Abstract
This article examines a number of decisions of Fair Work Australia, the High Court of Australia and the Federal Court of Australia from 2012 regarding the application of the Fair Work Act 2009. In the decision of Bendigo v Barclay, the High Court considered how the courts should approach a determination as to whether an employer has engaged in adverse action for a prohibited reason. The Endeavour Coal decisions of Fair Work Australia and the Federal Court have addressed the good-faith bargaining provisions of the Fair Work Act 2009. Further, Fair Work Australia has resolved conflicting authority regarding the approval of enterprise agreements containing ‘opt-out’ clauses. In other decisions, Fair Work Australia has considered an appeal from unfair dismissal proceedings regarding an employee who was terminated on the basis of an offensive Facebook page, and the Federal Court has confirmed the existence of an implied term of mutual trust and confidence in an employee's contract.
Introduction
The year 2012 was an important one for Fair Work Australia (FWA), with the Fair Work Act Review Panel releasing its final report in August 2012, and the Fair Work Amendment Bill 2012 (FW Amendment Bill), which implemented some of the recommendations from that report, passing through the Federal Parliament in November 2012. We have also seen a number of important decisions handed down by FWA and the Federal Courts. The year saw the High Court deliver its much-anticipated decision in The Board of Bendigo Regional Institute of Technical and Further Education v Gregory Paul Barclay 1 (the Barclay decision), clarifying how courts should approach the question of whether an employer has engaged in adverse action under the Fair Work Act 2009 (FW Act).
The requirements of good-faith bargaining have been further clarified in 2012 by way of the Full Bench of FWA's decision in Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia (Collieries' Staff Division) 2 (the Endeavour Full Bench decision), along with the decision in appeal proceedings before the Federal Court in Endeavour Coal Pty Limited v Association of Professional Engineers, Scientists and Managers, Australia 3 (the Endeavour Federal Court decision). The Full Bench of FWA and the Federal Court of Australia confirmed that despite the FW Act not explicitly requiring an employer to take any positive steps to satisfy good-faith bargaining requirements, an employer who simply rejects proposals put forward by an employee representative may be found to not be bargaining in good faith. Further, in the decision of J.J. Richards & Sons Pty Ltd v Fair Work Australia, 4 a Full Court of the Federal Court upheld an earlier Federal Court decision, confirming that good-faith bargaining negotiations do not need to have commenced before a protected action ballot order can be granted.
During 2012, FWA also sought to address conflicting tribunal authority that had developed regarding the use of ‘opt-out’ clauses in enterprise agreements. The Full Bench of FWA's decision in December 2011 in Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union 5 (the Newlands decision) approved an enterprise agreement containing an ‘opt-out’ clause, while the five-member Full Bench of FWA decision in September 2012 in Construction, Forestry, Mining, and Energy Union v Queensland Bulk Handling Pty Ltd 6 (the Queensland Bulk Handling decision) found that ‘opt-out’ clauses should not be used in enterprise agreements. The passing of the FW Amendment Bill now cements this position, with ‘opt-out’ clauses identified as unlawful terms.
A Full Bench of FWA has also considered an appeal from an unfair dismissal decision regarding an employee whose employment was terminated for serious misconduct on the basis of comments written about his managers on his Facebook page. In this decision – Linfox Australia v Stutsel 7 (the Linfox v Stutsel decision) – the Full Bench of FWA provided some important insights into the way the tribunal may treat inappropriate use of social media by employees in the future.
Finally, in the case of Barker v Commonwealth Bank of Australia (the Barker decision), 8 a single judge of the Federal Court emphasised the importance of employees and employers complying with company policies, even where those policies do not form part of an employment contract. In this important decision, Justice Besanko confirmed that under Australian law, a serious breach of a redundancy policy may give rise to a breach of an implied term of mutual trust and confidence.
Adverse action – the Barclay decision
On 7 September 2012, the High Court handed down its decision in Barclay, which was an appeal from the decision of the Full Federal Court in Barclay v Board of Bendigo Regional Institute of Technical and Further Education, 9 a case that we considered in a previous edition of this journal (Catanzariti and Kane, 2011). Mr Barclay was a senior teacher at Bendigo Regional Institute of Technical and Further Education (BRIT) as well as the sub-branch President of the Australian Education Union (AEU). Mr Barclay was suspended on full pay after he sent an email to those BRIT employees who were members of the AEU stating that several union members had reported witnessing or being asked to produce false and fraudulent documents for a BRIT audit. Mr Barclay claimed that by suspending him, BRIT had engaged in adverse action against him for a prohibited reason in contravention of both sections 346(a) and 346(b) of the FW Act.
Section 346 of the FW Act provides that: A person must not take adverse action against another person because the other person: (a) is or is not, or was or was not, an officer or member of an industrial association; or (b) engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b); or (c) does not engage, or has at any time not engaged or proposed to not engage, in industrial activity within the meaning of paragraphs 347(c) to (g).
Federal Court decisions
At first instance, Justice Tracey accepted the evidence of BRIT's Chief Executive Officer (CEO), Dr Harvey, that she suspended Mr Barclay for reasons not including the fact that Mr Barclay had a union position. Justice Tracey accordingly found that while BRIT had engaged in adverse action against Mr Barclay, that action had not been taken for a prohibited reason. Subsequently, a majority of the Full Federal Court allowed an appeal, finding in favour of Mr Barclay. Justices Gray and Bromberg found that it would be impossible for BRIT to divorce from its action the objective fact that the email was sent by Mr Barclay in his union capacity. Justices Gray and Bromberg explained that in determining the reason why a person took adverse action, an individual's frame of mind will be a relevant consideration: The [decision maker’s] state of mind will be centrally relevant, but it is not decisive … . The real reason for a person’s conduct is not necessarily the reason that the person asserts, even where the person genuinely believes he or she was motivated by that reason. The search is for what actuated the conduct of the person, not for what the person thinks he or she was actuated by. In that regard, the real reason may be conscious or unconscious.
High Court decision
BRIT then brought an appeal to the High Court, where two different approaches were presented as to how a court should consider the reason taken for a decision. First, the appellant, BRIT, contended that a contravention of section 346 of the FW Act requires a mental element – that is, the subjective reason why the employer took the adverse action must be a prohibited reason under the FW Act. The alternative approach, advanced by the respondents, was that a contravention of section 346 should be determined objectively. According to this view, a contravention would be established if a reasonable observer were to conclude that the employer took the adverse action for a reason that included a prohibited reason.
The High Court handed down three separate judgments, unanimously allowing the appeal. However, the Court resisted describing its approach as a ‘subjective’ or ‘objective’ approach. Rather, the Court explained that the decision-maker's own reasons for taking adverse action will be determinative in deciding whether an employer has acted for a prohibited reason. The Court explained that due to the reverse onus of proof in adverse action proceedings, an employer will ordinarily need to call evidence from a decision-maker as to the reason the particular action was taken. In this case, the decision-maker at BRIT had given evidence that the conduct was not engaged in for a reason that included a prohibited reason. Importantly, their Honours explained that it may be open to a court to test the decision-maker's evidence and potentially find that the decision-maker's direct evidence is unreliable, for example, if contradictory evidence is given by the decision-maker or because other objective facts contradict the decision-maker's evidence. However, where evidence given by a decision-maker is accepted as reliable, it is capable of discharging the burden upon an employer, despite the fact of the individual having engaged in industrial activity.
The High Court criticised the Full Federal Court's approach in seeking to look behind the evidence given by the decision-maker in order to take into account the unconscious reasons why a decision-maker made a particular decision. In particular, in a separate judgment, Heydon J described as ‘indefensible’ the position of the majority of the Full Federal Court that the ‘real reason’ taken for conduct could be ‘unconscious’. Justice Heydon explained that there is no requirement in the FW Act for a court to consider any unconscious reason for an employer's decision, and neither was there any evidence before the Court supporting the proposition that Dr Harvey had unconsciously engaged in prohibited reasoning when taking action against Mr Barclay. The High Court's clear reasoning in Barclay confirms that when determining whether adverse action has been taken for a prohibited reason, a court must clearly apply the test set out in the FW Act, and consider whether the decision-maker was genuinely motivated by reasons not including any prohibited reason.
Good-faith bargaining – Endeavour Coal cases
The Endeavour Coal series of cases has provided important insight into how the good-faith bargaining provisions of the FW Act will apply in practice. Endeavour Coal (Endeavour) conducts coal-mining activities in New South Wales, while the Association of Professional Engineers, Scientists and Managers, Australia (APESMA) represents employees in the coal industry. In 2010, a majority support determination was issued under the FW Act stating that a majority of employees of Endeavour wanted to bargain with the company for an enterprise agreement. Following this majority support determination, in the 12 months from August 2010 to August 2011, 12 bargaining meetings were held between Endeavour and APESMA. As at mid-2011, the parties remained in dispute over certain issues. On 19 August 2011, APESMA made an application to FWA seeking a bargaining order against Endeavour on the basis that Endeavour was in breach of the good-faith bargaining requirements and that its breach was undermining the collective bargaining process.
Fair Work Australia decisions
At first instance, Commissioner Roberts found that Endeavour was bargaining with APESMA with no real intention to negotiate an agreement, and that this cannot constitute bargaining in good faith. In reaching this decision, Commissioner Roberts referred to evidence given in cross-examination that Endeavour felt that it was under no obligation to put to APESMA a proposal to enter into an enterprise agreement on certain terms. Commissioner Roberts accordingly made orders largely in the terms sought by APESMA, including an order that Endeavour provide to APESMA a list of the subject matter that Endeavour would be prepared to include in an enterprise agreement applying to its employees.
Endeavour lodged an appeal with FWA, with the Full Bench delivering its judgment in March 2012.
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One of the key questions for the Full Bench to resolve was whether Endeavour had in fact failed to meet the good-faith bargaining requirements of the FW Act. The Full Bench explained that: this involved a consideration as to whether there was a real or serious endeavour being made by the Company to negotiate an agreement, having regard to the finding by FWA that a majority of its staff employees wanted to bargain for an agreement.
Federal Court decision
Endeavour then challenged the decisions of both Commissioner Roberts and the Full Bench in the Federal Court. It sought an order that the Full Bench of FWA had engaged in jurisdictional error in its construction of section 228 of the FW Act and in the orders made against the company.
Justice Flick provided a detailed analysis of the requirements of good-faith bargaining under the FW Act. His Honour explained that the requirements of good-faith bargaining set out in section 228(1) of the FW Act provide the touchstone against which the conduct of a bargaining representative is to be assessed. Justice Flick explained that section 228(1) of the FW Act does not require parties to bargain in any particular manner, and that what constitutes conduct satisfying good-faith bargaining requirements will vary from case to case. His Honour recognised that the good-faith bargaining provisions under section 228(1) refer to bargaining ‘for a proposed enterprise agreement’. While this does not mean that parties must bargain until an agreement is reached, it does require that bargaining representatives approach their task in good faith to reach an agreement if possible. His Honour also explained that the good-faith bargaining requirements require a party to ‘genuinely participate in the bargaining process; it cannot adopt the role of a disinterested suitor’. Accordingly, a party who sits mute and merely rejects the proposals put forward may fail to fulfil the requirements of the legislation. In the circumstances, his Honour found that the Full Bench of FWA did not err in its construction of section 228 of the FW Act.
Justice Flick also found, however, that certain orders made by Commissioner Roberts were beyond power. Those orders included, for example, an order that Endeavour list the subject matter that it would be prepared to include in an agreement. Justice Flick considered that this amounted to requiring Endeavour Coal to make a concession as to which terms it considered to be acceptable as part of an enterprise agreement and which terms it did not consider to be acceptable. His Honour considered that this would accordingly fall foul of section 228(2)(b) of the FW Act, which states that ‘The good faith bargaining requirements do not require … (b) a bargaining representative to reach agreement on the terms that are to be included in the agreement’. His Honour also noted that had an order been made that Endeavour Coal list the subject matter that it may (as opposed to would) be prepared to include in an agreement, this may have been consistent with the FW Act.
The Endeavour Federal Court decision provides practical insight into how FWA and the courts will approach compliance with the good-faith bargaining requirements of the FW Act. The Federal Court's decision confirms that an employer cannot necessarily sit by while an employee representative makes offers regarding an enterprise agreement, and that the absence of any positive obligation in the FW Act does not mean that an employer can necessarily do nothing in the negotiation process. While the parameters of good-faith bargaining will vary from case to case, employers and employees must, at the very least, bargain in good faith with the aim of agreeing on an enterprise agreement.
Protected action ballot orders – the J.J. Richards decision
A Full Court of the Federal Court unanimously dismissed an appeal brought by J.J. Richards, confirming that FWA exercised its power validly under the FW Act in granting a protected action ballot order before good-faith bargaining negotiations had commenced.
Section 443 of the FW Act relevantly states: 1. FWA must make a protected action ballot order in relation to a proposed enterprise agreement if: a. an application has been made under section 437; and b. FWA is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted 2. FWA must not make a protected action ballot order in relation to a proposed enterprise agreement except in the circumstances referred to in subsection (1).
J.J. Richards argued that section 443 should be construed in the context of other provisions of the FW Act regarding protected action ballot orders, and, accordingly, that such orders should not be granted before good-faith bargaining had commenced.
Justices Jessup, Tracey and Flick recognised that the FW Act does not explicitly require good-faith bargaining to have commenced before a protected action ballot order can be made. Their Honours considered principles of statutory construction and found that it would not be appropriate for the Court to restrict protected action ballot orders to instances where good-faith bargaining negotiations had commenced. Such a restriction, which had not been imposed by Parliament, should not be implied by the Court.
The Court explained that the FW Act did not require a bargaining representative to seek a majority support determination or good-faith bargaining order in order to be found to be genuinely trying to reach agreement, and successfully apply for a protected action ballot order. Whether an applicant for a protected action ballot order is in fact genuinely trying to reach agreement is a matter that will be determined having reference to all of the material before FWA. In delivering its reasons, the Court expressed some sympathy for the appellant's position, with Justice Jessup stating that ‘there is much to be said for the applicants’ case, as a matter of broad statutory purpose’. His Honour acknowledged that the FW Act provides, for instance, that an employer could be brought to the bargaining table by way of a majority support determination, rather than by way of protected industrial action. Justice Tracey similarly acknowledged the ‘less confrontational and more ordered process [that] was available to the Union had it wished to avail itself of it’.
Despite these comments, this decision confirms the Federal Court's strict interpretation of the FW Act, that good-faith bargaining does not need to have commenced in order to demonstrate that a party has been genuinely trying to reach agreement. Nor will a union be required to obtain a majority support determination, for example, before obtaining a protected action ballot order.
‘Opt-out’ clauses in enterprise agreements
In recent years, FWA has delivered a series of decisions regarding the validity of ‘opt-out’ clauses in enterprise agreements. A determination as to whether an enterprise agreement is valid is to be made in accordance with section 186 of the FW Act, which sets out those matters of which FWA must be satisfied before it will approve an enterprise agreement. In particular, section 186(3) of the FW Act provides that ‘FWA must be satisfied that the group of employees covered by the agreement was fairly chosen’ (emphasis added). In the decided cases, a key consideration in determining whether an ‘opt-out’ clause in an enterprise agreement is valid is whether the existence of an ‘opt-out’ clause would be inconsistent with this ‘fairly chosen’ test.
Newlands Coal
The enterprise agreement for consideration by FWA in Newlands Coal contained an ‘opt-out’ clause to the effect that the agreement would not apply to ‘employees who at any time elect in writing not to be covered by the agreement’. At first instance, Commissioner Roe found that there was some doubt that there could be a genuine agreement by employees to enter into an enterprise agreement for the purposes of the Act if ‘an undefined group of employees may at some future date be excluded from the agreement by “opting out”’. Commissioner Roe held that the process of choosing which employees would be covered by the agreement was unfair, since those employees voting for the agreement could not have known who might be covered by it in the future. Accordingly, Commissioner Roe refused to approve the enterprise agreement.
A majority of a Full Bench of FWA overturned Commissioner Roe's decision, upholding the validity of the ‘opt-out’ clause of the enterprise agreement.
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Senior Deputy President Hamberger and Deputy President McCarthy explained that: There is no uncertainty about who will be covered: all those employees in the relevant classifications with the exception of those employees on unexpired AWAs and those who have made a written election not to be covered. All employees were notified and given the opportunity to agree or disagree … . It is true that those voting would not know at that point which individuals would be covered by the agreement at some point in the future, nor how many employees would be covered. This is however quite unremarkable. All sorts of things typically happen over the life of the agreement to alter the individuals covered by the agreement.
In the second decision of the Full Bench of FWA,
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Senior Deputy President Hamberger, with Deputy President McCarthy agreeing on point, explained that: The only distinction between those who would be covered and those who would not is that the latter have made an election not to be covered. I do not consider that there is anything unfair about such a process (or such an outcome).
Construction, Forestry, Mining and Energy Union v Queensland Bulk Handling
In the first instance decision of Queensland Bulk Handling Pty Ltd v Construction, Forestry, Mining and Energy Union, 15 Deputy President Sams expressed concern at the absurdity that could potentially result from the approval of enterprise agreements containing ‘opt-out’ clauses. His Honour explained that ‘opt-out’ clauses should ‘be discouraged, if not ultimately found to be inconsistent with the statutory purpose and intent of Part 2-4 of the Act’. However, Deputy President Sams considered himself to be bound by the Full Bench of FWA's decision in Newlands, and accordingly approved the agreement before him that contained such an ‘opt-out’ clause.
In the appeal decision of Queensland Bulk Handling, a five-member bench of FWA clarified that ‘opt-out’ clauses will not be permitted in enterprise agreements. The tribunal gave several reasons why it considered ‘opt-out’ clauses to be inconsistent with the policy and purpose of the FW Act. First, the Full Bench explained that ‘opt-out’ clauses undermine the certainty around bargained outcomes that the FW Act seeks to achieve, as they allow employees to ‘opt-out’ of agreements. In theory, all employees could ‘opt-out’ of an agreement, and therefore practically terminate it. This would be contrary to the requirement under the FW Act that termination of an agreement only be by mutual consent. Second, the Full Bench explained that ‘opt-out’ clauses may facilitate an outcome whereby an enterprise agreement only covers one employee, which would be contrary to the clear legislative preference for the promotion of collective bargaining over individual bargaining. Third, the Full Bench of FWA explained that while the FW Act gives effect to providing a flexible framework by mandating ‘flexibility terms’ in enterprise agreements, ‘opt-out’ clauses provide for a degree of flexibility not contemplated by the statutory framework. Accordingly, the five-member Full Bench of FWA upheld the appeal and quashed the decision of Deputy President Sams, noting that while his Honour's reasoning was that enterprise agreements with ‘opt-out’ clauses should not be approved, his Honour had been obliged to follow the decision in Newlands.
The outcome of the Full Bench decision of Queensland Bulk Handling has since been enshrined in legislation, with parliament approving the FW Amendment Bill in November 2012, confirming that ‘opt-out’ clauses will be considered unlawful terms of an enterprise agreement.
Social media and unfair dismissal – Linfox v Stutsel
The separation of work and personal life, as well as the potential pitfalls facing employees in the age of social media, have recently been examined by a Full Bench of FWA in the decision of Linfox v Stutsel. Mr Stutsel, who had been employed as a truck driver by Linfox Australia since April 1989, was terminated for serious misconduct on the basis of comments posted to his Facebook profile page regarding two of his managers. The Full Bench of FWA described the comments posted on Mr Stutsel's Facebook page regarding the Linfox managers as ‘offensive, derogatory and discriminatory, and included suggestions of dishonest and underhanded conduct, and comments of sexual misconduct’. Such comments had been posted on Mr Stutsel's page by Mr Stutsel and a number of his colleagues. Linfox managers, who became aware of Mr Stutsel's Facebook page, complained to Linfox about Mr Stutsel's comments. Following an internal investigation, Mr Stutsel's employment was terminated in May 2011.
First instance decision
Mr Stutsel challenged his dismissal on the grounds that he had been unfairly dismissed pursuant to section 394 of the FW Act. At first instance, Commissioner Roberts was satisfied that his dismissal was ‘harsh, unjust or unreasonable’ and ordered that Mr Stutsel be reinstated. The Full Bench of FWA upheld this finding on appeal.
At first instance, Commissioner Roberts found that while Mr Stutsel's comments were distasteful, some of them were expressions of Mr Stutsel's private views and not intended to be made public; others were not racially derogatory and not intended to be hurtful; and others still were an attempt at humour and did not contain any credible threat to the managers’ well-being. Commissioner Roberts characterised the comments, some of which were not actually made by Mr Stutsel but by his Facebook ‘friends’, as having the flavour of ‘a group of friends letting off steam and trying to outdo one another in being outrageous’ and of ‘a conversation in a pub or café, although conducted in an electronic format’.
Commissioner Roberts also recognised that Linfox did not have a policy on employee use of social media, and the induction training material and the handbook that the company had relied upon in terminating Mr Stutsel were not an adequate basis upon which to ground a dismissal. The Commissioner also considered that the dismissal was harsh, unjust or unreasonable because Mr Stutsel had been treated differently from his colleagues, as while there were other employees who made offensive comments on Mr Stutsel's page, no action was taken against any other employee. The Commissioner also took into account Mr Stutsel's employment record, age and job prospects, as well as the fact that Mr Stutsel was under the mistaken impression that his Facebook page, which had been set up by his wife and daughter, was set to the highest privacy setting, and could only be viewed by his Facebook ‘friends’.
Fair Work Australia appeal
Linfox appealed Commissioner Roberts's decision on the basis that, inter alia, Commissioner Roberts had failed to take into account material considerations and relied on irrelevant considerations mitigating Mr Stutsel's culpability. The Full Bench of FWA dismissed the appeal. The Full Bench noted that: The posting of derogatory, offensive and discriminatory statements or comments about managers or other employees on Facebook might provide a valid reason for termination of employment. In each case, the enquiry will be as to the nature of the comments and statements made and the width of their publication.
The appeal bench ultimately determined that the appellant had not shown any error of such significance in the Commissioner's decision as to warrant interference by it. The Full Bench found that the following matters particularly supported Commissioner Roberts's decision:
Mr Stutsel's long period of satisfactory employment, his age and employment prospects; Mr Stutsel's belief that his Facebook page was set to the maximum privacy setting, and his belief that only himself and his Facebook friends could view the content, content that he never intended to be communicated to the managers; the conduct occurred outside of the workplace and outside of working hours; some of the statements complained about were not made by Mr Stutsel, and Mr Stutsel did not know how to delete them; Linfox did not take any action against other employees who also posted objectionable material; and Mr Stutsel's awareness that the comments were foolish and his regret of the entire situation.
Despite dismissing the appeal, the appeal bench recognised that, in future, employees may not be able to rely on the same arguments as those put by Mr Stutsel. In particular, the Full Bench of FWA noted that: with increased use and understanding about Facebook in the community and the adoption by more employers of social networking policies, some of these factors [age, record of employment, etc.] may be given less weight in future cases. The claim of ignorance on the part of an older worker, who has enthusiastically embraced the new social networking media but without fully understanding the implications of its use, might be viewed differently in the future.
FWA's decision in Linfox v Stutsel recognises the complexities associated with employee use of social media in circumstances where social media is used as a tool to communicate with work colleagues or is accessible by work colleagues. It also demonstrates the value of employers implementing carefully articulated social media policies. Although, in this instance, an employee's lack of understanding of Facebook privacy settings was considered to be a factor mitigating Mr Stutsel's conduct, the tribunal indicated that such a claim of ignorance might be treated differently by the tribunal in future.
Implied term of mutual trust and confidence – Barker v CBA
The Barker decision, handed down in September 2012, saw the Federal Court confirm the existence of an implied term of mutual trust and confidence in an Australian employee's contract of employment, and award damages to an employee for loss of chance due to breach of that term. The applicant, Mr Barker, was a former employee of the Commonwealth Bank of Australia (CBA) who was terminated by the CBA on the basis of redundancy in 2009. According to the CBA's Redundancy Policy, the CBA was required to take steps to seek to redeploy staff to suitable alternative positions in the case of redundancy. Justice Besanko found that the CBA had acted in ‘serious breach’ of this policy.
Mr Barker submitted that the redeployment policies issued by CBA had become terms of his contract of employment and that the respondent acted in breach of the contract. On the other hand, the CBA submitted that the bank's policy expressly stated that it was not to form part of an employee's contract of employment, and as such did not create a legal obligation on CBA.
Justice Besanko followed the decision of Yousif v Commonwealth Bank of Australia 16 in finding that, in the absence of countervailing factors, where an express term states that a policy does not form part of a contract of employment, then that policy will not be incorporated into a contract of employment. His Honour also considered whether Mr Barker's contract contained an implied term of mutual trust and confidence that the CBA may have been found to have breached. Justice Besanko held that English law recognised an implied term of trust and confidence in contracts of employment, but described the position in Australia as ‘not as clear’. Nonetheless, relying on the English decision of Malik v Bank of Credit and Commerce International (in liq.), 17 and the assumption of the existence of an implied term of mutual trust and confidence by four Justices of the High Court in Koehler v Cerebos (Aust) Ltd, 18 his Honour held that there was an implied term of mutual trust and confidence in the contract of employment between Mr Barker and the CBA. Justice Besanko held that such a term would be breached where a party does not have a reasonable and proper cause for its conduct and the conduct is likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. His Honour found that a serious breach of an employment policy will give rise to a breach of the implied term of mutual trust and confidence and a claim for damages.
In the context of Mr Barker's situation, the Court held that the failure of CBA to contact the applicant earlier in his redeployment period, without good cause, amounted to a failure to comply with its own company policy. Justice Besanko considered that had the Bank made a timely and genuine effort to comply with its Redeployment Policy, Mr Barker would have been advised of a position or positions for which he may have been considered suitable. Justice Besanko was not satisfied on the balance of probabilities that had the Bank followed its Redeployment Policy, Mr Barker would have been redeployed. However, based on the evidence, his Honour assessed Mr Barker's chance of redeployment at 25%. His Honour found Mr Barker to therefore be entitled to receive 25% of the past and future economic loss that he had and would suffer as a result of the CBA's breach of the implied term of mutual trust and confidence by acting in serious breach of the Redeployment Policy. Ultimately, Justice Besanko ordered the CBA to pay the applicant AU$317,500 in damages for breach of the implied term of mutual trust and confidence between an employer and an employee.
The decision in Barker confirms that employers cannot avoid compliance with company policies simply by excluding the application of those policies from the company's employment contracts. It also recognises that an employee who suffers loss of chance due to an employer's breach of the implied term of mutual trust and confidence may potentially be awarded significant damages as a result. An appeal from this decision has been lodged with a Full Court of the Federal Court.
Conclusion
FWA, High Court and Federal Court decisions in 2012 brought new insight and common sense to the application and interpretation of the FW Act. The Barclay decision has confirmed that the onus of proving reasons for taking adverse action lies on the person who took the action, and if the tribunal of fact is persuaded that the person was genuinely motivated by reasons not including any prohibited reason, then that reversed onus of proof will be satisfied. The Endeavour decisions have demonstrated that a party to good-faith bargaining who simply acts as a ‘disinterested suitor’ may be found to have breached the good-faith bargaining requirements of the FW Act.
Clarity has also been brought to the use of ‘opt-out’ clauses in enterprise agreements, with a five-member FWA Bench emphatically deciding that such clauses should not form part of enterprise agreements, a view confirmed by the FW Amendment Bill, which outlaws ‘opt-out’ clauses as ‘unlawful terms’.
In the special circumstances of the Linfox v Stutsel decision, a Full Bench of FWA refused to allow an appeal from a decision of Commissioner Roe that found the dismissal of an employee on the basis of offensive Facebook comments to be unfair. Then, in Barker, the Federal Court confirmed that a term of mutual trust and confidence may be identified in contracts of employment. Appeals have since been brought against each of these decisions in Linfox v Stutsel and Barker.
Footnotes
Funding
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.