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CORRS WORKPLACE RELATIONS WWW.CORRS.COM.AU EMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

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CORRS WORKPLACE RELATIONS

WWW.CORRS.COM.AU

EMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW

2015

AUTHORS

John Tuck Partner & Practice Group Leader

Siobhan Flores-Walsh Partner

Nick Ellery Partner

Nick Le Mare Partner

Heidi Roberts Partner

Anthony Forsyth Consultant

Simon Billing Partner

Jane Hall Partner

Jack de Flamingh Partner

Stephen Price Partner

Janine Young Partner

In our second annual review of employment, workplace and safety laws in Australia, we have focused on the frenetic rate of change in the world of work.

In the past 12 months there has been much talk about the impact of disruptive service providers – like Uber, AirBnB, Airtasker and Service Central – on traditional jobs.

This new ‘sharing economy’ or ‘collaborative consumption’ model is also transforming how Australian and international employers engage with labour and service providers.1

As Catherine Livingstone AO, President of the Business Council of Australia and Chairman of Telstra Corporation recently said:

Connectivity is changing the power relationships between consumers and companies; it is fragmenting supply chains and disrupting business models.

It is changing the nature of work and workplaces, and the shape of cities and urban environments. It is also opening up new possibilities and new frontiers of discovery.2

With these developments in mind, we asked leading Australian employer and union representatives – Innes Willox (AiGroup), Steve Knott (AMMA), Catherine Livingstone AO (BCA) and Tim Lyons (formerly with the ACTU) – the following questions:

• Do we have the right IR system for the workplace of the 2020s?

• Do our laws help or hinder productivity?

• Does the system need to change to embrace the jobs of the future and the impact of disruptive technologies?

• How do we balance Australia’s tradition of strong employment protections and the jobs the ‘millennials’ will be doing?

• What do you most want to see come out of the Productivity Commission Review of the Workplace Relations Framework? Will it happen?

Their responses, and those of several Partners in the Corrs Workplace Relations & Safety Team, can be viewed in the video series that accompanies this year’s review. http://www.corrs.com.au/thinking/insights/does-australia-have-the-right-ir-system-for-the-workplace-of-the-future/

INTRODUCTION

1. See e.g. Laura Goode, “Is the future freelance?”, Centre for Workplace Leadership Blog, 23 July 2014, at: http://www.workplaceleadership.com.au/blog/is-the-future-freelance-6y5z/; Robert Reich, “The sharing economy is hurtling us backwards”, Salon, 4 February 2015, at: http://www.salon.com/2015/02/04/robert_reich_the_sharing_economy_is_hurtling_us_backwards_partner; Chris Noone, “Share economy more than just Uber drivers”, Australian Financial Review, 26 May 2015.

2. Address to the National Press Club, 29 April 2015.

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

The Baird Government’s re-election in NSW was the exceptional event in a year of political instability. First-term Coalition governments lost office in Victoria and Queensland, and Federal Government leadership tensions came to a head in early 2015.

Added to the mix were shifting alliances among cross-bench Senators, who made it difficult for the Abbott Government to progress its legislative agenda.

While many reform bills stalled in the Senate, the Government initiated the Productivity Commission Review of the Fair Work Act 2009 (Cth) (FW Act). However, the Government took possible changes to minimum wage-setting or penalty rates off the table before the Commission could even consider those issues.

This year we again examine the workplace reform debate in the broader context of the major economic indicators: productivity, GDP, employment levels, wages growth and industrial disputes.

We highlight major legislative and policy developments along with workplace and employment law cases from the past year.

There is also a new section on key 2015 developments in work, health and safety law.

The review concludes with a brief assessment of the issues likely to be at the forefront of Australian employment relations in the run up to the 2016 Federal Election.

‘THE JOBS OF THE FUTURE ARE GOING TO BE VERY DIFFERENT TO THE JOBS OF YESTERDAY’.

‘WE NEED AN IR SYSTEM WHICH REFLECTS THE CHANGING NATURE OF OUR WORKFORCE, THE INCREASING GLOBAL COMPETITION HERE AND THE NEED FOR EMPLOYERS TO BE ABLE TO ADAPT MORE QUICKLY’.INNES WILLOX

Innes Willox Chief Executive, Australian Industry Group

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THE PRODUCTIVITY DEBATEIn 2014, the five-year trend of modest increases in private sector productivity3 continued with a 2.3% increase in labour productivity.

However, there are concerns about the wide variations between productivity levels in different industries, and how to fill the gap left as the highly productive mining sector tapers off.4

Over the past year, the Productivity Commission Review, and legislative proposals aimed at making enterprise bargaining improve productivity, have sharpened the focus on the role of workplace reform in improving productivity.

The Productivity Commission framed the debate by asking:

[W]hy are there not already sufficient commercial incentives (and competitive pressures) for parties to improve productivity, either as a commitment under an enterprise agreement or during the normal operation of the enterprise? 5

Evidence released by the Fair Work Commission (FWC) late last year6 shows that:

• Just under half (48.1%) of federal enterprise agreements include clauses that commit employers, employees and unions to workplace productivity improvements.

• Less than two-fifths (38.4%) of agreements provide for specific productivity measures.

The Government’s Fair Work Amendment (Bargaining Processes) Bill makes employer and union discussions about productivity measures a condition of FWC approval of agreements.

However, the likely effectiveness of this proposed measure is questionable given that:

• The negotiating parties will not have to include any productivity measures in their agreement. They will merely need to show that they discussed productivity.7

• The FWC’s analysis did not find a clear link between the productivity measures in current enterprise agreements and the productivity benefits delivered.8

3. ABS, Australian National Accounts: National Income, Expenditure and Profit, December 2014, Cat No 5206.0.

4. Jeff Borland, “Labour productivity has risen – but it’s not exactly a good news story“, The Conversation, 9 July 2014, at: https://theconversation.com/labour-productivity-has-risen-but-its-not-exactly-a-good-news-story-28901.

5. Productivity Commission, Workplace Relations Framework: The Bargaining Framework – Issues Paper 3, January 2015, page 6.

6. FWC, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace level, December 2014 (FWC Productivity Report).

7. Explanatory Memorandum to the Fair Work Amendment (Bargaining Processes) Bill.

8. FWC Productivity Report.

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

Major Business/Employer Submissions to the Productivity Commission Review Call for Productivity InitiativesBusiness Council of Australia (BCA)9

• Reduce the number of awards from 122 to one for each major industry group so there are around 25 awards in total. Award content to be limited to 10 matters/conditions.

• A single penalty rate for weekend, public holiday, overtime, shift or casual work, as part of the national minimum wage.

• FWC to review the ordinary span of hours for each industry to ensure alignment with the 24/7 economy.

Australian Industry Group (AiGroup)10

• Voluntary bargaining system to replace the current FW Act framework.

• Mandatory productivity terms in enterprise agreements that enable employers to implement workplace changes and ensure efficient enterprise management.

• Make it easier to terminate existing agreements, negotiated in more profitable times, which lock companies into unproductive and costly provisions.

Australian Mines and Metals Association (AMMA)11

• Restrict agreement content that negatively impacts on productivity and competitiveness.

• Ensure practical, accessible and reliable scope to make greenfields agreements for new resource projects.

• Subject protected industrial action to a public interest test.

• KPMG’s economic modelling of AMMA’s submission forecasts that fully implemented proposals can support 2%-5%12 growth in resource sector productivity.

Australian Chamber of Commerce and Industry (ACCI)13

• Reduce the minimum wages and conditions safety net.

• Remove penalty rates from awards and make them subject to bargaining of agreements. (This reflects the digital disruption that has transformed, for example, the retail sector).

• A simplified bargaining framework that produces cooperative and productive negotiations.

9. BCA, Submission to the Productivity Commission’s Workplace Relations Inquiry, March 2015.

10 . AiGroup, A Workplace Relations Framework for the 21st Century, March 2015.

11. AMMA, Getting Back on Track: Delivering the Workplace Relations Framework Australia Needs, 13 March 2015.

12. KPMG, Workplace Relations and the Competitiveness of the Australian Resources Sector, Report prepared for the Australian Mines and Metals Association, 12 March 2015, pages 12-13.

13. ACCI, Submission to the Productivity Commission Inquiry into the Workplace Relations Framework, March 2015.

414. Australian Government, Budget 2015-16 – Statement 2: Economic Outlook

(Government Budget Statement).

KEY ECONOMIC INDICATORS

Economic GrowthIn the 2015-16 Budget, the Federal Government outlined a fairly buoyant outlook for the Australian economy:

The Australian economy is entering its 25th consecutive year of growth and is forecast to strengthen further over the next few years. This is the second longest continuous period of growth of any advanced economy in the world.

Conditions globally are expected to improve somewhat over the forecast period. Growth in Australia’s major trading partners is expected to outpace world GDP growth, as activity in major advanced economies rises and growth remains strong in our faster growing Asian trading partners. ...

The lower exchange rate, lower oil and electricity prices and macroeconomic policy settings are all working together to underpin stronger growth in Australia. ...

The outlook for growth remains positive even in the face of the adjustment underway as the resources investment boom unwinds. ...

2¾%Real GDP is expected to grow in 2015-16.14

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

Growth in real GDP - Australian outlook

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2018-192017-182016-172015-162014-15

2 1/2 2 3/4

3 1/43 1/2 3 1/2

Source: ABC analysis of 2015-16 Budget papers.15

Growth in real GDP - International comparison - 2015

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

Canada

United Kingdom

Japan

United States 3.1

1.0

2.7

2.2

Source: ABC analysis of data from the IMF World Economic Forecast, April 2015.16

15. See: http://www.abc.net.au/news/2015-05-12/budget-2015-cheat-sheet-charts/6446436.

16. Ibid.

6

Trend 6.6

%

6.4

6.2

6.0

5.8

5.6

Seas adj.

Apr Jul Oct Jan Apr

20152014

Source: ABS, Labour Force: Australia, April 2015, Cat No 6202.0

However, a number of commentators have questioned the Government’s forecasted 3.5% rise in GDP by 2017. They point to sluggish wages growth17 and the uncertainty of a much-needed lift in non-mining investment when consumer and business confidence is low.18

The Government’s Intergenerational Report, released in March, predicts average annual economic growth of 2.8% over the next 40 years.19

17. ABC, “Wage growth figures challenge budget’s economic forecasts”, PM, 13 May 2015, at: http://www.abc.net.au/pm/content/2015/s4235135.htm; Peter Martin, “‘Glacial’ wage growth puts budget forecasts in doubt”, Sydney Morning Herald, 13 May 2015.

18. Gareth Hutchens, “The government’s something special may not save Australia”, Sydney Morning Herald, 16 May 2015. See

also Alan Mitchell, “Rosy outlook not shared by IMF, some economists”, Australian Financial Review, 18 May 2015.

19. Australian Government, 2015 Intergenerational Report: Australia in 2055, Summary, page 15.

20. Government Budget Statement.

Perhaps optimistically, the Government stated in the 2015 Budget that:

The labour market has proven more resilient than expected in recent months. Employment growth has picked up, supported by wage restraint across the economy. This has led to a downward revision to the forecast for the unemployment rate for the June quarter 2015 to 6¼ per cent. ...

Going forward, the unemployment rate is expected to edge a little higher in 2015-16 before falling in 2016-17.20

EmploymentIn the past year unemployment figures have jumped around wildly; hitting a 12-year high of 6.4% (seasonally adjusted) in January before falling to 6.1% in March (as shown in the following graph):

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

Employment - Australian outlook

0

2

4

6

8

10

Employment growth

Unemployment rate

2018-192017-182016-172015-162014-15

6 1/4

1 1/2 1 1/2 2 22

6 1/46

5 3/4

6 1/2

Source: ABC analysis of 2015-16 Budget papers.21

Employment - International comparison of unemployment rate (%) 2015

0 1 2 3 4 5 6 7 8

Canada

United Kingdom

Japan

United States 5.5

3.7

5.4

7.0

Source: ABC analysis of data from the IMF World Economic Forecast, April 2015.22

8

4.7

4.2

3.7

3.2

Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14

2.7

2.2

1.7

1.2

AAWI WPI CPI

Source: Department of Employment, Trends in Federal Enterprise Bargaining, December Quarter 2014, page 5.

WagesThe remarkable flattening of wages growth across the Australian economy has continued over the past 12 months, according to the ABS Wage Price Index (WPI).

The March 2015 quarter WPI showed annual wages growth of only 2.3%, down from 3.2% in 2013. It was the lowest increase since the WPI calculations began in the late 1990s.23

The Reserve Bank of Australia’s February Statement on Monetary Policy 24 links the slowing of wages growth to:

• Lower consumer and union expectations around inflation.

• Greater employee demand for job security rather than wage increases.

The enterprise agreement pay differential has become clearer with average annualised wage increases in private sector enterprise agreements at 3.4% for the year to the 2014 December quarter,25 compared to 2.3% for overall wage rises.

This graph compares wages increases under enterprise agreements (AAWI), wage rises across the economy (WPI) and the inflation rate (CPI) over the past three years:

21. See: http://www.abc.net.au/news/2015-05-12/budget-2015-cheat-sheet-charts/6446436.

22. Ibid.

23. ABS, Wage Price Index, Australia, March Quarter 2015, Cat No 6345.0, reported in “Wages maintaining record low levels of growth”, Workplace Express, 13 May 2015. See also Max Mason, “Australian wages growth hits the wall”, The Age, 5 December 2014.

24. Reported in “Wage growth subdued as employees opt for job security: RBA”, Workplace Express, 10 February 2015.

25. Department of Employment, Trends in Federal Enterprise Bargaining, December Quarter 2014.

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

In global terms, Australian wages growth is:

• Marginally ahead of the 2% level, in 2013, for all countries measured in the International Labour Organization (ILO) Global Wage Report 2014-15.

• Well below the 6% level for the Asian region, although this is largely attributable to continuing high wages in China.26

But, of course, the Australian debate also focuses on the level of Australia’s minimum wages compared with other developed countries.

In the latest OECD report Australia tops the league table for minimum wages, based on relative purchasing power, as shown in the table on the next page.

26. ILO, Global Wage Report 2014-15, 5 December 2014, at: http://www.ilo.org/global/research/global-reports/global-wage-report/2014/lang--en/index.htm. See also Matthew Philips, “China’s Rising Wages and the ‘Made in USA’ Revival”, Bloomberg Business, 23 October 2014, at: http://www.bloomberg.com/bw/articles/2014-10-23/chinas-rising-wages-and-the-made-in-the-usa-revival.

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Net minimum wages

US dollars per hour after taxes, at purchasing power parties (2013)

0 2 4 6 8 10

Mexico

Latvia

Chile

Estonia

Hungary

Czech Republic

Slovak Republic

Turkey

Poland

Portugal

Greece

Israel

Slovenia

Spain

Japan

Korea

United States

United Kingdom

Canada

Germany

New Zealand

Netherlands

France

Ireland

Belgium

Luxembourg

Australia 9.54

9.24

8.57

8.46

8.24

8.20

7.55

7.19

7.18

7.06

6.26

5.85

5.52

5.37

5.14

4.87

4.42

4.41

3.59

3.49

2.99

2.84

2.58

2.49

2.22

1.46

1.01

Source: OECD (2015). Focus on minimum wages after the crisis.

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

While the Productivity Commission is focused on the Fair Work Commission’s annual wage review process, 27 it is interesting to note the OECD’s endorsement of Australia’s approach to setting the minimum wage:

Independent expert commissions, which exist in different forms in several OECD countries (including Australia, France, the United Kingdom and several US States), are well placed to consider a wide range of economic and social factors and make the necessary links between MW policy and related policy areas, such as taxes and transfers. Public consultations and a requirement to publish recommendations promote minimum-wage adjustments that are transparent and predictable for both businesses and workers.28

The FWC’s Annual Wage Review Decision 2014-15, handed down on 2 June, did not spark the same level of intense employer criticism as last year’s decision.

The FWC Expert Panel’s 2.5% increase in the minimum wage ($16.00 per week) is lower than the 3% awarded in 2013-14. It takes the national minimum wage to $656.90 per week ($17.29 per hour).29

Industrial ActionABS data continued to show the long-term decline in the number of Australian industrial disputes, with 199 disputes causing a loss of 82,200 working days in the year to March 2015 – a 7% reduction on the previous year.30

However, threatened and actual industrial action is still a significant issue for employers in particular sectors, as shown by:

• The CFMEU strike at Bechtel’s Curtis Island LNG Project in August last year.31

• The bargaining dispute over the second half of 2014 at Port Hedland tugboat operator, Teekay Shipping.32

• Protected industrial action affecting stevedoring company, DP World, at the Sydney, Melbourne and Fremantle ports in late 2014.33

• The widespread industrial campaign of the CPSU covering 165,000 workers in over 70 federal public sector agencies.34

27. Productivity Commission, Workplace Relations Framework: Safety Nets – Issues Paper 2, January 2015, page 6.

28. OECD, Minimum wages after the crisis: Making them pay, Directorate for Labour and Social Affairs, May 2015, page 7.

29. Annual Wage Review 2014-15 [2015] FWCFB 3720 (2 June 2015).

30. ABS, Industrial Disputes, Australia, March 2015, Cat No 6321.0.55.001.

31. “Bechtel industrial action to restart despite temporary reprieve”, Workforce, No 19272, 12 August 2014; Angela Macdonald-Smith, “CFMEU takes flak as strike ruled illegal”, Australian Financial Review, 14 August 2014.

32. “Port Hedland strike off, union considers ‘genuinely trying’ appeal”, Workplace Express, 21 November 2014.

33. “Stevedore threatens lockouts as strikes set to begin”, Workplace Express, 11 December 2014; Matthew Stevens, “DP World shuts door on MUA”, Australian Financial Review, 11 December 2014.

34. “CPSU resolves to take industrial action to break impasse”, Workplace Express, 19 September 2014.

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WORKPLACE RELATIONS LAW

Progress Stalled: The Federal Government’s Legislative & Policy AgendaThe Abbott Government has not obtained passage for any of its key workplace reform bills (listed below). Those now stalled in the Senate for more than 18 months are the:

• Fair Work Amendment Bill. Includes easier processes for greenfields project agreements and individual flexibility arrangements. It also limits union entry rights.

• Fair Entitlements Guarantee Amendment Bill. Reduces maximum employee redundancy payments, under the Fair Entitlements Guarantee scheme, to 16 weeks’ pay.

• Fair Work Amendment (Bargaining Processes) Bill. Will require productivity discussions in enterprise agreement negotiations. The Bill will also introduce two pre-conditions for taking protected

industrial action in bargaining: claims must not be excessive and adversely impact productivity; and there must have been genuine efforts to negotiate before taking action.

• Fair Work (Registered Organisations) Bill. Will set up a new Registered Organisations Commission (ROC) to oversee governance and accountability of unions and employer organisations; and increase financial and reporting standards, and penalties, for office- holders.

• Building and Construction Industry (Improving Productivity) Bill. Re- establishes the Australian Building and Construction Commission (ABCC) and will enable the Government’s proposed new Building and Construction Industry (Fair and Lawful Building Sites) Code to take effect.35

35. See the revised advance release of the Code, issued by the Government on 28 November 2014, at: https://www.employment.gov.au/building-code.

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

The delay in the passage of these Bills has seen some of their policy objectives overtaken by other developments:

• There is less emphasis on the reform of greenfields agreements in certain sectors. An example of this is the drop in new projects due to the wind down of mining investment.

• The Trade Union Royal Commission has proposed legal changes36 that go beyond many of the measures in the Registered Organisations and Construction Industry Bills.

• The Government’s Budget papers indicate that funding for re-establishing the ABCC and the new ROC is not a priority for 2015-16.37

The Government did, however, secure Senate support to extend, to mid 2017, the current building regulator’s powers to obtain compulsory examination notices (also known as the ‘coercive powers’ of Fair Work Building and Construction (FWBC).38

Productivity Commission ReviewThe Productivity Commission Review of the Federal Workplace Relations Framework got under way in January, after terms of reference were finalised just before Christmas. The Commission released five Issue Papers, which provide details about the focus of the Review and some of the assumptions upon which it is being conducted. For example, the Commission stated that:

Notwithstanding a shift towards enterprise bargaining (and, to a lesser extent, individual agreements), Australia appears to give more weight than other Anglo-Saxon countries to elaborate rules about [workplace relations] processes and, most particularly, to the centralised determination of wages and conditions for many employees. This then requires a complex legal and institutional architecture that is distinctive to Australia.39

The Productivity Commission is focusing on how minimum wages impact productivity and employment levels; the role of awards and penalty rates; the bargaining system and rights to take protected industrial action; and the effects of general protections and unfair dismissal claims on business hiring practices.

The Commission received 247 submissions from business organisations, employers, unions, academics and other stakeholders. It will release a Draft Report in August. The Final Report is due in November.

36. Australian Government, Royal Commission into Trade Union Governance and Corruption, Discussion Paper: Options for Law Reform, 19 May 2015.

37. “ABCC and ROC disappear from Government’s wish list”, Workplace Express, 14 May 2015.

38. Construction Industry Amendment (Protecting Witnesses) Bill 2015, passed by the Senate on 11 May and by the House of Representatives on 13 May 2015.

39. Productivity Commission, Workplace Relations Framework: The Inquiry in Context – Issues Paper 1, January 2015, pages 9-10 (emphasis added).

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There were two major developments in this area in the past six months, one expected and the other far less so:

• In early February, the Prime Minister finally relented to public and internal Government pressure and announced the shelving of plans to introduce an expanded Paid Parental Leave (PPL) scheme. The scheme would have increased the current government-funded 18 weeks of PPL, based on the minimum wage, to 26 weeks’ leave paid at an employee’s actual wage.

• Then, in the May Budget, the Government completed the significant reversal of its original PPL policy. It moved to end, from 1 July 2016, what it called ‘double dipping’ – some employees’ access to the government PPL scheme with top-up payments under their employer’s scheme.40 However, it is presently unclear whether this Budget measure will obtain enough cross-bench Senate support.41

PAID PARENTAL LEAVE

40. See: http://www.corrs.com.au/publications/corrs-in-brief/budget-changes-to-the-paid-parental-leave-scheme-how-will-they-affect-employers/

41. Judith Ireland, “Abbott Government’s paid parental leave changes struggle to secure Senate support”, Sydney Morning Herald, 16 May 2015.

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

Public Sector BargainingThe Government has adopted a tough position in agreement negotiations across the Australian Public Service (APS). Initially, the Government insisted that public sector employees not receive more than the 1.5% per year wage increase awarded to the Australian Defence Force (ADF).42 The door was later opened to slightly higher increases when the Prime Minister gave ADF personnel a 2% raise,43 although sub-inflation wage offers have continued to be the norm.44

Over many months of bargaining, no agreements have been reached.45 A proposed agreement was voted down at the Department of Employment.46 The CPSU organised protected industrial action at major APS departments and agencies, which included Veterans’ Affairs, Human Services (covering Medicare and Centrelink offices), and the Australian Taxation Office.47

In late January, a Full Bench of the FWC rejected the Government’s attempt to alter the APS enterprise award by increasing weekly working hours and the daily span of hours: Commonwealth of Australia v CPSU [2015] FWCFB 616 (23 January 2015).48

42. “Expect sub-CPI pay, says PM, as public servants vote on action”, Workplace Express, 5 November 2014.

43. “Abbott increases ADF pay”, Workplace Express, 4 March 2015.

44. DHS links pay rise to low management levels”, Workplace Express, 18 February 2015.

45. Stephen Easton, “APS union campaign escalates, but does it have the firepower to win?”, The Mandarin, 30 March 2015, at: http://www.themandarin.com.au/27840-aps-union-campaign-escalates-firepower-win/

46. “Rebuff to Abetz”, Workplace Express, 16 December 2014.

47. “CPSU applies for ballot order, says deal impossible under Coalition”, Workplace Express, 9 October 2014; “Veterans’ Affairs staff approves industrial action”, Workforce, No 19433; “Industrial action ramps up in federal public service”, Workplace Express, 13 February 2015; “ATO staff to strike on Budget day”, Workplace Express, 1 May 2015.

48. Ben Potter, “Public sector retains perks”, Australian Financial Review, 24-26 January 2015.

‘PEOPLE TALK ABOUT [DIGITAL] DISRUPTION BUT SAY IT’S JUST LIKE THE INDUSTRIAL REVOLUTION...SOME JOBS WILL GO AND SOME JOBS WILL BE CREATED BUT IN FACT THAT IS NOT THE CASE. THE ANALYSIS IS SHOWING THAT BETWEEN 45 AND 75% OF THE JOB TYPES AS WE KNOW IT WILL ACTUALLY DISAPPEAR BECAUSE OF ARTIFICIAL INTELLIGENCE. SO WE NEED TO BE THINKING ABOUT THAT IMPACT RATHER THAN TAKING THE LAWS THAT WE HAVE AND SOMEHOW TRYING TO ADJUST THEM IN SMALL WAYS TO MAKE THEM MORE CONTEMPORARY.’CATHERINE LIVINGSTONE

Catherine Livingstone AO President, Business Council of Australia and Chairman, Telstra

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Visas for offshore construction workLast year we reported on the Abbott Government’s attempted repeal of legislation introduced by the previous Labor Government. The legislation required non-citizens working on offshore resources platforms to hold valid work visas.49

In late March, the Full Federal Court struck down the ministerial determination aimed at repealing AMOU v Assistant Minister for Immigration and Border Protection [2015] FCAFC (26 March 2015).50 The Government responded almost immediately by issuing a new determination and accompanying declaration to overcome defects identified by the Court. As a result, visa requirements for offshore resource workers have been relaxed again.51

However, there is still considerable uncertainty in this area. An anticipated AMOU and MUA court challenge to the Assistant Minister’s new determination and declaration is likely to be finely balanced.

49. Migration Amendment (Offshore Resources Activity) Act 2013 (Cth), enacted in response to the Federal Court decision in Allseas Construction SA v Minister for Immigration and Citizenship [2012] FCA 529.

50. See: http://www.corrs.com.au/publications/corrs-in-brief/off-again-on-again-foreign-workers-in-the-offshore-resources-sector-now-require-visas/

51. For details on the applicable rules at the time of writing, see: http://www.corrs.com.au/publications/corrs-in-brief/government-response-to-amou-v-assistant-minister-for-immigration-decision/

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

TOP 10 WORKPLACE LAW DECISIONS

1 Adverse Action and Industrial Activity: CFMEU v BHP Coal Pty Ltd [2014] HCA 41 (16 October 2014)

The High Court (by a 3:2 majority) determined that an employer had not breached Part 3-1 of the FW Act when it dismissed a union activist who held an ‘anti-scab’ sign, on a picket line, during industrial action.

The majority judges applied the High Court’s earlier decision in Board of Bendigo Regional Institute of TAFE v Barclay [2012] HCA 32. They found that the company manager’s reason for dismissing the unionist was not related to his involvement in lawful industrial activity and that this included holding the sign. Instead, the dismissal decision was based on the employee’s non-conformance with the employer’s required standards of workplace conduct.

The majority decision in BHP Coal again confirms that the courts will focus on why an employer’s decision-maker has taken particular action, like discipline or dismissal, when the courts determine if the action was taken because of a proscribed reason under Part 3-1. Even in cases such as this one, where the conduct of an employee seems inextricably linked to a protected attribute like industrial activity, an employer may avoid liability where it has other legitimate reasons, which can be adduced in evidence,52 for acting against an employee.

2 Tort of Intimidation: CFMEU v Boral Resources (Vic) Pty Ltd and Others [2014] VSCA 348 (19 December 2014)

This Victorian Court of Appeal decision upheld the view of the Victorian Supreme Court53 that:

• The tort of intimidation formed part of the common law of Australia.

• The tort could form the basis of Boral’s action for damages related to bans imposed by the CFMEU on Boral’s products during the 2012 Grocon Myer Emporium site dispute.

On 15 May 2015, the High Court refused the union’s application for special leave to appeal against the Victorian Court of Appeal’s decision. The outcome confirms the availability of an action for damages, or an injunction based on the tort of intimidation, where third party businesses are the ultimate target of unlawful industrial action taken against an employer.

52. See, more recently, the Full Federal Court decision in CFMEU v Endeavour Coal Pty Ltd [2015] FCAFC 76 (3 June 2015) (Perram and McDermott JJ in the majority; Bromberg J dissenting).

53. Boral Resources (Vic) Pty Ltd v CFMEU [2014] VSC 429 (16 September 2014).

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3 Protected Industrial Action: Esso Australia Pty Ltd v AMWU, CEPU and AWU [2015] FWCFB 210 (10 February 2015)

A Full Bench of the FWC clarified that a union seeking non-permitted content in an enterprise agreement may still be considered to be ‘genuinely trying to reach agreement’. This meant that the union was therefore eligible to take protected industrial action under Part 3-3 of the FW Act.

In this case three unions wanted restrictions on contractors in new enterprise agreements, which would clearly not be permitted terms under section 172(1). The Full Bench held that the unions’ pursuit of non-permitted claims was relevant to whether the unions were meeting the requirement to genuinely try to reach agreement... but was not determinative of the issue.

4 Agreement Coverage: CFMEU v John Holland Pty Ltd [2015] FCAFC 16 (24 February 2015)

The Full Federal Court confirmed that an employer can enter into an enterprise agreement with a limited number of employees and lawfully apply that agreement more widely.

John Holland initially made an agreement with three employees on a specific project site. It then wanted to apply it to all John Holland employees on West Australian building sites. The Court ruled that John Holland’s action was lawful.

The Full Court judgment overturned a view, from a Full Bench of the FWC, that the agreement’s coverage did not meet the ‘fairly chosen’ requirement in section 186(3)-(3A) of the FW Act. According to the Full Federal Court, it is often not possible to state, with precision or certainty, the future coverage of an agreement. However, that need not adversely affect whether the group of employees to be covered by the agreement is considered to have been fairly chosen.

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5 “Surface Bargaining”: APESMA v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451 (3 March 2015)

In this decision, a Full Bench of the FWC held that an employer must engage with the bargaining process to a certain extent, in order to meet the good faith bargaining requirements in section 228(1) of the FW Act. Peabody Coal had failed to do so, when it met with the union but then rejected the union’s offer and indicated it did not wish to negotiate any further.

The Full Bench made bargaining orders requiring the company to meet with the union; provide it with salary information for the classifications to be covered by the agreement; and provide it with a genuine proposal that included matters the company might agree to.

6 Employer Bargaining Representatives: ANMF v Kaizen Hospitals (Essendon) Pty Ltd [2015] FCAFC 23 (5 March 2015)

The Full Federal Court held that the employers, a group of private hospitals, were bound by enterprise agreements entered into on their behalf by a corporate manager – even though he was not formally appointed as their bargaining representative under section 176 of the FW Act.

The Court upheld two FWC Full Bench decisions that supported the corporate manager’s authority to act in a way that bound the hospitals under section 793. Therefore, the hospitals could not later stop agreements being approved by the FWC, when all other statutory requirements for approval were satisfied.

The decision highlights the importance of employers appointing bargaining representatives in writing from the start of enterprise agreement negotiations.

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7 “Better Off Overall Test” for Enterprise Agreements: AKN Pty Ltd t/a Aitkin Crane Services [2015] FWCFB 1833 (15 April 2015)

A Full Bench of the FWC clarified two important aspects of the tribunal’s role in the enterprise agreement approval process:

• The FWC must use a global approach to the ‘Better Off Overall Test’ (BOOT) under section 193 of the FW Act, rather than a line-by-line comparison between the proposed agreement and the relevant modern award. The Full Bench overturned a decision saying a refusal to approve the proposed agreement in this case did not pass the BOOT. The Full Bench said: ‘The Commissioner did not explain how, in his overall assessment, the less beneficial provisions of the Agreement outweighed those which were found to be more beneficial. There was, for example, no analysis as to how employees generally or in particular categories or scenarios would fare financially under the Agreement as compared to the relevant award’.54

• The FWC should allow an employer to offer undertakings, under section 190, which might address the tribunal’s concerns about an agreement not meeting the statutory tests for approval. However, the FWC is not required to be facilitative and engage in ongoing dialogue with an employer about a proposed agreement, nor give the employer multiple opportunities to provide undertakings. Further, the purpose of such undertakings is not to permit a wholesale reshaping of an agreement, which has already been negotiated and voted on by employees, to ensure its approval.55

54. [2015] FWCFB 1833 at [44].

55. [2015] FWCFB 1833 at [34], [40].

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8Termination of Enterprise Agreements: Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540 (22 April 2015)

In this landmark ruling, a Full Bench of the FWC realigned the dynamics of bargaining under the FW Act by terminating 12 expired enterprise agreements during a stalemate in negotiations for their replacement.

Prior to the Aurizon Full Bench decision, single members of the FWC had been reluctant to terminate expired agreements under sections 225-226 of the FW Act, which included a public interest test. The predominant view was that terminating an agreement on the application of one of the parties would give that party an unfair advantage in negotiations for a new agreement.56

The Full Bench in Aurizon took a different view, stating that: ‘It cannot be expected that terms and conditions of employment contained in an enterprise agreement [will] continue unaltered in perpetuity after the agreement has passed its nominal expiry date. Terms and conditions may be altered by making a new agreement or by terminating the existing agreement’.57

The Full Bench decided the public interest test had been met and terminated the 12 agreements in the Aurizon case. The expired agreements were seen to be made in the context of the privatisation of former Queensland government rail operations, and included many inefficient and outdated work practices.

The decision certainly strengthens the capacity of employers to seek termination of an existing agreement, with the result that the base line for negotiations becomes the relevant award. Employers should, however, proceed cautiously. An appeal against the Full Bench’s decision has been heard by the Full Federal Court. At the time of writing, the Court’s decision had been reserved.

56. See e.g. Metropolitan Fire and Emergency Services Board v United Firefighters’ Union of Australia [2014] FWC 7776 (3 November 2014).

57. [2015] FWCFB 540 at [176].

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9Determination of Penalties for Workplace Law Breaches: Director, Fair Work Building Industry Inspectorate v CFMEU [2015] FCAFC 59 (1 May 2015)

This decision, with far-reaching implications for federal regulators, saw the Full Federal Court depart from more than 20 years of authority. The case related to the ability of enforcement bodies to make joint submissions, with a party subject to a civil prosecution, on what financial penalty should be imposed for legislative breaches.

The Full Court determined that penalties agreed upon between FWBC and the CFMEU, for the union’s breaches of provisions of the Building and Construction Industry Improvement Act 2005 (Cth) relating to unlawful industrial action, were inadmissible.

Following the High Court decision in Barbaro v The Queen [2014] HCA 2, the Full Federal Court held it was the court’s role to fix penalties. Even when an offender nominates a financial penalty it will submit to, the court must not consider that agreed amount when the court fixes the appropriate penalty.

The decision means that FWBC, the Fair Work Ombudsman and other federal regulators – like the ACCC, ASIC and ATO – can no longer enter into agreements that use penalties to settle enforcement proceedings. This is likely to result in many more such proceedings being contested in future.58

10Notice of Representational Rights for Agreement-Making: AMOU v Harbour City Ferries Pty Ltd and Others [2015] FWCFB 3337 (15 May 2015)

A FWC Full Bench maintained the tribunal’s strict approach59 to how the content in the notice of representational rights must be issued to employees when agreement negotiations start.

In this case, the employer made changes to the wording in the notice – described by the Full Bench as minor and insignificant – that rendered it ineffective under section 174(1A) of the FW Act.

Employers must ensure that notices of representational rights are issued to employees in the form set out in Schedule 2.1 of the Fair Work Regulations 2009 (Cth), and add applicable details where required.60 Any departure from the wording in that form is likely to invalidate the resulting agreement and require the employer to start the bargaining process again.

58. See Corrs’ further discussion of the CFMEU decision and its implications at: http://www.corrs.com.au/publications/corrs-in-brief/where-to-now-for-agreed-civil-penalty-outcomes-following-the-cfmeu-and-barbaro-decisions/

59. Peabody Moorvale v CFMEU [2014] FWCFB 2042 (2 April 2014).

60. See FWC, Guide: Notice of employee representational rights, 18 May 2015, at: https://www.fwc.gov.au/documents/documents/factsheets/Guide-Notice-employee-rep-rights.pdf

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EMPLOYMENT LAW

Focus on Social MediaInstances of employees being dismissed for alleged social media misuse continued last year.

The standout was SBS’s sacking of sports reporter, Scott McIntyre, because his Anzac Day tweets were deemed offensive.61 McIntyre’s general protections claim is shaping up to be an important test case of an employee’s right to express a political opinion (FW Act, section 351), and an employer’s capacity to regulate employee social media commentary that may harm the employer’s reputation or business.62

The Social Media Protocol, which SBS alleges McIntyre breached, is fairly typical of many Australian employer policies. Increasingly, employers are trying to curtail employees’ social media discussions about their work, even outside the physical workplace and normal working hours. This inevitably limits what employees may regard as their right to privacy or freedom of expression.63

Social media policies are, however, vital to ensuring employers can align employee conduct to organisational values, and that steps can be taken to deal with employees’ social media transgressions.

Significantly, social media misuse is alleged in a test case of the FWC’s anti-bullying jurisdiction. The case involves applications for anti-bullying orders (under Part 6-4B of the FW Act) by three employees of DP World. The employees allege they were subjected to various forms of bullying by MUA officials, which included hostile and insulting Facebook posts.

In a decision on a strike-out application by the employer and the MUA, a five-member Full Bench of the FWC has held that social media can be used to engage in unreasonable behaviour. The behaviour falls within the ‘bullying at work’ definition for purposes of Part 6-4B. This occurs even if the alleged bully is not at work when the social media posts are made. However, the victim of such posts needs to be at work when he or she reads them, for the conduct to fall within the scope of Part 6-4B: Bowker and Others v DP World Melbourne Limited, MUA and Others [2014] FWCFB 9227 (19 December 2014) at [54]-[56].

61. See: http://www.corrs.com.au/thinking/insights/maybe-i-shouldnt-have-tweeted-that-social-media-misuse-in-the-workplace/. Soon after McIntyre’s dismissal, another SBS journalist (Marion Ives, employed on a casual basis) was not given any further shifts after sharing an article critical of the network on her personal Facebook page.

62. See: http://www.corrs.com.au/thinking/insights/can-an-employee-be-sacked-for-tweeting-political-opinions/. Marion Ives is also contesting her dismissal.

63. “Social media policies impinging on privacy, freedom of expression”, Workplace Express, 29 August 2014.

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TOP 10 EMPLOYMENT LAW DECISIONS

64. Slattery v Manningham CC (Human Rights) [2014] VCAT 1442 (23 October 2014); Jemal v ISS Facility Services Pty Ltd (Human Rights) [2015] VCAT 103 (19 January 2015).

1 Sexual Harassment Damages: Richardson v Oracle Corporation Australia Pty Ltd and Tucker [2014] FCAFC 82 (15 July 2014)

This Full Federal Court decision signals an important shift in the approach of Australian courts to the assessment of damages in sexual harassment cases. The Full Court awarded $130,000 in damages to Oracle’s former consulting manager for sexual harassment by a male sales representative. The company was held vicariously liable for the sales representative’s conduct. The Full Court found that the trial judge’s award of $18,000 damages did not reflect ‘prevailing community standards’.

The Oracle decision has not yet resulted in large damages awards in other sexual harassment cases. However, it has been referred to, with approval, in two subsequent Victorian anti-discrimination decisions.64

2 Implied Term of Trust and Confidence: Commonwealth Bank of Australia v Barker [2014] HCA 32 (10 September 2014)

In this much-awaited decision, the High Court has ruled that Australian employment contracts do not have an implied term of mutual trust and confidence. This means the Court has closed off the implied term as an avenue of employee redress against various forms of adverse or unreasonable treatment by employers.

The decision makes the common law narrower than in the United Kingdom, where the implied term of mutual trust and confidence originated. The narrower view has already been applied in State of New South Wales v Shaw [2015] NSWCA 97 (17 April 2015). In that case, the NSW Court of Appeal dismissed the employees’ argument that the High Court’s Barker decision should be distinguished because the employees were engaged on probationary employment contracts.

Not only did the NSW Court of Appeal in Shaw find that no term of mutual trust and confidence was implied; it also rejected the notion that there was an implied duty of good faith in operation to regulate employer handling of employee complaints. This is significant because the High Court in Barker left open the possibility of the law developing to recognise an implied term of good faith in Australian employment contracts.

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3 Contractual Effect of Workplace Policy: Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAFC 177 (22 December 2014)

The Full Federal Court has again considered the contractual force of a workplace policy. This case concerned a possible breach of an employer’s harassment and discrimination policy during an investigation into an employee complaint about a ship captain’s conduct at sea.

The Court determined that the policy was not merely aspirational as it was able to precisely identify mutual employer and employee obligations. Furthermore, a breach of the policy was found because the employer’s investigation had focused on the captain’s concerns about the aggrieved employee’s behaviour, rather than the employee’s bullying complaint.

The decision confirms the approach to contractual incorporation of policies established in, for example, Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193. It also highlights the need to take care in drafting employment contracts and HR policies, to ensure employers do not unintentionally subject themselves to legally enforceable obligations.

4 Adverse Action and Misconduct: State of Victoria (The Office of Public Prosecutions) v Grant [2014] FCAFC 184 (23 December 2014)

The Full Federal Court overturned a Federal Circuit Court decision to reinstate a government lawyer dismissed for misconduct while suffering from anxiety and depression. The dismissal followed the lawyer’s repeated failure to adhere to directions. These arose from his absenteeism and poor performance, including him missing court hearings. In the Federal Circuit Court the lawyer succeeded with the argument that he was dismissed due to mental disability, which is prohibited under the FW Act, section 351(1).

On appeal, the Full Federal Court applied the High Court’s Barclay and BHP Coal decisions and held that there was no evidence to support the trial judge’s conclusion that the manager, responsible for the lawyer’s dismissal, should have linked the lawyer’s misconduct to mental illness. The Full Court said: ‘It is possible for there to be a close association between the proscribed reason and the conduct which gives rise to adverse action and for the decision maker to satisfy the Court that no proscribed reason actuated the adverse action’.65 The manager had not, therefore, acted for a proscribed reason in breach of Part 3-1 of the FW Act.

65. [2014] FCAFC 184 at [57].

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5 Workplace Bullying: Applicant v Respondent [2015] FWCFB 1972 (22 April 2015)

This decision gives employers significant latitude in managing the reasonable performance of employees, 66 as the FWC Full Bench confirmed the tribunal’s general approach in applications for anti-bullying orders under Part 6-4B of the FW Act.

The Full Bench upheld a first instance finding that a public sector employer performed reasonably in managing an employee because there had been concerns about the employee’s underperformance for a considerable time.67

The Full Bench indicated that the FWC’s role, in determining if performance management is reasonable management action, is not: ‘To undertake a complete investigation of all of the background to the performance concerns and make findings about [them]’. Nor does the FWC need to carry out a ‘point-by-point merits review’ of the employer’s assessment of the employee’s work performance. Rather, the tribunal must consider the evidence and objectively assess whether bullying behaviour, or on the other hand, reasonable management action has occurred.68

66. In the last 12 months, see also Applicant v Respondent [2014] FWC 6285 (31 October 2014), YH v Centre and Others [2014] FWC 8905 (11 December 2014) (although employer warned to improve its performance management processes), Mac v Bank of Queensland [2015] FWC 774 (13 February 2015), AB [2015] FWC 3353 (4 June 2015); cf. Willis v Gibson; Capital Radiology Pty Ltd [2015] FWC 1131 (17 February 2015).

67. Applicant v Respondent [2014] FWC 6285 (31 October 2014).

68. [2015] FWCFB 1972 at [30].

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6 Summary Dismissal at Common Law: Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20 (26 February 2015)

In this decision, the Full Federal Court held that Melbourne Stadiums had reasonable grounds to summarily dismiss an executive employee because of serious misconduct, which overturned an earlier Victorian County Court decision. The alleged misconduct included the executive using stadium tickets to obtain goods and services for his own benefit; using his position to obtain tickets to a rugby match; disseminating disparaging information about the organisation’s CEO; and breaching the CEO’s direction for the executive not to be involved in another stadium project.

In the view of the five-member bench of the Full Court, each of the first three forms of misconduct: ‘Was deliberate, involved elements of dishonesty, and of its very nature struck at the heart of the trust relationship between Mr. Sautner and MSL. Each of those three, individually, justified summary dismissal. Taken together, with the breach of the CEO’s direction, no other conclusion was reasonably open other than that MSL had made good its case that Mr. Sautner’s conduct justified summary dismissal’.69

The decision’s importance lies in the Full Court’s determination that the employer could not rely on both the right to terminate the contract of employment summarily and the right to dismiss with six months’ notice. The Court said that a ‘contract cannot be terminated twice’.70 In principle, the employer could not justify summary dismissal when the employer initially tried to dismiss the executive under the contractual notice provision. However, in this case, the attempt to terminate on notice was actually ineffective – making instant dismissal, based on grounds discovered after the attempted dismissal on notice, lawful.

69. [2015] FCAFC 20 at [87].

70. [2015] FCAFC 20 at [112].

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7Annual Leave Payments on Termination of Employment: Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCA 136 (27 February 2015)

The Federal Court has clarified a long-running area of uncertainty: whether annual leave entitlements paid on termination should be at an employee’s base rate or a higher rate of pay that includes, for example, annual leave loading or overtime/shift penalties.

The Court has found that annual leave payable on termination of employment must be paid at the rate equal to the amount an employee would be paid if they took annual leave during their employment. The Court’s interpretation of the relevant National Employment Standards (NES) provisions of the FW Act, rendered the contrary provision of the enterprise agreement in this case unenforceable.

However, the certainty provided by this decision has been short-lived as: (i) the CFMEU has initiated an appeal to the Full Federal Court; and (ii) an amendment, designed to make annual leave on termination payable at the base pay rate, forms part of the Fair Work Amendment Bill currently before the Senate.71

71. See also 4 Yearly Review of Modern Awards – Annual Leave [2015] FWCFB 3406 (11 June 2015), where an FWC Full Bench adjourned an ACTU application to vary modern awards to ensure annual leave payments include leave loading and other entitlements, due to the uncertainty created by the Fair Work Amendment Bill still being before Parliament.

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8 Drug and Alcohol Testing: DP World Brisbane Pty Ltd and Others v MUA [2014] FWCFB 7889 (6 November 2014)

A five-member FWC Full Bench has upheld an appeal by DP World against a first instance decision that constrained its ability to conduct urine tests as part of a new drug and alcohol (D&A) policy.

The case involved interpretation of DP World’s enterprise agreement provision that referred to the policy’s random D&A testing regime and swab/oral testing method. Under its new national policy, which replaced site-specific policies, DP World tried to introduce a follow-up urine test when an employee had a positive swab test.

The Full Bench determined that the agreement, and the circumstances of DP World’s operations, did not preclude urine testing for a second or confirmatory test.

The decision is one of a number of FWC decisions in the past year that have largely supported employer rights to administer D&A tests under applicable workplace policies, and to discipline or dismiss employees who breach such policies.72

72. See e.g. Sharp v BCS Infrastructure Support Pty Ltd [2015] FWCFB 1033 (27 February 2015); Toms v Harbour City Ferries Pty Ltd (discussed below); CFMEU v Port Kembla Coal Terminal Limited [2015] FWC 2384 (8 April 2015); AMWU v ACI Operations Pty Ltd [2015] FWC 3162 (7 May 2015).

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9 Drug Testing and Unfair Dismissal: Toms v Harbour City Ferries Pty Ltd [2015] FCAFC 35 (16 March 2015)

The Full Federal Court has affirmed a FWC Full Bench decision to overturn the reinstatement of a ferry master who failed a drug test after crashing a ferry into a pylon. The ferry master did not declare his use of marijuana for pain relief on the day prior to the incident. When he returned a positive reading, he was suspended and then dismissed for breaching the employer’s ‘zero tolerance’ drug and alcohol policy.

In its decision,73 the Full Bench was dismissive of the mitigating factors identified first by the FWC. These included the absence of a link between the drug use and the accident and the fact that there was no substantial damage to the vessel. The Full Court held that the Full Bench did not commit any jurisdictional error when it intervened to correct the erroneous reliance upon those mitigating factors. It rightly identified errors in the original decision-making process and in the order of reinstatement.

The Full Court’s decision is significant because it confirms that the FWC has the discretion to judge whether a dismissal is unfair and what remedy should be awarded – with limited scope for a challenge based on jurisdictional error. 74 It is also likely to make employers more certain about disciplinary action or dismissal clauses in their D&A policies, even when there is no evidence of employee impairment.75

73. Harbour City Ferries Pty Ltd v Toms [2014] FWCFB 6249 (12 September 2014).

74. [2015] FCAFC 35 at [30].

75. “Full Court backs zero tolerance drug sacking”, Workplace Express, 17 March 2015; see also DP World Brisbane Pty Ltd and Others v MUA (discussed above).

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10 Employee or Independent Contractor? Tattsbet Limited v Morrow [2015] FCAFC 62 (11 May 2015)

The Full Federal Court overturned a Federal Circuit Court decision that found that the operator of a shop front betting agency was an employee entitled to notice of termination under the NES.

The Full Court found the trial judge incorrectly focused on the operator conducting her own business as an entrepreneur, rather than as an employee.

In ruling that the operator was not an employee, the Full Court considered:

• The payment arrangements because the operator’s pay was tied to the value of the business transacted by the agency.

• The operator’s direct employment of other staff.

• The divergence between her overall remuneration and net personal income – her income was about one-third of the agency’s remuneration.

• The tax implications of the operation in which the operator collected GST payments and completed BAS returns.

The Full Court’s decision departs from several other Federal Court cases.76 Those cases emphasised the concept of entrepreneurship to distinguish between employees and independent contractors in common law tests. That is, workers are more likely to be considered contractors if they appear to be entrepreneurs or running businesses on their own account – a higher test than the common law traditionally imposes.

76. See e.g. On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; ACE Insurance Limited v Trifunovski [2013] FCAFC 3; Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37.

32 77. The Safesearch remuneration survey 2014-15

HEALTH AND SAFETY LAW

HAVE WE FINALLY ARRIVED AT A TRULY NATIONAL APPROACH TO THE REGULATION OF HEALTH AND SAFETY?The short answer is no. The ‘harmonised’ system is the most significant step to date to relieve the regulatory headaches businesses experience operating across states, however, it was not designed to deliver a national approach to the regulation of work health and safety (WHS) and it has not done so.

The myth of uniformity was relied upon to produce model WHS laws which were to be passed in each WHS jurisdiction in Australia. However, the adoption of the model laws in 6 of the 8 WHS jurisdictions has given business little relief from the WHS regulatory bureaucracy because WHS laws remain different in each jurisdiction.

Victoria and WA have not adopted the model WHS laws and within the so-called ‘harmonised jurisdiction’ the model laws have been varied to accommodate local pressures - this means that over time, each state and territory will become increasingly divergent.

WHAT IMPACT HAS THE MODEL WORK HEALTH AND SAFETY ACT (WHS ACT) HAD IN ITS FIRST 2 YEARS OF OPERATION?There have been three key impacts or responses to the WHS Act; educative, increased safety investment and changes in prosecutions.

The WHS Act has had a significant impact on WHS education and awareness. The process of developing and implementing the model WHS laws increased discussion about WHS and has given it a media and Boardroom prominence that it previously lacked. The laws have also triggered an increased demand for WHS professionals and business is encountering difficulty in attracting suitable candidates. At the same time senior WHS managers report that safety is plateauing and that a ‘step change’ is required for WHS professionals to be front and centre in a ‘challenging commercial environment’.77 This means that the nature of a ‘suitable’ candidate for WHS professionals is changing and, while formal qualifications and technical knowledge are important, so is being a capable business leader who can engage and execute changes.

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The WHS Act has had a significant impact on investment in safety. Boards and senior executives engaged in training about their personal WHS duties and liabilities as well as those of their ‘PCBU78’s – most medium to large organisations developed and implemented ‘due diligence’ frameworks to help facilitate their officers’ compliance with the officer’s duty under the WHS Act. Those due diligence frameworks vary from the very prescriptive (that is; defining the actions required by officers against compliance schedules), to the more laissez faire (that is; providing guidance about how to fulfill the officer’s duty and relying on a high degree of individual officer input and responsibility for their compliance). This new found safety literacy has in turn led to an increased interest in the concept of ‘safety culture’ by officers who are seeking ways to measure safety culture and identify deficiencies in it so that rectification action can be undertaken. There is an emerging recognition that ‘safety culture’ can operate as a safety hazard or a safety enabler and therefore, has to be proactively managed.

The WHS Act has had a significant prosecution impact – it has resulted (particularly in NSW) in defendants now having options other than entering into a plea agreement; defences are available again. Prosecutions stalled in most model jurisdictions about 6 months prior to the commencement of the model laws and did not restart with any vigour until 12-18 months after the model laws commenced. During that period the dominant approach taken by WHS Regulators was one of ‘advise and persuade’. Prosecution action has recommenced with some vigour, although

few decisions have been made under the WHS Act. However, those that have been made signal that at least in NSW, we will see a radical departure from earlier WHS judicial approaches and this will have significant impacts for prosecutors and defendants.

In NSW, WHS prosecutions are now primarily heard in the District Court of NSW. In the first defended hearing to be determined, Workcover v Patrick Container Ports 17 February 2014, Curtis J considered the fatal injury of an employee who was aware of the relevant risk and the safe work method procedure he was required to adopt, however, he did not apply it. The employee had significant amounts of methamphetamine in his system at the relevant time. Workcover alleged a range of workplace risks against Patrick Container Ports that largely related to a lack of documented systems. Curtis J found that the employee had been trained about the safe procedure and his non-compliance with it would not have been changed if a documented process had been in place. The case signaled that the prosecutor must prove beyond reasonable doubt that the defendant did not take all steps reasonably practicable to ensure the health and safety of its workers. This means that defendants now have options other than reaching agreement on a plea; defences exist and should be pursued where appropriate. Further, defendants should have increased bargaining power when discussing potential plea agreements.

78. Person Conducting a Business or Undertaking

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There is also a pipeline of prosecutions which should test some of the boundaries of the ‘officer’s duty’ including:

• Will the officers of large companies be prosecuted for breach of the officer’s duty or will it tend to be prosecuted when the officer has been working close to the ‘coalface’? Under predecessor OHS legislation, the officers of small organisations tended to be prosecuted and they were generally ‘hands on’ in the relevant operation (this led to the suggestion that there was defacto immunity for large company directors). The new officer’s duty was designed to make Boardrooms and those working closely with them, ensure that their companies had appropriate WHS systems that were adequately resourced and had adequate processes. A recent decision of the Supreme Court of NSW79 suggests that WHS Regulators will hold Boards accountable. The case demonstrates that WHS Regulators are seeking, and are entitled to seek, information created for Board use (as long as the information does not attract legal professional privilege) and further, the WHS Regulator’s power to seek “Board material” is not limited to documents that specifically refer to safety matters, as the court held that the absence of safety information in documents may prove that a WHS duty has been breached.

• Can a company be an officer of another company under the WHS Act? For example can a holding or parent company be an officer for a subsidiary or operating

company in circumstances where they fulfill aspects of the definition of an officer, such as being a person (albeit an unnatural person) making or participating in decisions which affect the whole or a substantial part of the company’s business?

HAS THE OFFICER’S DUTY DELIVERED INCREASED INTEREST IN SAFETY AT BOARD AND SENIOR EXECUTIVE LEVELS?Early disbelief by Boards and very senior executives that they had personal WHS liability has been replaced with an acceptance that they must be ‘safety literate’ so that they can sign off, on an informed basis, on safety initiatives and robustly interrogate their executives about safety – in much the same way that they must be financially literate in order to sign off on financial matters.

Difficulty in identifying officers has meant that from a practical perspective those that sit on the ‘cusp’ of the officer’s definition tend to be asked by their organisations to comply with the officer’s duty. There are some concerns that the question of ‘who is an officer’ will be relevant if the regulator is considering a prosecution. In order to deal with this issue, some commentators have suggested the WHS Act be amended to provide that a person, who would not otherwise be an officer under the WHS laws, does not make themselves an officer simply by complying with the officer’s duty.

79. Perilya Limited v Nash [2015] NSWSC 706 (5 June 2015)

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Generally, our clients suggest an acceptance of officer liability in the form set out in the WHS Act and a belief that the due diligence provisions have created an increased focus on health and safety with the potential to achieve improved outcomes in the workplace. There is strong support amongst some part of the business community80 for the six part ‘explanation of due diligence’ as set out in section 27(5) of the WHS Act. However, it should be noted that the BCA81 wants the officer laws to be more aligned with those that apply in Victoria and in particular notes that in Victoria, officers are only liable for WHS breaches if the body corporate contravenes the legislation.

The increased awareness of the ‘officer’s duty’ and the personal liability that flows from it, has also meant that Boards and senior executives are casting a more critical eye over how they are affected by their partners in business.

WHAT WILL BE THE KEY WHS ISSUES DURING THE NEXT 12 MONTHS?We focus on two key issues. First, the credibility of the WHS Act as a ‘national scheme’ will be tested and secondly the emergence of mental health as a mainstream WHS issue.

The credibility of the WHS Act as a ‘national scheme’

During the next 12 months the Council of Australian Governments National Consideration of the Model Work Health and Safety Act and Regulations (COAG Review) should be completed. The COAG Review sought options to reduce regulatory burden and red tape for business. As we understand it, Safe Work Australia has prepared a report for COAG (based on submissions from all model WHS jurisdictions and others) with options for amending the model WHS Act to deal with concerns identified during its first two years of operation however, it is not clear when the report will be released. It will be important that the recommended options (when they are delivered) deal with the concerns of business and each of the model WHS Act jurisdictions.

Business was promised a seamless WHS regulatory regime in return for accepting increased organisational WHS liability as well as increased personal liability for officers. However, this promised ‘seamlessness’ has not been delivered with divergent jurisdictional variations in the WHS Act laws and apparently different approaches by model Act Regulators and courts. Specific issues include:

• Calls to bring the model scheme into line with the Victorian and Western Australian occupational health and safety schemes82.

80. Submission by the Ai Group to the Council of Australian Governments National Consideration of the Model Work Health and Safety Act and Regulations dated 1 August 2014

81. Submission by the Business Council of Australia to the Commonwealth Department of Employment on the Issues Paper and Consultation Regulation Impact Statement Examining Improvements in the Model Work Health and Safety (WHS) Laws (August 2014)

82. Submission by the Business Council of Australia to the Commonwealth Department of Employment on the Issues Paper and Consultation Regulation Impact Statement Examining Improvements in the Model Work Health and Safety (WHS) Laws (August 2014)

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• Concerns about the growing jurisdictional differences between the provisions of the WHS Act83.

• Concerns about the “PCBU” concept and in particular, its tendency to create multiple overlapping duties which pose practical compliance difficulties (that are not addressed in guidance materials).

• Concerns about the administrative burden of record keeping and incident notification.

• The power of union officials. Business has cited the use of WHS/OHS entry powers to access sites for industrial purposes and in particular rely upon decisions relating to prosecutions by the Fair Work Building and Construction Commission and its predecessor, the ABCC.

• As noted above, business has different views about the officers’ duty. The Ai Group has supported the existing officer’s duty, however the BCA wants the officer laws to replicate those that apply in Victoria and is attracted to the fact that in Victoria, officers are only liable for WHS breaches if their body corporate contravenes the legislation.

• The powers of health and safety representatives. Whilst some submissions identify the valuable role that HSRs can play in an organisation by assisting the consultation process, others were concerned that HSRs were sometimes reluctant to participate in training (whilst noting the need to undertake training before they could

issue a PIN or direct a cessation of work). There was concern that the training undertaken by HSRs is not subject to competency assessment or assurance.

• The model regulations. Business has noted confusion about how the regulations operate with some claiming that much of the regulatory material would be better handled through codes of practice or practical guidance material. On the other hand, business also indicated that there has been an overreliance on developing codes of practice to ‘regulate’ what has not been detailed in the regulations.

The emergence of workplace mental health as a mainstream WHS issue.

Workers’ compensation claims for psychological injury at work are increasing at a rapid rate and the costs of these claims are considerably higher than other injuries because they involve longer periods of time away from work and high medical, legal and other payments.

The cost of responding to workplace psychological injury is not the only cost for business. Changes in the labour force mean that four out of every five jobs in Australia are in the services sector84 and the delivery of services is usually in person. This means that happy workers are good for business - “The importance of employee happiness and psychological engagement becomes all the greater once corporations are in the business of selling ideas, experiences and services’.85

83. Submission by the Business Council of Australia to the Commonwealth Department of Employment on the Issues Paper and Consultation Regulation Impact Statement Examining Improvements in the Model Work Health and Safety (WHS) Laws (August 2014)

84. Christopher Scanlan, Academic Director, Learning Focus Area Hub at La Trobe University “Why business suddenly cares about staff being happy”. The Conversation, 29 June 2015, at http://theconversation.com/why-business-suddenly-cares-about-staff-being-happy-43843

85. Davies, W, 2015. The Happiness Industry: How the Government and Big Business Sold us Well-Being. London: Verso at page 126

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

The WHS Act imposes an obligation on PCBUs to ensure that they take all steps reasonably practicable to ensure both the physical and psychological health of their workers. WHS regulations also require business to apply a risk management approach to psychological risk. This means that businesses have a duty and responsibility under the WHS Act to proactively manage risks, which includes a comprehensive and systematic approach to identifying, assessing, controlling and monitoring risks to the psychological health of their workers and to ensure that they don’t expose others to relevant risks arising from work performed in their business.

Significant assistance is available from the WHS Regulators’ websites in relation to how one conducts a risk assessment in relation to psychosocial hazard however business is struggling to convert those risk assessments into effective action. Many are turning to leaders in the field such as Canada which has produced the standard known as ‘Psychological Health and Safety in the Workplace’86. This is a detailed and voluntary standard that specifies requirements for

a systematic approach to develop and enable psychologically safe and healthy workplaces, the integration of a psychological health and safety management system into the way the organisation manages its business and the promotion of psychological wellness as opposed to focusing only on preventing psychological injury arising from working conditions. The WHS Regulators now recognise workplace bullying as a WHS risk and have introduced guidance material and campaigns, and increased interventions in this area. However, WHS prosecutions in relation to these issues are not common yet – it remains to be seen if the WHS Regulators and Inspectors will be sufficiently resourced to respond effectively to workplace psychological risks. Certainly, the Corporate Plan, WorkCover NSW 2010–2015 states “Research indicates job stress and other work-related psychosocial hazards are emerging as leading contributors to the burden of workplace illness and injury”.

There is little doubt that workplace psychosocial risk is an emerging WHS issue requiring a systematic response from business.

86. Go to http://www.csagroup.org/documents/codes-and-standards/publications/Z1003_EN.pdf

‘WE DON’T EVEN HAVE THE RIGHT IR SYSTEM FOR THE 2000 WORKPLACE... WE ARE PROBABLY 15 YEARS OUT OF TOUCH ALREADY’.STEVE KNOTT

Steve Knott CEO Australian Mines & Metals Association

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CORRS WORKPLACE RELATIONSEMPLOYMENT, WORKPLACE & SAFETY LAW: MID-YEAR REVIEW 2015

LOOKING AHEADWhile the Federal Government was largely optimistic about Australia’s economic growth prospects, it did sound the following warning in its 2015-16 Budget:

The pace and timing of the pick up in economic growth is subject to some uncertainty. A lower exchange rate, historically low interest rates and lower oil prices should stimulate faster growth in household spending and business investment than forecast. However, there remain some risks. The headwinds from the reduction in mining investment are significant and it is also possible that the pick up in non-mining investment may not be as strong as expected. There is also a risk that momentum in consumer spending could dissipate.87

The Productivity Commission’s final report, scheduled for November, and Commissioner Dyson Heydon’s Trade Unions Royal Commission report at year’s end, will no doubt ensure that workplace relations issues remain as prominent in the national policy debate as they have been for the past decade.

These important inquiry findings will converge with Coalition and ALP policy development in the lead-up to next year’s federal election. The spectre of Work Choices will no doubt continue to loom large: federal Labor recently instigated its own taskforce to examine the impact of the Abbott Government’s IR policies. For its part, the Coalition is considered unlikely to act on radical reform proposals proposed by the Productivity Commission.

However, we echo the views of the business figures featured in the videos accompanying this year’s Mid-Year Review:

• The Productivity Commission Review provides an opportunity for a more sophisticated, evidence-based discussion of the kind of workplace relations system that Australia needs.

• Future debate over workplace reform will be best served by a departure from the constrained, decade-old Work Choices paradigm to one with regulatory options best suited to the rapidly transforming nature of work and the workplace.

87. Government Budget Statement.

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‘PRODUCTIVITY IS VITALLY IMPORTANT MAINLY BECAUSE IT’S THE ONLY WAY THAT YOU’RE GOING TO GET SUSTAINABLY RISING LIVING STANDARDS....AUSTRALIA NEEDS TO HAVE A MUCH MORE GROWN UP CONVERSATION ABOUT THE DRIVERS OF PRODUCTIVITY AND PROSPERITY’.

‘...CHALLENGES FOR UNIONS ARE TO REBUILD TWO THINGS – ONE IS ECONOMIC POWER AND THE SECOND ONE IS A MEASURE OF POPULAR SUPPORT AND WITHOUT THOSE TWO THINGS REALLY UNIONS WILL STRUGGLE’.TIM LYONS

Tim Lyons Former Assistant Secretary, ACTU

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