International Labor & Employment Law Committee Newsletter

Issue: September 2013

Editor: Tim Darby | Africa and Middle East Editor: Karen Seigel | Asia and Oceania Editor: Ute Krudewagen | Canada Editor: Gilles Touchette | European Editor: Paul Callaghan | Latin America Editor: Juan Carlos Varela | Law Student Editor: Irene Lehne, Earle Mack School of Law at Drexel University | USA: Trent Sutton

Australia

Bullying Code Pushes Past Health and Safety Law Dangerous Workplace Boundaries into White Collar Work

Andrew Ball (Partner, Sydney) and Donna Trembath (Senior Associate, Sydney), DLA Piper

Safe Work Australia's draft Code of Practice on Preventing and Responding to Workplace Bullying ("Bullying Code") marks the first meaningful development in work health and safety law that will be applicable to employers in "safe" industries and office workers for many years. The Bullying Code, once finalized, will set a national benchmark for managing workplace bullying that is likely to have a strong impact on employment law. The Bullying Code will also complement the new bullying laws that will take effect from January 1, 2014. As discussed in previous newsletter articles,1 the amendments to the Fair Work Act 2009 (Cth) will open up a venue for employees to raise workplace bullying claims before the federal Fair Work Commission.

As a by-product of harmonized workplace health and safety laws in Australia, the Bullying Code can be expected to resonate much more strongly than single-State work health and safety initiatives have done in the past to combat harassment or bullying.2 In practical terms the draft Bullying Code is also revolutionary because it expands the frontiers of work health and safety law into mental well-being. Once the Bullying Code is finalized it will be up to the relevant Commonwealth, State and Territory work health and safety Ministers to approve the Bullying Code and give it legal effect in their jurisdictions.

Background

Safe Work Australia is an independent statutory agency responsible for improving occupational health and safety arrangements across Australia. It has presided over an occupational health and safety harmonisation process that was agreed by all jurisdictions in principle in 2008 and which has led to the Commonwealth and six of eight States and Territories (other than Victoria and Western Australia) legislating close to "mirror" Work Health Safety Acts from 1 January 2012 onwards.

The Bullying Code, while relevant to all Australians, pushes the boundaries of work health and safety law into white collar work. Employers in "safe" industries that might not otherwise be heavily impacted by work health and safety law will need to pay attention to the Bullying Code if only from an employment law and human resources management perspective. While not a law as such, section 275 of the harmonised work health and safety legislation makes a Code of Practice admissible in prosecution proceedings under the legislation. The court or tribunal hearing the proceedings may use the Bullying Code to determine what could have been done, in a practical sense, to protect workers from bullying. That said, there is nothing to prevent an employer from adopting another method outside a Code of Practice that is equivalent to or of a higher standard than the standard required in a Code.

1ILELC News | April 2013 | Australia; ILELC News | July 2013 | Australia

2Prevention of Workplace Harassment Code of Practice 2004 (Queensland); Code of Practice--Violence, Aggression and Bullying at Work 2010 (WA).

Appellate Court Finds Term of Mutual Trust and Confidence Is Implied by Necessity into Every Australian Employment Contract, Absent Disclaimer

Jason Noakes, Partner, and Jodie Kessler, Associate, Norton Rose Fulbright, Sydney Australia

A Full Court of the Federal Court of Australia has handed down a majority decision upholding the previous finding of a single judge of the Federal Court that, in the absence of an express exclusion, a term of mutual trust and confidence (Term) was implied into every Australian employment contract.1

The decision is the first decision to be handed down by an Australian intermediate court of appeal in which the existence of the Term has been affirmed.

The Full Court held that:

  1. the Term was implied into every Australian employment contract by necessity, having regard to the relationship between employers and employees;
  2. the Term obliges an employer to not, without reasonable cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee;
  3. the Term may be excluded by an express provision in an employment contract;
  4. the content of the Term is an evolving one and must be moulded according to the nature of the particular employment relationship and facts of the case; and
  5. breach of the Term gives rise to a claim in damages for breach of contract so long as the breach is prior to, and independent of, termination. However, general damages for hurt, distress and loss of reputation are not recoverable.

At first instance, as earlier reported in this newsletter,2 the decision by the single Federal Court judge found the implied term was breached by the employer's failing to follow the Redundancy, Redeployment, Retrenchment and Outplacement Policy contained in its handbook in circumstances where that handbook was expressly excluded from the employment contract. The employer then lodged an appeal to the Full Court.

On appeal, the Full Court unanimously held that the Judge at first instance had erred in finding that the employer breached the Term by failing to uphold a non-contractual policy, but reached the same result with different reasoning. The majority of the Full Court (Jacobson and Lander JJ) found that the implied Term existed regardless of the non-contractual policy, and that the employer had breached the implied Term by failing to take positive steps to consult with the employee, whose position had been made redundant, in circumstances where the employer was a large corporation and the employee had a significant period of service with it.

In his lengthy dissenting decision, Justice Jessup found against the necessary implication of the term, noting that he could find no solid basis for the premise that an employer owes a duty of trust and confidence to an employee under the contract of employment beyond the duties conventionally associated with employment contracts. His Honour also commented that the implied Term, in his view, would both "enable defined limits in the existing fabric of common law and equitable remedies to be sidestepped" and "overlap a number of legislated prohibitions and requirements in particular dimensions of the employment relationship, thus tending to compromise the democratically-drawn architecture of the relevant obligations."

His Honour's dissenting decision laid the foundations for the employer to appeal the decision of the Full Court to the High Court of Australia, and the employer is in the process of seeking special leave for such an appeal.

1Commonwealth Bank of Australia v Barker [2013] FCAFC 83

2ILELC News | October 2012 | Australia

Employer May Not Deny Remote-Area Housing to Striking Employees on the Grounds that It Constitutes Unlawful 'Strike Pay'

Jason Noakes, Partner, Michael Nightingale, Senior Associate, and Alistair Carmichael, Associate, Norton Rose Fulbright Australia

An employer may not deny remote-area "accommodation" (i.e., room and board) to fly-in/fly-out workers who go on strike after arriving in the remote area on the grounds that providing the accommodation would be making a prohibited "payment in relation to the total duration of the industrial action," the High Court of Australia has unanimously held.1 The provision of accommodation to the employees, who had attended the employer's site in the remote north-west of Western Australia at the employer's direction but then participated in a strike in support of a new enterprise agreement, was therefore not prohibited under section 470(1) of the Fair Work Act 2009 (Cth.) (FW Act) which precludes an employer from making payments to employees for any period in which they engage or have engaged in protected industrial action. Further, in this case, the High Court found, had the employer denied accommodation this would have amounted to an alteration of the position of the employees to their detriment and, pursuant to section 342 of the FW Act, would have amounted to the taking of adverse action against the employees by their employer, which is prohibited by the statute.

The High Court rejected the argument put forward by the Respondent, which had been accepted at first instance and on appeal before the Federal Court of Australia, that the making of a payment referred to in section 470(1) of the FW Act was broad enough to include the transfer of an economic benefit or payments in kind. Rather, the High Court found, the proper construction of the term "payment" within section 470(1) was a payment of money.

The High Court noted that interpreting section 470(1) of the FW Act as prohibiting the transfer of any economic benefit to a striking employee would render the provision unclear and of uncertain reach, and could expose employers to a penalty even where they had merely maintained the status quo.

The High Court also found that the mischief to which section 470(1) is directed is the payment of strike pay--that is, the making of payments in the nature of recoupment of wages lost due to the period of industrial action. In this case, the provision of accommodation was a benefit to which the fly-in/fly-out workers were entitled upon attending at the work site until they were directed to return to their usual place of residence, rather than a benefit in respect of any period worked or not worked due to industrial action, and was not caught by section 470(1).

The High Court noted, however, that whether the section prohibited any given payment would depend upon the circumstances of the case. For example, a payment by way of a gift might be prohibited if the circumstances showed that it was actually made by way of recompense for wages not earned.

The High Court concluded that the denial of accommodation in this case would amount to an alteration of the position of the employees to the employees' prejudice and, pursuant to section 342 of the FW Act, would amount to the taking of adverse action against the employees.

At first instance before the Federal Magistrates Court of Australia, Federal Magistrate Lucev had dismissed the application of the Construction Forestry Mining & Energy Union (CFMEU) challenging the denial. Federal Magistrate Lucev saw the purpose of section 470(1) of the FW Act as ensuring that employees were to bear all economic loss flowing from their industrial action. In the circumstances, Federal Magistrate Lucev argued that the employees engaged in protected industrial action would not be bearing the financial consequences of their industrial action if they continued to receive accommodation paid for by their employer. On appeal to the Federal Court of Australia, Justice Gilmour upheld the court of first instance, rejecting the narrow interpretation of section 470(1) of the FW Act advocated by CFMEU, and found that section 470(1) was broad enough to preclude payments in kind, such as the provision of accommodation.

The decision of the High Court thus appears to narrow the scope and impact of section 470(1) of the FW Act on the basis that the provision of non-cash benefits, and some cash benefits, which are not in the nature of recoupment of wages lost due to the period of industrial action, is not prohibited by the section.

1Construction Forestry Mining & Energy Union v Mammoet Australia Pty Ltd [2013] HCA 36

 

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