A summary of the week’s critical news, developments and case updates that affect your workplace.

News and developments

• COVID-19: JobKeeper Update
• Corporate crime: Systematic misconduct

Case updates

• Promotion without refreshing contract – terrible trouble
• Redundancy subterfuge and adverse action
• Redundancy reduction
• Suitable alternative employment
• Not listening to your own doctor

COVID-19: JobKeeper Update

The Victorian Government has extended the 6 month of workers’ compensation weekly entitlements to long term injured whose 130 weeks are due to expire in October, November or December. Although the Government has not said, it is unlikely there will be any premium impact as is was made clear first extension would have no impact.

Increased inspectors’ powers of issuing directions and prohibition notices ss.112 and 120 of OHS Act where there is an immediate risk relating to pandemic. For high risk industries like to meat-processing industry – expect a visit.

Corporate crime: Systematic misconduct

Last month, the Australian Law Reform Commission’s report on criminal responsibility was tabled in Parliament. The report addressed the growing concern that corporations are rarely held responsible for their breaches of the law. The ALRC found that current provisions that deal with the criminal responsibility of corporations are too complex and generally only cover low level offences. It further contends that the civil penalty provisions do not adequately deter corporations as many see them as ‘the cost of doing business’.

To address the lack of accountability that corporations face, the report makes a number of recommendations. Most notably, it recommends that a new criminal offence is introduced to punish corporations that systematically engage in misconduct and breach the civil penalty provisions. It also suggests a national regime is needed and that there needs to only be one method for determining when a corporation should be held responsible for a crime. Higher regulation is coming to the financial sector following the damning findings of the Banking Royal Commission. It is time to get your house in order.

Promotion without refreshing contract – terrible trouble

When people are doing well, we grow lax with documentation around their entitlements. We are all friends, and nobody contemplates falling out of love. It is the way of the world. In Roderick v Washington H Soul Pattison (WHSP), Ms Roderick commenced work in 2006, was promoted to an executive director role as Finance Director in 2014 (significantly higher responsibilities and wage, along with access to STI and LTI (bonuses). A new contract was drafted but never signed. She had three months’ notice under her original contract notice provision but no right to terminate in lieu of notice. WHSP decided to replace her with a CFO who was much cheaper (never admitted but the Judge found they did – he was appointed the day after she was terminated). She was given no reason for her termination, denied payment of STI and LTI, days before period of STI matured and paid 3 months in lieu of notice. The key findings:

1. There was clear evidence that the original contract was mutually intended to be terminated (imputed from the facts -a mutual intention including substantially different role, recognition by payment of higher wages different contract etc). Therefore, it was terminated.
2. The new unsigned contract was not perfected and terms were not agreed. No ill-will just not a priority.
3. Therefore, notice was ‘reasonable notice’-which for a person of her service and seniority was 12 months. There was no capacity to pay in lieu.
4. Bonus was defined by KPI targets, so the word discretion was fettered to meeting her KPI’s – the Court awarded her pro rata entitlement to bonus.
5. As an aside, WHSP alleged she was a poor performer – but not surprisingly there was absolutely no evidence of this in her entire employment.

She was awarded $1.1m damages. Lesson, you must confirm new appointments by contract with rights around gardening leave, payment in lieu and an appropriate notice clause.

Redundancy subterfuge and adverse action

How often do you hear an employer seek to use redundancy to avoid dealing with a performance issue, or to rid themselves of a troublesome employee (like a Union Delegate of HSR). My advice – DO NOT EVER DO IT.

Why? Because you are the good guys who honour your values and are honest. Leaders motivate employees to work hard and follow them because they are good. If you do something so obviously bad, you lose the heart of your workforce.

In Melbourne Precast Concrete (MPC) v CFMEU and Hes, MPC, and its director, Mr Pichler, were found to have contrived the redundancy of Mr Hes because he made inquiries and complaints to WorkSafe. Inquiries and complaints were lawful processes and in fact enabled by the safety regulations. Clearly, these were protected workplace rights in Adverse Action law. The Court found that:

1. Mr Hes had acted lawfully in his role.
2. He was an excellent worker with no evidence of poor performance.
3. His termination was motivated by Mr Pilcher’s anger at him inquiring and complaining to WorkSafe.
4. The Skills Matrix was fabricated (done by Mr Pilcher although he said by someone else and falsely assessed the performance as low).
5. Mr Hes was reinstated, awarded compensation and both MPC and Mr Pilcher were fined close to the highest end of available penalties.

Lesson in this case is don’t use redundancy as a ruse for other unscrupulous action.

Redundancy reduction

In CFMEU v JFM Group, JFM successfully had severance payments reduced to nil because of the financial position of the business under ss.119 and 120 FWA. On appeal, the Full Bench made it clear the entitlement to severance variation only arose where the entitlement to severance comes from the NES in the FWA. JFM was covered by an Award that had an inter-industry redundancy scheme, not NES (see s.123) therefore no severance reduction could occur. Please check your Award or EA to make sure it refers to the NES. If not, no reduction.

Suitable alternative employment

In volatile times what you don’t need today you may need tomorrow. In Lakhan v United Petroleum, Mr Lakham was made redundant. At the time there was no other role. In error they advertised shortly after for a similar role. They admitted it was done in error. The FWC held it was done in error (very lucky) and that the time for testing suitable alternative work is at the time of making the decision to make the employee redundant. Again, if it is merely subterfuge to rid yourself of someone and later reemploy someone else it will fail.

Not listening to your own doctor! Derrrr

Matthews v Comcare tells a story of Centrelink’s utter failure to comprehend the risk of change on a vulnerable employee. Before we get to the facts lets state some legal propositions which are uncontroversial.

1. Safety law requires employers to do everything that is reasonably practicable to monitor an employee’s health.
2. Reasonably practicable requires the identification of a hazard. A vulnerable person who has expressed their fears shouts out psychosocial hazard. Your job is then to determine the risk by assessing their vulnerability and creating a control to eliminate or mitigate that risk. Usually a lay person can do that by listening carefully to the person and working with them, and their treating mental health practitioner. If you are concerned you can require a medical assessment.
3. Monitoring health is a continuous process and means surveillance of a person’s health who, in this case, is struggling with change.
4. When you are changing how and where work is done you must consult under safety legislation, undertake risk assessments and use controls-see above.

Centrelink knew the person was vulnerable, received expert medical advice on how to control the risk and ignored the advice. Its failure caused a psychological injury that was compensable.

Written by Nina Hoang and Jewlia Holt

Have a question or need advice?

Our team are here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas.