Major court and tribunal decisions in Australia in 2013

Abstract

This article examines a number of decisions of the High Court of Australia, the Federal Court of Australia, the Fair Work Commission and the Local Court of NSW from 2013 regarding industrial law issues including the application of the Fair Work Act 2009. In the decision of Commonwealth Bank of Australia v Barker, the Full Federal Court confirmed the existence of an implied term of mutual trust and confidence in an Australian employment contract. The Federal Court of Australia's decision in Warrell v Walton examined the right of parties to be represented before the Fair Work Commission. The High Court of Australia's decision in Construction Forestry Mining & Energy Union v Mammoet Australia Pty Ltd allowed an appeal from the decision of the Federal Court of Australia which had held that accommodation provided to fly-in/fly-out employees constituted payment for the purposes of a protected industrial action. The interpretation of section 90(2) of the Fair Work Act 2009 received its first judicial analysis in a decision by the New South Wales Local Court in Stephen Edward Ryan v Whitehaven Coal Mining Pty Ltd. Lastly, with the Fair Work Commission's specific bullying jurisdiction to commence on 1 January 2014, the decision of Harris v Workpac Pty Ltd provided an example of an approach that the Fair Work Commission may take in its newly conferred jurisdiction.

Keywords

Adverse action Fair Work Act 2009 representation workplace bullying

Introduction

The year 2013 has again demonstrated that tribunals and courts continue to play a critical role in guiding the practice of industrial relations in Australia. This article presents examples of this from an array of tribunals including the High Court of Australia (HCA), the Federal Court of Australia (FCA) and the Fair Work Commission (FWC).

The year saw the Full Federal Court in Commonwealth Bank of Australia v Barker¹ (Barker) confirm the existence of an implied term of mutual trust and confidence in an Australian employee's contract of employment, a decision which represents the first binding decision of an intermediate appellate court in Australia recognising such a term as a part of its ratio decidendi.

The High Court of Australia's decision in Construction Forestry Mining & Energy Union v Mammoet Australia Pty Ltd² (Mammoet) provided an analysis of the general protections and strike pay provisions of the Fair Work Act 2009 (Cth). In Mammoet, the High Court unanimously allowed an appeal from the decision of the Federal Court of Australia, which had held that accommodation provided to ‘fly-in/fly-out’ employees constituted ‘payment’ which was required to be withheld during a protected industrial action.

For the FWC, 2013 was a year of transition, following its change of name from Fair Work Australia on 1 January 2013. The FWC has handed down a number of important decisions that have the potential to influence industrial law in 2014 and beyond. The passing of the Fair Work Amendment Act 2013 (Cth) also conferred on the FWC an entirely new jurisdiction in respect of workplace bullying which will commence on 1 January 2014. This new jurisdiction has the potential to reach critical mass quickly in 2014 and the FWC estimates that it will receive approximately 3500 claims per year. A decision of Commissioner Cloghan of the FWC in Harris v WorkPac Pty Ltd³ (Harris) is a timely insight into the possible approach that the FWC may take in its newly conferred jurisdiction.

In the Federal Court of Australia, the decision of Warrell v Walton⁴ (Warrell) dispelled a widespread assumption that the FWC should, as a matter of course, grant permission for parties to be legally represented at a hearing before the FWC. That decision, and the decisions which follow it, have the potential to change the nature of representation before the FWC, the primary industrial tribunal in Australia.

Finally, of particular interest to industrial law practitioners was the decision of Stephen Edward Ryan v Whitehaven Coal Mining Pty Ltd⁵ (Ryan). Ryan represents the first judicial consideration of the correct interpretation of section 90(2) of the FW Act which relates to the payment of outstanding leave entitlements to employees upon termination.

Implied term of mutual trust and confidence: Barker

In Barker, a majority of the Full Federal Court confirmed the existence of an implied term of mutual trust and confidence (implied term) in Australian employment contracts. The decision has the potential to be extremely significant given it is the first binding decision of an intermediate appellate court in Australia recognising the existence of the implied term in the employment context.

Facts of Barker

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. In Mr Barker's case, CBA did not.

The Federal Court decision in Barker

At first instance, Besanko J of the Federal Court of Australia found that the CBA had, in failing to investigate redeployment opportunities for Mr Barker, acted in ‘serious breach’⁶ of the CBA Redundancy Policy. Mr Barker submitted that the redeployment policies issued by the CBA had become terms of his contract of employment and that CBA had accordingly acted in breach of that contract. CBA submitted that the relevant policy was expressly stated not to form part of Mr Barker's contract of employment, and as such did not create a legal obligation on the CBA.

Besanko J followed the decision of Yousif v Commonwealth Bank of Australia⁷ 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 which the CBA may have breached. Relying on the English decision of Malik v Bank of Credit and Commerce International (in liq.),⁸ and the fact that the existence of an implied term of mutual trust and confidence had been assumed by four Justices of the High Court in Koehler v Cerebos (Aust) Ltd,⁹ Besanko J held that there was an implied term of mutual trust and confidence in the contract of employment between Mr Barker and the CBA.

On the basis of that finding, Besanko J held that the failure of the CBA to contact Mr Barker earlier in his redeployment period, without good cause, amounted to a serious breach of its own company policy and resulted in a breach of the implied term. In the absence of a breach of the implied term, the Court considered that there remained a real and not insubstantial chance that Mr Barker could have been redeployed. On the basis of that breach, Besanko J awarded damages to Mr Barker in the amount of $317,500, representing a calculation of the total economic loss suffered by Mr Barker up to the date of retirement ($1,270,000) reduced by 75%, given that the Court assessed Mr Barker as having a 25% likelihood of redeployment at the time of termination.

The decision of Besanko J was appealed to the Full Federal Court.

The Full Court decision in Barker

CBA appealed to the Full Court, arguing that the implied term should not have been applied and was not breached in any event. Mr Barker cross-appealed on the basis that damages had been calculated incorrectly.

In the majority judgment, Jacobson and Lander JJ held that an implied term of mutual trust and confidence in employment contracts had ‘obtained a sufficient degree of recognition’¹⁰ and should be accepted. The majority reached this conclusion on the basis of policy considerations, accepted by the courts in England, which supported the development of the implied term in a manner consistent with the contemporary employment relationship and the evolution of the employment relationship to reflect common interest and partnership principles, rather than the traditional master/servant model. The majority accepted that these elements called for the implication by law of an obligation on the employer.

In finding that the implied term existed in Australia, the majority determined that the precise scope of the implied term would depend on the particular nature of the employment relationship and would not apply in the context of ‘dismissal or to steps which are inextricably bound up with dismissal’.¹¹ The majority also held that the implied term could not be implied where it had been expressly excluded or was inconsistent with the express terms of the employment contract.

With respect to the facts before them, the majority disagreed with Besanko J's finding that the implied term arose out of the CBA's serious breach of its redeployment policy, finding that such policy had been expressly excluded from the contract. The majority instead found that the implied term should be recognised in the particular circumstances before the Court, given that Mr Barker was a senior employee of nearly 23 years' standing in a large corporate organisation and the fact that the employment contract contemplated that the employment may be terminated if the CBA were unable to place the employee in an alternative position.

In these circumstances, the majority held that the implied term required the CBA to take positive steps to consult with Mr Barker about the possibility of redeployment and to provide him with the opportunity to apply for alternative positions within the CBA. The majority outlined that in the present circumstances, the implied term required that the employer would not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between the parties.

The majority held that damages were available for breach but not available for an alleged loss of reputation or for hurt and distress as a result of termination. It was agreed that, subject to an error in calculation, damages had been accurately assessed by Besanko J.

The dissenting judgment in Barker

Following an extensive review of the relevant case law in Australia and the United Kingdom, Jessup J dissented from the majority in not being satisfied that an implied term of mutual trust and confidence should be implied into employment contracts in Australia. Jessup J held that no intermediate Australian Court had ever recognised the implied term, in the sense that the recognition of the implied term formed a part of a Court's ratio decidendi. So much was agreed by the majority.

Jessup J also found that, in any event, the implied term could not be breached by failing to adhere to a policy that was specifically excluded from the contract of employment. His Honour held that the implied term was not necessary for the enjoyment of the rights conferred by a contract of employment and therefore, the term could not be implied by law.

Jessup J warned that the implied term, if accepted, ‘would enable defined limits in the existing fabric of common law and equitable remedies to be sidestepped’,¹² and that the implied term would ‘overlap a number of legislated prohibitions and requirements …, thus tending to compromise the democratically-drawn architecture’¹³ of relevant employment obligations.

Special leave to appeal the majority's decision has now been granted by the High Court of Australia.

Significance of Barker

The long-term significance of Barker will obviously depend on the result of CBA's appeal to the High Court. If the majority's view is upheld, where not expressly excluded, the implied term will require employers to take considerable care in ensuring that their employees are treated with fairness consistent with the term of mutual trust and confidence. Although the implied term as recognised in Barker is limited in that it does not extend to circumstances of dismissal, it may apply in a number of other scenarios arising in the lead up to termination such as misconduct investigations, employee suspensions, redeployment or consultation discussions and performance management procedures.

The application of the implied term to the above scenarios gives rise to the real risk of employers being exposed to significant claims of economic loss should the implied term be breached and the relevant employee terminated. Significantly, the damages available for breach of the implied term as recognised in Barker may, in circumstances where statutory remedies for termination are limited or unavailable, represent an attractive alternative cause of action for employees.

Adverse action and strike pay: Mammoet

In Mammoet, the High Court of Australia held that the provision of on-site accommodation to employees during a period of protected industrial action was not a ‘payment’ that was prohibited by the FW Act.

Background to Mammoet

The Construction, Forestry, Mining and Energy Union (CFMEU) represented a number of employees of Mammoet Australia who worked on construction at the Woodside Pluto Liquefied Natural Gas Project located on the Burrup Peninsula in the remote north-west of Western Australia. The relevant employees worked pursuant to ‘fly-in/fly-out’ arrangements, under which Mammoet Australia provided their accommodation while on location.

Following notification that some of its employees intended to engage in ‘protected industrial action’ within the meaning of section 408 of the FW Act as part of the process of negotiating an enterprise agreement, Mammoet Australia notified the relevant employees that it intended to cease providing accommodation to them, contending it was obliged to do so during the period of industrial action by section 470(1) of the FW Act which provides:

If an employee engaged, or engages, in protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to the total duration of the industrial action on that day.

The ability to initiate or participate in protected industrial action is, by virtue of subsections (1)(b) and (2)(c) of section 341 of the FW Act, a ‘workplace right’, which is protected by the adverse action provisions found in section 340 which prohibit the taking of adverse action against an employee because the employee has exercised a workplace right.

The Agreement

The employment of the relevant employees was regulated by an enterprise agreement titled The Mammoet Australia Pty Ltd Pluto Project Greenfields Agreement 2008 (Agreement). Clause 38 of the Agreement was headed ‘Contract of Service’. It contained the following relevant sub-clauses:

…

GENERAL CONDITIONS

…

(13) Employees shall have no right to be paid for any time that they are not ready, willing and available to follow all lawful directions of the Company or to carry out all duties that they are capable of performing.

…

Clause 42 of the Agreement provided that ‘Employees classified as Distant Workers as defined … shall be entitled to the conditions contained at Appendix 7’.

Appendix 7 contained the following relevant clause:

(6) The Company shall have the choice of providing each Distant Worker with either suitable board and lodging or paying the Living Away from Home Allowance set out in this Appendix.

The relevant employees met the definition of ‘Distant Workers’ and Mammoet Australia was accordingly obliged by clause 6 of Appendix 7 either to provide them with suitable accommodation or to pay a living away from home allowance. Mammoet Australia chose to provide their accommodation.

Initial proceeding in Mammoet

The CFMEU commenced proceedings against Mammoet Australia in the Federal Magistrates Court of Australia (now the Federal Circuit Court of Australia), claiming that Mammoet Australia's refusal to provide accommodation was ‘adverse action’ taken because of the relevant employee's decision to exercise their workplace right to engage in protected industrial action. This decision was claimed by the CFMEU to be in breach of Part 3-1 of the FW Act. Mammoet Australia was successful before the Federal Magistrates Court and on appeal by the CFMEU to the Federal Court.

Decision of the High Court in Mammoet

The High Court (Crennan, Kiefel, Bell, Gageler and Keane JJ) unanimously found in favour of the CFMEU on the basis that the provision of accommodation to the employees engaging in protected industrial action was not a ‘payment’ of the kind referred to in section 470(1) of the FW Act. The High Court was satisfied that a reference to ‘payment’ in that provision means a payment in money and not simply the transfer of any economic benefit from an employer to an employee. The Court found that section 470(1) of the FW Act is directed at a particular kind of transaction: a ‘payment to an employee’ which is ‘in relation to the total duration of the industrial action’ on a day.¹⁴

While the High Court accepted that the provision of accommodation by an employer to an employee may involve the transfer from the employer to the employee of an economic benefit, it did not accept that this circumstance necessarily meant that there has been a payment by the employer to the employee. The High Court noted that Mammoet Australia could not point to references in the FW Act which referred to the provision of non-monetary benefits as ‘payment’ and that the character of section 470(1) as a civil remedy provision suggested that ‘payment’ related to monetary benefits.

The above considerations led the High Court to conclude that a contravention of section 470(1) does not necessarily arise following the transfer of any economic benefit by an employer to an employee during a period of protected industrial action. The High Court found that section 470(1) of the FW Act was concerned directly with ‘strike pay’. The High Court was satisfied that in the circumstances before it, the accommodation provided by Mammoet Australia was simply a benefit which employees were entitled to upon attending the work site, unless they were directed by Mammoet Australia to return home in accordance with the terms of the Agreement. The High Court held that the accommodation was not a benefit tied to a specific period of work, it was only tied to the continuance of the employment relationship and the presence of the employees on site at the direction of Mammoet Australia.

The High Court concluded that the effect of the Agreement was that, while the employment relationship subsisted, accommodation was to be provided by Mammoet Australia to its employees who had acted upon its instruction to travel to the location of worksite. Accordingly, the High Court was satisfied that Mammoet Australia's withdrawal of accommodation would amount to adverse action within section 342 of the FW Act because it would constitute an alteration of the relevant employees' positions to their detriment. The majority allowed the appeal and set aside the orders of the Federal Court, with the application in respect of adverse action remitted to the Federal Circuit Court.

Significance of Mammoet

The High Court's decision in Mammoet has particular significance for employers engaging employees on fly-in/fly-out arrangements or workplaces that rely on the provision of non-monetary benefits such as subsidised accommodation. The decision is in accordance with the recommendation of the Fair Work Act Review Panel,¹⁵ which expressed the view that to classify employer-provided accommodation as ‘payment' for the purposes of section 470 of the FW Act would be to undermine the capacity for employees who work in remote locations and utilise accommodation provided by their employer to take protected industrial action. The decision will also remove the possibility of practical problems for employers in complying with the FW Act when their employees take short periods of industrial action.

Mammoet crystallises the importance for employers, when faced with protected industrial action, to be able to classify benefits provided to employees as payments which are captured by section 470(1) of the FW Act or otherwise. In its decision, the High Court expressly did not provide an exhaustive list of the benefits to which section 470(1) will apply; however, it did observe that a gift provided to an employee to compensate for wages not earned might be a payment under section 470(1). Whether a particular non-monetary benefit will be a ‘payment’ under section 470(1) of the FW Act will depend on the facts and circumstances of each case. For employers who provide non-monetary benefits to their employees such as company cars, technology products, or petrol, food or entertainment allowances, it will be critical to be able to make a clear determination as to whether such payments are captured by section 470 so as to avoid the possibility of breaching the adverse action provisions of the FW Act during periods of protected industrial action.

An insight into the FWC's new bullying jurisdiction: Harris

From 1 January 2014, amendments to the FW Act pursuant to the Fair Work Amendment Act 2013 (Cth), will allow a worker who believes that they have been bullied to apply to the FWC for an order to stop the bullying. While this jurisdiction only commenced operation on 1 January 2014, a substantial body of law already exists in respect to workplace bullying, albeit spread across a number of species of claim and various jurisdictions. The possible approach of the FWC in exercising its new jurisdiction is the subject of considerable debate amongst unions, practitioners and employers. The FWC has issued an Anti-Workplace Bullying Guide and an Anti-Bullying Benchbook designed to assist parties lodging or responding to anti-bullying applications under the FW Act. The Benchbook contains an outline of the relevant provisions and processes which will be employed by the FWC in its new jurisdiction.

One case delivered in 2013 which sheds light on a current approach to workplace bullying in the FWC is the decision of Commissioner Cloghan in Harris. Although not referenced in the Benchbook and not decided under the bullying provisions set to take effect on 1 January 2014 (which contain their own definition of workplace bullying), the decision in Harris is an interesting insight into a possible approach that the FWC may take in its newly conferred jurisdiction.

The facts in Harris

The proceedings concerned the unfair dismissal of the Applicant, Mrs Karen Harris, who had commenced employment with Rockingham Business Centre (RBC) on 29 November 2004.

During the course of her employment, Mrs Harris worked with a Ms Rachel Maye. Following her resignation, Ms Maye made various complaints against Mrs Harris in respect of Mrs Harris' apparent treatment of her. Amongst the claims made during Ms Maye's exit interview (and later put to Mrs Harris) were that:

Mrs Harris was aggressive in every dealing she had with Ms Maye;

Mrs Harris swore and screamed at Ms Maye regularly;

Mrs Harris constantly embarrassed and humiliated Ms Maye in front of other staff members and showed no respect to Ms Maye as a team member.

On the basis of Ms Maye's complaints, Mrs Harris was advised that her employment was being terminated immediately for bullying Ms Maye, which the employer considered gross misconduct. On 3 January 2013, Mrs Harris made an application to the FWC for unfair dismissal.

Harris' evidence and submissions

During the hearing, Mrs Harris submitted that allegations that she bullied Ms Maye were fictitious, vexatious and without basis. She submitted that the complaints of bullying and harassment were only made after Ms Maye tendered her resignation and that there was no impartial investigation of those complaints. In reply, RBC submitted that the allegations were sufficiently serious to warrant an investigation and that the investigation was ‘impartial and conducted promptly, confidentially and objectively in accordance with the [RBC]'s harassment, Unlawful Discrimination and Workplace Bullying Policy’.¹⁶

The FWC's findings in Harris

Notwithstanding the conflicting evidence as to what actually occurred, Commissioner Cloghan was not satisfied that the alleged conduct of Mrs Harris, as set out in the disciplinary investigation, had occurred.

Following the determination that Mrs Harris was unfairly dismissed, the Commissioner made a number of interesting observations in respect of the treatment of workplace bullying by the Commission. Most significantly, the Commissioner stressed that not all conflict between employees in the workplace should be classed as workplace bullying and that employees required, by mere fact of their presence in a workplace, some degree of resilience. To that end, the Commissioner stated:

While the Commission does not and should not endorse the view that “anything goes” at the workplace, it is also important not to confirm as bullying and gross misconduct behaviour, as in this case, which is not pursued with any vigour and relates to incidents which occurred some time ago.¹⁷

The Commissioner went on to state that:

In my view, the Commission should guard against creating a workplace environment of excessive sensitivity to every misplaced word or conduct. The workplace comprises of persons of different ages, workplace experience and personalities – not divine angels. Employers are required to pursue inappropriate behaviour but need to be mindful that every employee who claims to have been hurt, embarrassed or humiliated does not automatically mean the offending employee is “guilty of bullying” and “gross misconduct”.¹⁸

Insight into the FWC's bullying jurisdiction

This decision provides a timely discussion of workplace bullying in light of the introduction of the FWC's new anti-bullying jurisdiction. The new provisions¹⁹ will allow workers engaged by a constitutionally covered business, who reasonably believe they are being bullied at work, to apply directly to the FWC for an order to stop the bullying. The range of orders that the Commission may make (as contemplated by the Explanatory Memorandum) include orders requiring:

(a) the individuals or group to stop the specified behaviour;

(b) regular monitoring of behaviours by an employer;

(c)compliance with an employer's anti-bullying policy;

(d) the provision of information and additional support and training to workers; and

(e)a review of the employer's workplace bullying policy.

Given that the relevant jurisdiction commenced as recently as 1 January 2014, it is premature to speculate as to how the FWC's workplace bullying jurisdiction will evolve over time. Certainly, decisions placing a relatively high threshold to establish workplace bullying such as Harris have the potential to inform the FWC's future approach and may, therefore, be of some comfort to employers anxious to assess the FWC's approach to its considerable new powers.

Right to representation before the FWC: Warrell

In Warrell, Flick J of the Federal Court of Australia dispelled any assumption on the part of all parties to FWC proceedings that they will be granted the right to legal representation as a matter of course.

Legislative background

The ability of parties to be legally represented before the FWC is addressed by section 596 of FW Act. At the time of the decision in Warrell, that section provided as follows:

Representation by lawyers and paid agents

(1) Except as provided by subsection (3) or the procedural rules, a person may be represented in a matter before FWA … by a lawyer or paid agent only with the permission of FWA.

(2) FWA may grant permission for a person to be represented by a lawyer or paid agent in a matter before FWA only if:

(a) it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter; or

(b) it would be unfair not to allow the person to be represented because the person is unable to represent himself, herself or itself effectively; or

(c) it would be unfair not to allow the person to be represented taking into account fairness between the person and other persons in the same matter.

Facts in Warrell

The employment of Mr Warrell, who was found to be functionally illiterate and suffering from brain damage, was terminated by the Second Respondent, Bacto Laboratories, on 16 March 2011. After some confusion as to where to file his claim for unfair dismissal and an attempt to file it with the Fair Work Ombudsman, Mr Warrell applied to the FWC for an extension of time in which to lodge a claim of unfair dismissal. Senior Deputy President Drake of the FWC conducted the initial hearing and elected to hear Mr Warrell's application for an extension of time and for unfair dismissal concurrently.

Mr Warrell appeared on his own behalf. Bacto Laboratories sought to be represented by its lawyer, a Mr Butterfield. At the commencement of the hearing, the following exchange occurred with respect to the representation of Bacto Laboratories:

THE SENIOR DEPUTY PRESIDENT: Mr Butterfield, it's necessary for you to have permission to appear. Do you seek permission?

MR BUTTERFIELD: I do seek leave to appear on behalf of the respondent.

Following the hearing, SDP Drake refused Mr Warrell's application for extension of time and further held that the termination of Mr Warrell's employment did not satisfy the requirements of the unfair dismissal test under the FW Act.

Subsequent proceedings before the Full Bench and the Federal Court

An application seeking permission to appeal from SDP Drake's decision was heard and rejected by a Full Bench of FWC in October 2011. Previously, Mr Warrell's application to have that hearing adjourned was refused by the Full Bench.

Mr Warrell appealed to the Federal Court of Australia where Perram J set aside the Full Bench's decision on the basis that it had denied Mr Warrell procedural fairness in refusing to adjourn the proceedings before it. The effect of Perram J's decision was to remit the matter back to the Full Bench of the FWC.

In June 2012, a reconstituted Full Bench of FWC heard Mr Warrell's application seeking permission to appeal from SDP Drake's decision. Mr Warrell's appeal was based on the fact that SDP Drake had not proceeded in a manner which was ‘fair and just’ as required by section 577 of the FW Act in allowing Mr Warrell to proceed unrepresented in circumstances where he was ‘clearly unable to conduct his case’.²⁰

The second Full Bench also refused Mr Warrell permission to appeal, holding that it was not satisfied that her Honour failed to conduct the hearing in a fair and just manner. Mr Warrell appealed the decision of the second Full Bench to the Federal Court of Australia where the appeal was heard before Flick J.

Decision Flick J in Warrell

Before Flick J, Mr Warrell argued that the hearing before SDP Drake was not ‘fair and just’ by reason of Bacto Laboratories having been impliedly granted permission to have a lawyer appear on its behalf, without regard and contrary to section 596(2) of the FW Act.

Flick J found in favour of Mr Warrell, holding that the Full Bench of FWC had erred in concluding that the hearing before SDP Drake was ‘fair and just’ as it had failed to take into account the failure on the part of SDP Drake to make findings of fact establishing that the requirements imposed by section 596(2) had been satisfied. Flick J also considered that the Full Bench had failed to take into account the manifest advantages that Bacto Laboratories enjoyed in cross-examining Mr Warrell and the considerable difficulties confronting Mr Warrell in his questioning of a representative of Bacto Laboratories, given his disabilities.

In assessing SDP Drake's failure to apply section 596(2), Flick J found:

Neither on a review of the reasons for decision of the Senior Deputy President nor the transcript of the proceedings does it appear that any consideration at all was given to the constraints imposed by s 596(2). … These matters cannot be regarded as some mere oversight assuming no real importance or exposing Mr Warrell to no real prejudice.²¹

In outlining the requirements of section 596(2) Flick J found that:

A decision to grant or refuse “permission” for a party to be represented by “a lawyer” pursuant to s 596 cannot be properly characterised as a mere procedural decision. It is a decision which may fundamentally change the dynamics and manner in which a hearing is conducted.²²

In the particular circumstances of the case of Mr Warrell, the requirement to turn the FWC's mind to the requirements of section 596(2) to ensure fairness was even more pressing. In this respect Flick J found:

Even if the constraints imposed by s 596(2) can be left to one side, the potential for unfairness readily emerged during the hearing. … The unfairness to Mr Warrell had its roots in the failure at the outset on the part of the Senior Deputy President to apparently consider the terms of s 596(2) and the potential prejudice thereafter experienced by Mr Warrell in being effectively cross-examined by a lawyer. Having granted permission for Mr Butterfield to appear, the “damage was done”.²³

Flick J accordingly ordered that the orders made by the Full Bench on 5 June 2012 should be quashed and that the matter should be reconsidered.

Implications of Warrell

Flick J's decision in Warrell has already been cited in a number of FWC decisions which take a more stringent approach to the granting of leave to be represented before the FWC. The decision appears to have, in practice, ‘raised the bar' for practitioners seeking leave to appear before the FWC. It was cited by the Full Bench of the FWC in refusing permission for a barrister of an employer to appear in an appeal of the granting of extra time to lodge an unfair dismissal claim.²⁴

Other decisions which have cited Warrell in refusing the granting of leave include the FWC's decisions in Adrian Meredith v Peter MacCallum Cancer Centre [2013] FWC 5381, Richard Fishers v Serco Australia Pty Ltd t/a Serco Australia [2013] FWC 515, Mr Emmanuel Azzopardi v Serco Sodexo Defence Services Pty Limited [2013] FWC 3405 and Dr Nitya Karmakar v Australian Campus Network Pty Ltd [2013] FWC 2340.

Annual leave upon termination: Ryan

One source of considerable ambiguity for practitioners and employers in applying the National Employment Standards contained in the FW Act has been the apparent inconsistency within the terms of section 90 of the FW Act. That section provides:

Payment for annual leave

(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.

(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

The provision, particularly the interpretation of section 90(2) relating to the amount of annual leave to be paid out to an employee on termination, has been subject to a number of competing interpretations. The Fair Work Ombudsman has adopted an interpretation that if an employee is entitled to annual leave loading, then upon termination, the employee must be paid out both their annual leave and annual leave loading.

Employer groups have disagreed with this interpretation, stating that such an interpretation would lead to a result whereby an employee would only be entitled under the NES to his/her ‘base rate' of pay during employment, but entitled to a ‘full rate' upon termination. Employer groups have accordingly argued that, in line with the text of section 90(1), section 90(2) requires annual leave to be paid out at the base rate of pay only, without the addition of any leave loading.

Changes to the provision had been previously recommended by the Fair Work Act Review Panel in 2012, which stated that section 90(2) should be amended to make clear annual leave loading was not payable on termination unless expressly required by an industrial award or agreement.²⁵ In its ‘Improving the Fair Work Laws’ IR Policy document, the Liberal Party of Australia states it will implement the Panel's recommendation and clarify circumstances where annual leave loading is payable on termination.

On 26 July 2013, the Local Court of New South Wales (NSW) handed down the first judicial decision regarding section 90(2), when Magistrate Buscombe in Ryan ruled that the section required employers upon termination to pay out accrued annual leave at the same rate as that the employee would have received had he or she taken the leave during the employment. In accepting that the relevant employee in Ryan was entitled to be paid his annual leave with a 20% leave loading upon termination, Magistrate Buscombe found that section 90(2) provided a minimum standard for untaken paid leave. Practitioners, employee associations and employers alike await legislative amendment of s 90(2) for more determinative guidance on how to interpret what is a commonly engaged provision.

Conclusion

The major Industrial Tribunal decisions of 2013 brought fresh insight into the development of a number of areas of industrial law. The decisions described in this article do not, however, if an Industrial Tribunal decision ever could, represent the last word on any particular issue.

The decision in Barker, despite confirming that, unless expressly excluded, an implied term of mutual trust and confidence exists in all Australian employment contracts, will be subject to an appeal in the High Court. The interpretation of section 90(2) of the FW Act in Ryan will likely be the subject of legislative amendment by the new Liberal Government. The FWC's bullying jurisdiction commenced on 1 January 2014 and the full effect of the Warrell decision is likely to be felt in the coming years.

In short, the major Industrial Law Tribunal decisions of 2013 have put into motion a number of interesting areas of jurisprudential development.

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

Notes

Biographical notes

Michael Byrnes is a Special Counsel at Clayton Utz with over 15 years' experience advising on all aspects of employment law.

Julian Arndt is a lawyer in Clayton Utz's Workplace Relations, Employment & Safety Group. Prior to his role at Clayton Utz, Julian served as an Associate in the Federal Court of Australia.