workplace relations update
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Common sense prevails at Fair Work Australia
In a decision which will bring comfort to employers, Fair Work Australia (FWA) has found that employees should not have to be taught ‘common sense’ in finding that the dismissal of an employee was not unfair.
The employee was a production worker at a carpet tile manufacturing plant. The employee claimed that shortly after starting work, a colleague told him that he could climb into a compactor used to push down carpet off-cuts. The employee stated that he had received no formal training on the use of the compactor and it was common practice for employees to climb into the compactor. Further, the compactor had no signage prohibiting employees from climbing into the compactor.
In November 2010, the employee spoke to an OHS training group who were observing operations at the plant. The employee asked the trainer whether the group was doing an OHS course. When the trainer replied that they were, the employee climbed into the compactor and started to jump up and down. The employee told the group that he was on the OHS Committee and laughed and giggled while waving his arms about without hanging on to the edges of the compactor.
The trainer, who was an independent bystander, later reported the incident. Following a meeting with the employee attended by his union representative, the employee was summarily dismissed for, amongst other matters, a breach of his safety obligations.
The employee subsequently applied to FWA for an unfair dismissal remedy. While the employee did not dispute that he climbed into the compactor, he disputed that he jumped up and down in it, engaged in horseplay or deliberately disparaged his employer to a group of visitors. The employee also claimed that climbing into the compactor was not prohibited and that he was doing no more than he had been shown to do and, like other employees, had done many times before.
What did FWA decide?
FWA found that the employee’s evidence was contrary to that of his manager, who had observed part of the incident, and the independent OHS trainer. FWA was satisfied with the employer’s version of events and found that the employee’s actions, including climbing into the compactor, jumping up and down and waving his arms around, were ‘inherently unsafe’. FWA also found that by his actions, the employee had placed himself at risk of falling onto the concrete floor or hitting himself on the compactor. As such, FWA found that the employee’s conduct presented a serious and imminent risk to his safety.
FWA’s concerns were further compounded by the employee’s lack of concern about the possible risks and dangers associated with his actions and his cavalier approach to the disciplinary meeting and the FWA proceedings, particularly given that he was an OHS representative.
FWA accepted that the employee had climbed into the compactor on previous occasions, as had other employees, and that the employer had not directly told its employees to not climb into the compactor. Despite this, FWA found that ‘it is a matter of common sense not to climb into machinery in such circumstances. In my view, the applicant should not have required training on this.’ Accordingly, FWA dismissed the employee’s application.
Key lessons for employers
While this decision will provide some level of comfort to employers that common sense can prevail, it is important to keep in mind that the outcome may have been different if the employer had not provided induction training, had a safety policy which was provided to the employee, twice assessed the employee’s skills and, in his capacity as an OHS representative, trained the employee in risk assessment. As outlined in our previous update (click here), the outcome may also have been different if there were any significant mitigating factors, as these have the ability to render harsh a dismissal that was otherwise procedurally fair and for a valid reason. As such, employers should take into account subjective, mitigating factors when deciding whether to terminate an employee’s employment.
Are you getting the flexibility you are looking for?
A recent prosecution by the Fair Work Ombudsman has demonstrated the strict compliance requirements associated with the use and implementation of an individual flexibility arrangement (IFA) in an employer’s business.
What is an IFA?
Under the Fair Work Act 2009 (Cth) (FW Act), modern awards and enterprise agreements are required to permit the making of an IFA. The introduction of IFAs into modern awards and enterprise agreements was heralded as enabling employers and employees to make arrangements to meet their genuine individual needs. Modern awards generally contain a standard clause allowing for the making of an IFA, while the clause to be used in an enterprise agreement is a matter for negotiation.
IFAs were supposed to be as simple as possible for an employer and employee to understand and implement. Despite this, modern awards set out a number of specific requirements that must be satisfied by an IFA. These include the IFA:
With the commencement of modern awards, the employer became regulated by awards for the first time. The employer was a small business with only six employees, and the manner in which it operated its business, including with flexibility in the hours to be worked by employees, did not comply with the modern award. As a result, the employer formed the view that it was unable to implement the penalty rates and other loadings payable under the modern award.
In order to try to accommodate the application of the modern award to the employer’s historical business operations, the employer drafted a document intended to be an IFA and requested that all employees sign the IFA. Some employees declined to sign the IFA, and the employer converted those employees to casual employees.
The employer admitted that it had failed to comply with the requirements of the modern award and the FW Act in that it had:
As a result of the employer’s admissions, the court found that the employer, and its managing director, had contravened the FW Act (including the modern award). Despite this, the court found that the employer had admitted its contraventions of the FW Act at the earliest possible opportunity, and had taken a number of voluntary steps, including apologising to the employees, to start to rectify its breaches. As a result, the court heavily discounted the penalties to be imposed on the employer and its managing director and fined the employer $25,000 (out of a maximum of $99,000) and the managing director $5,000 (out of a maximum of $19,700).
Key lessons for employers
Despite the limited matters that may be dealt with by an IFA and the ability for an employee to unilaterally terminate the IFA with four weeks’ notice, provided an employee agrees, an IFA can provide employers with additional flexibility in the operation of their business. This can be especially beneficial with the increase in the regulation of employment under modern awards, particularly in relation to part-time employment.
Before making an IFA with an employee, employers should carefully consider the ease with which the employer can return to the modern award or enterprise agreements conditions that would otherwise apply if the employee decides to terminate the IFA. Provided this can be effectively managed, employers should take care to ensure that they have fully complied with all of the requirements necessary to implement an IFA, including ensuring that sufficient detail is provided regarding the application of the varied terms of the relevant modern award or enterprise agreement.
Finally, in circumstances where an employer has inadvertently contravened the FW Act, it is important to take immediate steps to rectify those contraventions, including cooperating with the Fair Work Ombudsman or other prosecutorial body, so as to minimise the penalties to be imposed.
That’s not reasonable! So what is? Managing
misconduct under the microscope
A recent decision of the Administrative Appeals Tribunal is a timely reminder of the importance of acting reasonably in managing employee misconduct. In the case, the tribunal emphasised that managers should not blindly follow a policy or procedure but must turn their minds to the particular circumstances to determine what is reasonable.
A manager had received several complaints about an employee who was accused of making uncomplimentary remarks about other staff and making comments which undermined management. Although the complaints were potentially serious, the manager was unwilling to activate formal disciplinary processes because the employee did not respond well to counselling or criticism. Instead, the employee was asked to meet with a supervisor for an 'informal chat'.
Because the manager did not work in the same city as the employee, she arranged to be joined to the meeting by telephone. She also arranged for the supervisor to be present to ensure the employee was alright.
The manager gave evidence that the complaints were put to the employee during the meeting and the employee was given the opportunity to respond. At the conclusion of the meeting, the manager was satisfied with the responses and decided not to progress the matter.
No record of the discussion was entered onto the employee’s personnel file.
The next day, the employee concerned emailed the manager and advised that she was surprised and upset by the complaints which she believed were unfounded. The employee asked for a follow up meeting to get to the bottom of the complaints. The manager declined the invitation because she regarded the matter as closed and thought it best to ‘move on’.
The employee claimed that she had developed a psychiatric condition as a result of these events and applied for workers’ compensation under the Safety Rehabilitation and Compensation Act 1988 (Cth).
In particular, the employee criticised the process on the basis that:
What did the tribunal find?
The tribunal held that the actions of the employee’s manager constituted ‘reasonable administrative action’. As a result, notwithstanding that the events contributed to the onset of the employee’s psychiatric condition, the employee’s claim for compensation failed.
In reaching this decision, the tribunal found that:
The tribunal also concluded that the manager proceeded ‘fairly and with considerable sensitivity in the circumstances’ and noted that ‘a reflexive resort to the more elaborate formal processes in the misconduct policy would have been so disproportionate that it might have been unreasonable to adopt that course.’
Key lessons for employers
This case is a reminder that managers ‘are not excused from their obligations to act reasonably just because they follow a procedure laid down by their supervisors. Conversely, their behaviour must not be condemned merely because they do not follow such a policy if their conduct was still, in the circumstances, reasonable.’ In short, management action need not be perfect but must be reasonable when considering all of the circumstances.
To ensure that employee misconduct is managed reasonably and effectively, employers should implement a best practice policy which provides for both informal and formal disciplinary processes depending on the circumstances. Employers should also train senior staff in how to apply the policy and make decisions that are proportionate and appropriate having regard to all the circumstances. A failure to provide adequate training may result in the policy being either ignored or applied in a manner that not reasonable.
Employers also need to be familiar with the protections provided to employees by the adverse action provisions of the Fair Work Act 2009 (Cth).
Lastly, if an informal performance management process is used and the problem is not resolved, a formal process must be commenced before any further action can be taken against the employee to minimise the risk of successful claims.
This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.