Australia: The Workplace - Spring Edition - October 2009, Case Round Up

Van Efferen v CMA Corporation Ltd [2009] FCA 597 (4 June 2009)

Holding

For the first time, the Federal Court has awarded a sacked employee compensation (of $274,288) on the basis that his employer breached the grievance procedure in his Australian Workplace Agreement (AWA).

Facts

The employee was hired by CMA Corporation Ltd (CMA) under a three year AWA on a project in Port Hedland, WA. Four months after the contract commenced, CMA's project manager told the employee that it was not working out and sent him back to CMA's Geelong office in Victoria where he was then made redundant.

The employee argued that CMA was obliged to observe the staged process imposed by the grievance procedure provision in his AWA once CMA had developed a concern about his conduct. The grievance clause was expressed to be designed to deal with 'CMA's concerns about the behaviour of its employees' and outlined steps which the employer must follow when it had such a 'concern'.

Mandatory obligation to observe the grievance procedure

Justice Tracey found that the clause imposed a mandatory obligation on CMA to implement the grievance procedure whenever it had a concern about the behaviour of an employee which impacts upon some aspect of its operations.

The term 'concern' in the AWA was interpreted broadly to include a wider range of situations other than those which have disciplinary actions. In the present case, it was held that the grievance clause required the CMA to proceed at least as far as step one and hold discussions with the employee in relation to its dissatisfaction with the manner in which he was performing his duties.

Calculation of damages

Damages for the breach of the AWA provision were calculated as they would be for any breach of contract. Justice Tracey found that the employee was likely to have remained in his position at Port Hedland for the completion of the project had CMA not breached the grievance provisions in the AWA. Therefore, the employee was awarded earnings he would have received had he remained employed until the completion of the Port Hedland project.

Implications

• Interpretation is applicable to other industrial instruments containing grievance provisions, such as certified agreements and common law contracts.
• Depending on how they are drafted, such provisions can be enlivened in a wide range of circumstances.
• Employers will need to be aware that they may have to engage grievance provisions even where they have determined that disciplinary action against the employee is not warranted.

CFMEU v Caelli Constructions (Vic) Pty Ltd [2009] FCA 655 (18 June 2009)

Holding

On 18 June 2009, the Federal Court ordered Caelli Constructions (Vic) Pty Ltd (Caelli) to delay a ballot of its workers for a non-union collective agreement after finding it exhibited 'lack of candour' when it failed to tell the AIRC it intended to hold the vote.

Facts

Caelli had been in dispute with the Victorian Branch of the CFMEU regarding a refusal to sign the CFMEU's industry wide agreement in 2008. CFMEU successfully applied to the AIRC for orders to hold a protected action ballot of workers at Caelli after negotiations for a modified agreement broke down. A week later, Caelli informed its employees that it would ask them to approve an employee collective agreement, with the vote to be held largely at the same time as the protected action ballot, but to close a day earlier.

Injunction granted to delay Caelli's ballot

Justice Ryan granted the injunction on the basis that:

• There was a serious question to be tried as to whether employees would be 'distracted' or otherwise prevented from having a reasonable opportunity to decide whether to approve the agreement given the circumstances in which the vote was to be held; and
• The balance of convenience also heavily favoured delaying the agreement vote for the short and defined period sought by the union. Further, Justice Ryan noted that he had been influenced in exercising his discretion to grant the injunction by the fact that Caelli could have sought directions from the AIRC as to how the agreement vote could take place in conjunction with the protected action ballot. Instead, Caelli had chosen not to reveal its plans to hold the vote either at the initial hearing before the AIRC or the subsequent hearing before the President, Justice Geoffrey Giudice.

Lessons learned

The decision highlights the importance of employers being candid with the court regarding its plans for making agreements with employees.

Poniatowska v Hickinbotham [2009] FCA 680 (23 June 2009)

Holding

A company has been ordered to pay a near-record $466,000 in damages to a former female employee who was sexually harassed by two male co-workers and then treated as 'a problem to be dealt with' rather than a victim.

Facts

• A female employee was sent emails and text messages by two male colleagues inviting her to have a sexual relationship. Justice Mansfield held that these incidents amounted to sexual harassment.
• The company did not investigate the employee's complaints and responded flippantly to the employee when she raised her concerns
• The company then dismissed the employee for what it claimed to be alleged poor performance.

Company's response was inadequate

• Justice Mansfield found that the overall, the company response to the employee's complaints was 'not adequate'. He said that it had no 'internal protocol or procedure' for addressing complaints about sexual harassment or discrimination.
• He found that while the company's response to the incidents didn't amount to sexual harassment in breach of Section 28B, it had discriminated against the consultant on the ground of her sex, in breach of Section 14(2) of the Sex Discrimination Act, by treating her less favourably than it would have treated a male in similar circumstances.
• Justice Mansfield refused to accept that the company dismissed the consultant for the reasons it alleged. He found that the real motivation for the 'unwarranted' warning letters was to 'set the scene' for her dismissal, because she had revealed, via her allegations about sexual harassment, a 'sensitivity' to that type of conduct.

Damages

• Justice Mansfield ordered the company to pay the employee $466,000 in damages, plus costs. He allocated $90,000 for pain and suffering, $200,000 for past lost earning capacity (plus $30,000 in interest), $140,000 for future lost earning capacity and $3,000 for medical expenses.
  
  Justice Mansfield said ESA could apply to the court for the order to be amended to require part of it to be paid by the company's managing director, team leader and the two consultants who had sexually harassed her.
  
  He awarded the damages because of the 'severe depression' the consultant had suffered, which was caused by the employer's conduct - 'by its sex discrimination and therefore by its unlawful discrimination'.
  
  He said she was likely to be able to return to full-time work in six months to two years.
  

Lessons learned

• Employers should address employee's concerns regarding workplace harassment seriously and have internal protocols or procedures in place for dealing with such concerns.
• Failure to do so may have significant financial consequences for the employer.

Martin v Abigroup Contrac tors Pty Ltd [2009] NSWIRC 110

Holding

Abigroup Contractors Pty Ltd (Abigroup) was fined $300,000 following the death of a contractor. Abigroup had pleaded guilty to failing to ensure that persons on their work site were not exposed to risks to their health and safety.

Facts

A tipper truck driver employed by BKM Contracting Pty Ltd (BKM), who were contractors to Abigroup, died when he was crushed between the tailgate and tipper tray of his truck and a concrete place-spreader machines which came into contact with the tailgate of his truck.

Abigroup pleaded guilty to the particular that it failed to provide and/or maintain a safe system of work with respect to mobile plant and vehicular movement at the work site.

Sentencing considerations

The objective seriousness of the incident was considered in determining the penalty.

Justice Staff found the risk that a truck driver who had alighted from their truck would be struck by moving plant at a road construction site was obvious and potentially of the utmost seriousness in terms of likely consequences. Although Abigroup and BKM had implemented safety processes, Justice Staff held that these processes were deficient in a number of areas in relation to vehicular movement and mobile plants.

The seriousness of the risk, its foreseeability and the ease of removing the risk led Justice Staff to find the offence to be in the mid-seriousness.

His Honour also included an element in the penalty to generally deter employers and contractors in the road construction industry from unsafe work practices. Additionally, an element was included in the penalty for specific deterrence to ensure Abigroup remains continually committed to workplace health and safety.

Abigroup's conduct following the incident, including pleading guilty at the earliest opportunity, co-operating with the WorkCover authority, demonstrating contrition and remorse (Abigroup deposited an amount of $98,721 into a trust account for the benefit of the contractor's children) was looked upon favourably by Justice Staff. Having regard to these circumstances, a penalty of $300,000 instead of the maximum of $825,000 was imposed upon Abigroup.

Lessons learned

• Employers need to ensure that safety processes adequately identify and provide for management of all foreseeable risks at the work site.
• Employer's subsequent actions pursuant to a workplace incident are an important consideration which the court will be taken into account in determining the penalty.

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