Recent developments in employment law

The latest issues, decisions and proposed changes impacting business and workplace risk 5 min read

Fair Work Act changes have now commenced

By: Tarsha Gavin, Lawrence Mai, Ruby Evans

Time to review contractual arrangements and processes

As foreshadowed in our August Insight, the second tranche of changes introduced by the Closing Loopholes amendments commenced on 26 August 2024. Some of the key changes that are now in force include:

The right to disconnect

The new right permits an employee to refuse to respond to contact (or attempted contact) from their employer or third parties when that contact is made outside of their working hours, unless the employee's refusal is unreasonable.

Changes to the definition of employment

The new definition of an employment relationship requires an assessment of the 'real substance, practical reality and true nature of the working relationship' (now known as the 'whole of relationship' test).

Rights for independent contractors

Contractors who earn above the contractor high income threshold of $175,000 are now eligible to voluntarily opt out of the new definition of an employment relationship (if it would otherwise apply to them). Those who opt out of the 'whole of relationship' test will instead be governed by the 'start of relationship test', which assesses what the parties agreed about the nature of their relationship.

Casual employment changes

A new definition of a 'casual employee' has been introduced, and a new 'employee choice' process for conversion to permanent employment has also come into effect.

Key takeaway

As the latest tranche of legislative changes impact permanent employees, casual employees and contractors, it is important that employers review contractual arrangements and processes across their workforce to ensure they are compliant with the recent changes.

For more information on the above amendments, see Closing Loopholes (No 2) Bill passes both houses of Parliament.

New delegates' rights clause in operation

By: Sonia Millen, Sarah Lunny & Steve Hatzipavlis 

Expect a rise in union activity

Implementing a key Closing Loopholes amendment, all modern awards now include a workplace delegates' rights clause.¹ Newly made enterprise agreements must now also include an equivalent or more favourable clause.

Key takeaways

• From 1 July 2024, all modern awards contain a term that sets out the rights of workplace delegates (being workers elected or appointed by their union to represent the interests of union members and employees eligible to be union members) in a workplace.
• Any enterprise agreements put to a vote post-1 July 2024 must contain a delegates' rights term. If an enterprise agreement does not contain a delegates' rights term or the proposed term is less favourable than the modern award term, the more favourable modern award term is taken to form part of the agreement.

What does the new delegates' rights clause say?

In summary, the new delegates' rights clause provides workplace delegates with the following rights:

How does this affect you?

We expect that the new delegates' rights term will result in increased union activity and involvement in a wide variety of workplace matters.

To ensure your organisation is prepared for the changes, we recommend:

• if your organisation is bargaining for a new enterprise agreement, reviewing the model delegates' rights clause and considering whether it is appropriate to adopt the modern award term or bargain for a different term (noting that any term must be at least as favourable as the modern award term);
• notifying employees and managers of the rights available to workplace delegates; and
• reviewing current practices and considering whether to introduce a protocol to support consistent, reasonable and appropriate management of workplace delegates.

Fair Work Commission alters flexible working arrangement

By: Tegan Ayling, Anastasia Hatzisarantinos 

Decision highlights the importance of articulating reasonable business grounds 

In a recent decision, the Fair Work Commission (FWC) ordered an employee to work in the office one day per week, at the same time highlighting the importance of adequately explaining reasonable business grounds if an employer refuses a request.

Key takeaway

Employers should clearly outline their reasonable business grounds for refusing flexible working requests. This involves not only explaining the benefits to the employer's proposed working arrangement, but also explaining how the approval of the working arrangement requested by the employee would be detrimental to the employer's business.

Background

FedEx gradually introduced hybrid arrangements that involved employees working back in the office post COVID-19. From July 2023, employees were required to work in the office three days per week.

FedEx refused an employee's request to work from home three days per week to care for his two teenage children who have an intellectual disability and autism, and his wife who suffers a debilitating illness. However, it agreed that the employee could continue his existing arrangement to work in the office two days per week and two days from home. While that arrangement was in place, the employee was in practice working in the office one day per week, taking leave one day per week and working two days from home.

In January 2024, the employee made another request to work entirely from home. FedEx sought further information from the employee and suggested alternative arrangements, but no agreement was reached. FedEx subsequently rejected the employee's request, and he lodged a dispute with the FWC.

Following conciliation, FedEx agreed to trial three days at home and one day in the office, but the employee never returned to the office.

Decision

Since the matter could not be resolved between the parties, the FWC ultimately ordered the employee to work in the office one day per week and allowed FedEx to also direct him to work in the office in specific circumstances. This included if the employee did not attend the office for two consecutive weeks, there were performance concerns or there were genuine operational requirements that required his attendance.

In its decision, the FWC emphasised the importance of following proper process when responding to a request for flexible working arrangements. In particular, the FWC criticised FedEx for failing to sufficiently articulate its reasonable business grounds in rejecting the employee's request. The grounds FedEx relied on during the proceeding had not been clearly articulated to the employee in FedEx's refusal of his request.

The FWC also took into account that the employee had not followed FedEx's lawful and reasonable direction to return to the office, noting that employees are not entitled to a flexible working arrangement without an approved request. The employee's actions to 'avoid working in the office at all costs' before the flexibility request was decided was a factor in the FWC decision to permit FedEx to direct the employee to work in the office, including in the specific circumstances outlined above.

Employer not required to produce investigation report under terms of enterprise agreement

By: Tarsha Gavin, Sayomi Ariyawansa and Steve Hatzipavlis

Confidentiality does not automatically prohibit provision of documents

The Full Bench of the FWC ruled that Aurizon Operations Limited (Aurizon) was not required under the terms of its enterprise agreement to produce an investigation report to an employee following an investigation into their alleged misconduct.²

Key takeaways

• The FWC will consider the process set out in the relevant enterprise agreement when determining the requirements of natural justice and due process in relation to an investigation, and any subsequent process relating to the determination of a disciplinary outcome.
• Even if an investigation is confidential, the requirements of procedural fairness include informing an employee of the substance of the adverse material against them so the employee can provide a response before findings are made.
• A clause stating that an investigation is confidential does not necessarily prohibit an employer from providing a copy of an investigation report to the employee.

Decision

Following an investigation by Aurizon into allegations of misconduct by an employee, an investigation report was prepared outlining the substantiated conduct, and the employee was provided with an opportunity to put forward their submissions on the appropriate disciplinary outcome. The Rail Tram and Bus Union (RTBU) on behalf of the employee requested a copy of the investigation report for the purposes of making these submissions. This request was refused.

The RTBU brought an application in the FWC claiming that Aurizon's failure to provide the report breached the applicable enterprise agreement which relevantly provided the following terms:

1. Process: any investigation that may lead to the disciplinary action against an employee must apply the principles of natural justice and due process, including the employee being made fully aware of allegations subject to an investigation and being provided with sufficient information to provide an informed response.
2. Confidentiality: disciplinary inquiries and investigations shall be confidential.
3. Disciplinary outcomes: following the investigation procedure, the employee may be subject to various disciplinary outcomes, following a process that includes providing the employee with a reasonable opportunity to provide reasons regarding what the appropriate disciplinary outcome should be.

The RTBU alleged that the principles of procedural fairness, as set out in (a), required Aurizon to provide the investigation report to the employee to assist with the employee's response in (c) concerning the disciplinary outcome. The RBTU also alleged there was no utility in keeping the investigation confidential as the employee was already aware of the complainant's identity and allegations. Aurizon claimed that because of the confidentiality requirements, the Full Bench of the FWC could not order Aurizon to produce the report.

The Full Bench of the FWC found that:

• the confidentiality clause did not prevent Aurizon from providing a copy of the investigation report to a worker. If this were the case, Aurizon would be unable to provide information to the employee subject to the investigation as required by (a) and it would make the disciplinary regime unworkable. Rather, the confidentiality clause prohibited workers from disclosing information obtained during the investigation and prohibited Aurizon from disclosing investigation information to any person not involved during the inquiry.
• at the point the RTBU sought the investigation report, the investigation process was complete, and Aurizon was at the stage of assessing the appropriate disciplinary outcome. At this point of the disciplinary process, there was no requirement in the enterprise agreement for Aurizon to apply the general principles of natural justice and due process outlined in (a), as these did not apply in the assessment of disciplinary outcomes outlined in (c). As such, Aurizon was not required to produce the investigation report.
• natural justice and due process had not been afforded to the employee under (a), as the substance of the adverse material in the report was not put to the employee for their response during the investigation process. The Full Bench recommended that it would be prudent for Aurizon to re-open the investigation to put the substance of the report findings to the employee, but did not make an order to this effect as the grounds of appeal in the matter were limited to dealing with the production of the completed report.

Employees retain redundancy pay because of move to 'dusty, noisy and malodorous' office 

By: Sarah Lunny and Bella Busby

Connection between redundancy pay and alternative employment 

After accepting that an employer had obtained 'acceptable alternative employment' for two former employees, the FWC allowed the two employees to keep 30% of their redundancy pay because of the inferior quality of their new office space.³

Key takeaways

• Employers can apply to the FWC to vary the amount of redundancy pay that would otherwise be payable to an employee under the Fair Work Act 2009 (Cth) (FW Act) if the employer obtains other acceptable employment for the employee. The FWC has a broad discretion to vary redundancy pay to an amount it considers appropriate, including reducing the amount payable to zero.
• Even if an employer has arranged a new role for a former employee, the FWC may determine that the employee is entitled to receive part of their redundancy pay entitlement if there is a difference in working conditions between the employee's previous role and the new one.

Background

An employer in the recycling industry made an application to the FWC to reduce the redundancy pay entitlements of two administrative employees after the employer arranged comparable roles with another recycling business. Both office-based employees had been made redundant after the original employer's business suffered a significant downturn, resulting in 100 employees being laid off.

Both employees argued that their redundancy pay entitlements should not be reduced because the new roles the employer had arranged for them did not constitute acceptable alternative employment, including because:

• the new employer had a less professional, more 'blue collar' work culture than the previous workplace; and
• the new office was noisier and dirtier than their previous workplace, as it was physically attached to the recycling facility, where trucks would enter and unload rubbish several times a day.

After comparing each employee's role with the new employer to their role with the old employer, the FWC decided that both employees had been provided with 'other acceptable employment' because the work and conditions were sufficiently similar to those of their previous employment, even if there were some factors that made the new jobs less attractive to the employees.

In considering whether to reduce the employees' redundancy pay, the FWC weighed the 'significant effort' the employer had made to obtain other acceptable employment for the employees against 'the disadvantage of the quite different work environment' at the new employer. The FWC ultimately decided to reduce each employee's redundancy pay by 70%, allowing each employee to keep 30% of their redundancy pay in consideration of the 'marked difference' between performing their administrative work in an office attached to a recycling warehouse compared to previously working in an office removed from the actual process of recycling.

Resurrecting the dead: breathing life into a zombie agreement

By: Andrew Wydmanski and Samuel Jackson

Extensions remain viable during ongoing bargaining of enterprise agreements

The Full Bench of the FWC has extended the default period of a 'zombie agreement', for a second time, rejecting the employer's request to transition employees onto the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award) while bargaining for a new agreement was ongoing.⁴

Key takeaways

• The FWC is open to extending the life of zombie agreements during enterprise bargaining if it considers that extending the agreement would 'minimise disruptions or changes to terms and conditions' and where it might be expected that 'a replacement agreement will be reached in the near future'.
• Employers covered by a zombie agreement that has been extended by the FWC should prepare for the possibility that the FWC may grant further extensions if bargaining for a new enterprise agreement is ongoing.

Background

A 'zombie agreement' is an old industrial workplace agreement made before the commencement of the FW Act. Under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), all zombie agreements were set to automatically end on the 'default period' of 7 December 2023, unless an application was made to the Commission to extend it.

In September 2023, the Health Service Union (HSU) made an extension application in respect of the Kirinari Community Services Ltd Hume Riverina Branch Certified Agreement 2006-2008 (Agreement). The Full Bench of the FWC decided it was reasonable to extend the operation of the Agreement to 6 April 2024.

The HSU again applied under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the default period of the Agreement, this time until 6 December 2024.

The employer, Kirinari Community Services Ltd (Kirinari), opposed the HSU's application on the basis that:

• from an administrative and payroll perspective, it would be more efficient and fairer for all of its employees to be covered by the SCHADS Award;
• the terms of the SCHADS Award would provide employees with greater flexibility should they wish to work in Kirinari's operations outside of the Hume Riverina region; and
• given that bargaining for the new enterprise agreement was based on the SCHADS Award, transitioning remaining employees to the SCHADS Award would mean all employees would be familiar with rostering arrangements and other terms and conditions of the SCHADS Award.

The Commission rejected Kirinari's arguments, finding that moving employees from the Agreement to the SCHADS Award at a time when a replacement agreement was expected to be reached in the near future could disturb current bargaining.

The Commission considered that more progress should have been made since its decision in September last year. It also noted that the parties had not sought the Commission's assistance to finalise the replacement enterprise agreement. As a result, the Commission was satisfied that it was appropriate to extend the default period for a further four months.

Former manager awarded $1.5 million following unlawful summary dismissal

By: Anthony Hallal and Matt Stark 

Penalties can be severe for breaches of the general protections regime

The Federal Circuit and Family Court of Australia (FCFCA) recently ordered an employer to pay a former manager over $1.5 million after summarily dismissing him in breach of the general protections regime in the FW Act and their employment contract.

Key takeaway

This case is a recent example of the substantial damages that can be awarded under the general protections regime where employees have been found to be unlawfully terminated.

Background

An employee of Laing O'Rourke Australia Management Services Pty Ltd (LOA), Mr Haley worked for LOA and other companies in LOA's group for over 15 years. From 2018 he was the Commercial Team Leader in charge of cleaning up bushfire-damaged properties from the previous Christmas period (Bushfire Project).

In early July 2020, Mr Haley and other LOA employees invited their colleagues to a property LOA was leasing while working on the Bushfire Project for a social event. Following noise complaints from neighbours, the owners of the property attended twice, which culminated in a verbal altercation between the LOA employees and the owners (the Incident).

LOA subsequently conducted an investigation into the Incident, following which Mr Haley had a show cause meeting with LOA. Later in July 2020, Mr Haley was summarily dismissed by LOA on the basis that he had engaged in serious misconduct. Specifically, LOA alleged that Mr Haley had lied in the course of the investigation, and that Mr Haley's conduct during the Incident breached LOA's policies in a manner that 'caused imminent and serious risk to the reputation of [LOA]'.⁵

The FCFCA decided that LOA had not established it was entitled to summarily dismiss Mr Haley from his employment. Further, LOA had taken adverse action by summarily dismissing Mr Haley in circumstances where it could not establish Mr Hayley's complaints and inquiries in relation to his employment were not a reason for his dismissal.⁶

Decision on damages

Following this finding that Mr Haley had been unlawfully terminated, the most recent decision⁷ of the FCFCA concerned the assessment of damages to which Mr Haley was entitled.

LOA was ordered to pay Mr Haley a sum of more than $1.5 million in respect of the summary dismissal, accounting for Mr Haley's:

• loss of income up to the date of judgment;
• present value of Mr Haley's loss of future income until March 2025 (accounting for likely promotions/pay increases throughout this period);
• relocation costs back to the UK after the termination of his employment;
• break fees for car rental and lease agreements; and
• an amount of $50,000 for Mr Haley's hurt, distress and humiliation.