other employees of the employer.

What is a workplace right?

s.341(1) defines a workplace right as:

• an entitlement to benefit, role or responsibility under:

• a workplace law (i.e. Fair Work Act 2009, Occupational Health and Safety Legislation etc.)

• workplace instrument (i.e. modern awards, enterprise agreements) or

• an order made by an industrial body; or


What is a workplace right? (Cont’d)

• ability to initiate or participate in a process or proceedings under a workplace law or workplace instrument (i.e. enterprise bargaining); or

• ability to make a complaint or inquiry.


Establishing the nexus between adverse action and a workplace right

The critical element to establish is the connection between the adverse action taken and the employee’s workplace right.

Prohibited reason for adverse action need not be the sole reason:

A person takes adverse action for a particular reason if the reasons for the action include that reason (s.360).


Establishing the nexus between adverse action and a workplace right (Cont’d)

Presumption

Reason for action (i.e. dismissal) presumed until proved otherwise by employer (s.361).

Objective test

A failure to discharge onus will result in contravention irrespective of employer’s subjective belief: Barclay v Board of Bendigo TAFE [2011] FCAFC 14 (Barclay) (currently under appeal High Court of Australia).

Real Reason

‘The real reason for a person’s conduct is not necessarily the reason that the person asserts, even where the person genuinely believes he or she was motivated by that reason.’- Barclay


Finding of adverse action: remedies

• Civil remedy provisions (s.539(2)) – max 60 penalty units

currently $6,600.00 for an Individual and $33,000.00 for a Corporation

penalty may be paid to the Commonwealth, a particular organisation, or a particular person

• Federal Court or Federal Magistrates Court may make any order as it considers appropriate (s.545)

i.e. uncapped compensation/reinstatement/injunction


Adverse Action – Illustrative Scenario An employee makes a complaint to his employer about a faulty machine in the workplace (in

contravention of relevant Occupational Health and Safety Law).

The employer fails to respond to the complaint and does not fix the faulty machinery. The employee is worried, he tells the employer that if the machinery is not repaired he will make a formal complaint to WorkSafe, the local body responsible for supervising health and safety in the workplace.

The employer dismisses the employee on account of alleged ‘poor performance’.

Prior to the dismissal, the employee had received outstanding performance reviews and has had impeccable attendance.

The employer and employee attend a conciliation conference at Fair Work Australia, but all reasonable attempts to resolve the dispute are unsuccessful.

The matter is then brought before the Federal Court. The employer is unable to adduce any substantial evidence illustrative of poor performance, and is unable to rebut the presumption that the adverse action was taken for a prohibited reason.

The court makes a finding of adverse action in favor of the employee as the employer dismissed the employee (adverse action) for reasons, or reasons that included, the employee’s complaints (workplace right).

The court will enforce a civil remedy provision/grant any order it considers appropriate (i.e. compensation) against the employer.


Unfair Dismissal

Origins of Federal Unfair Dismissal laws:

State Industrial Relations law; and

The Termination of Employment Convention, 1982 (ILO Convention No. 158)

1. State Industrial Relations Law

re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95 at 99:

Tribunal’s objective is always industrial justice

expression ‘fair go all round’ was used by Sheldon J

see s.381 note

2. ILO Convention

First legislation introduced by the Industrial Relations Reform Act 1993, new laws principally based on ILO convention No. 158

Legislation placed onerous burden on employers to prove that termination was lawful


Unfair Dismissal (Cont’d)

Current Statutory Regime

Objective of Unfair Dismissal laws under the Act is to strike a balance between the needs of the employer and the needs of employees (s.381(1)).

Concept of a ‘fair go all round’ is accorded to both the employer and employee concerned (s381(2).


Unfair Dismissal

s.385 A person has been unfairly dismissed if FWA is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

18© Commonwealth of Australia — Fair Work Australia

Meaning of dismissed

s.386 A person has been dismissed if:

(a) the person’s employment has been terminated at the employer’s initiative; or

(b) the person was forced to resign because of the employer’s conduct.


Who is protected from an unfair dismissal?

s.382 A person is protected from unfair dismissal if at that time:

(a)Completed minimum employment period:

6 months or 12 months for employees of small business employer; and

(b) A modern award covers person/Enterprise Agreement applies to person; or

A person earns less than the high income threshold – currently $118, 100.00.


The Unfair Dismissal Process


Criteria for considering whether a dismissal is harsh, unjust, or unreasonable

s.387 In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:

(a) whether there was a valid reason related to capacity or conduct; and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond; and

(d) any unreasonable refusal to allow the person to have a support person present; and

(e) if unsatisfactory performance, whether person warned of unsatisfactory performance before dismissal; and

(f) degree to which size of employer’s business would impact upon procedures followed in effecting the dismissal; and

(g) degree to which absence of dedicated human resource management specialists or expertise in the enterprise would impact upon procedures followed in effecting the dismissal; and

(h) any other matters FWA considers relevant.


What will warrant a termination that is harsh, unjust or unreasonable?

Circumstances are to be viewed as a whole

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

Byrne and another v Australian Airlines Limited, (1995) 185 CLR 410 at 465, 11 October 1995, Brennan CJ, Dawson, Toohey, McHugh, Gummow JJ per McHugh and Gummow JJ.


What is a valid reason?

Meaning

A reason which is ‘sound, defensible or well-founded’ rather than ‘capricious, fanciful, spiteful or prejudiced’

Selvachandran v Peteron Plastics Pty Ltd,(1995) 62 IR 371 at 373, 7 July 1995, Northrop J.

A reason must be objectively valid

‘The reason for termination must be defensible or justifiable on an objective analysis of the relevant facts.’

Rode v Burwood Mitsubishi, Print R4471 at pn 19, 11 May 1999, Ross VP, Polites SDP, Foggo C.


What is procedural fairness?

Notification of reason should provide an opportunity to respond

‘...Procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified...’

Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport, S5897 at pn 73, 11 May 2000, Ross VP, Acton SDP, Cribb C.


Unfair Dismissal Remedies

• If Fair Work Australia is satisfied that a dismissal is unfair, it may order reinstatement or compensation (s.390(1)).

• Compensation may not be ordered unless (s.390(3)):

reinstatement is inappropriate;

payment of compensation is appropriate in all the circumstances.


Unfair Dismissal Remedies (Cont’d)

List of factors which Fair Work Australia must take into account in determining amount (s.392(2)):

a) effect on viability of employer’s business; and

b) length of service; and

c) remuneration received or likely to have been received if person not dismissed; and

d) attempts at mitigation; and

e) amount earned from date of dismissal to order; and

f) amount reasonably likely to have been earned from making of order to payment of compensation; and

g) any other matter FWA considers relevant.


Unfair Dismissal: Recent case examples

O’Keefe v Williams Muir’s P/L t/a troy Williams The Good Guys [2011] FWA 5311: use of threatening language about supervisor on Facebook constituted a valid reason for dismissal .

Almasi v Mazzaferro P/L [2012] FWA 3956; Vyramuthu v Challenger Cleaning P/L [2012] FWA 3403: physical assaults constituted valid reason for dismissal.

Rigaldi v Panoramic Resources Ltd [2012] FWA 4140: unsatisfactory performance over prolonged period of time including excessive use of computer for personal use (inappropriate content) and leaving site accommodation in untidy state. Applicant forewarned of unsatisfactory performance and dismissal procedure consistent with size of enterprise. Valid reason for dismissal.

Parmalat Food Products P/L v Wililo [2011] FWAFB 1166: grossly negligent and dangerous behaviour while driving forklift was a valid reason for dismissal, but length of service and fact that conduct was considered carless rather than negligent rendered an initial finding that termination was harsh. Full Bench subsequently held that a breach of safety requirements coupled with the fact that procedural fairness was afforded meant that a conclusion of harshness was left open. Initial decision quashed and unfair dismissal application dismissed.

Lawrence v Coal & Allied [2010] FWAFB 10089: conscious breach of safety procedure, dismissal ‘manifestly harsh’ considering employee’s ‘28 years of service’, ‘impeccable disciplinary record’ and ‘otherwise impeccable safety record’.

Bodel v Glenorchy City Council [2012] FWA 2002: construction worker allegedly installed inverter on truck without authorisation causing damage to crane. Allegation unsustainable. No ‘serious misconduct of wilful nature’. Dismissal short of a warning to employee considered harsh.


Conclusion

The current statutory regime provides a number of legislative avenues through which a employee can challenge the legality or fairness of a dismissal.

The overarching objective of these provisions is to forge a system of industrial relations in Australia that can balance the interests of both employers and employees while also ensuring that workers are not unfairly dismissed or victimised for exercising legitimate workplace rights.


Commissioner John Lewin, Fair Work Australia Commissioner David Gregory, Fair Work Australia 18 June...

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