E m p l o y m e n t
m a t t e r s
Welcome to the latest edition of Piper Alderman’s Employment
Matters, which provides updates on key employment and
industrial issues.
January 2015
2
Quiche and schnitzel scammer
ends up with egg on his face
6
Lawyer, Emily Haar deciphers the
lessons for employers served up in the
recent Federal Circuit Court decision of
Amponsem v Laundy (Exhibition) Pty Ltd [2014] FCCA
2206.
4
Accrual of leave during
workers compensation
absence
Senior Associate, Ben Motro and
Lawyer, Hannah Linossier explain
the impact of a recent Federal Circuit Court case which
clarifies the previously unsettled position of whether
annual leave can be accrued by employees on workers
compensation.
Don’t label me a “scab”: The
High Court reconsiders the
boundary between protected
industrial action and misconduct
warranting dismissal
Lawyers, Emily Haar and Eliza Hampton examine the
decision of the High Court in CFMEU v BHP and explain
the ramifications it may have on future general protections
applications.
www.piperalderman.com.au
1
January 2015
Quiche and schnitzel scammer ends up with egg
on his face
Lawyer, Emily Haar deciphers the lessons for employers served up in the recent
Federal Circuit Court decision of Amponsem v Laundy (Exhibition) Pty Ltd [2014]
FCCA 2206.
If you have been to Wollongong, it is
possible that you have experienced
the Northgong Hotel’s “world famous
schnitty”. The Northgong Hotel Bistro
may now become infamous due to the
schnitzel scam committed within its
kitchen by former head chef Kobina
Amponsem.
Mr Amponsem was employed as head
chef for the Northgong Hotel Bistro in
March 2008. He was employed by Laundy
(Exhibition) Pty Ltd, which operates a
number of pubs.
In 2009, Mr Amponsem told his employer
that there was a problem with the
schnitzel supplier for the bistro. He was
tasked to find a new supplier for the
Northgong, and other pubs in the Laundy
group. He was told that the price could
not be any more than $2.80 per schnitzel.
Mr Amponsem started bulk-buying
schnitzels from a business his wife
owned for between $1.80 and $1.90
per schnitzel. He then invoiced Laundy
between $2.80 and $2.90 per schnitzel,
and kept the $1 profit.
In April 2010, Mr Amponsem also started
bulk-buying quiches for the hotels in the
Laundy group from his wife’s business.
The secret schnitzel profits continued until
early 2011, when the duty manager of the
Northgong Hotel was handed an invoice for
10 quiches by Mr Amponsem, but only five
arrived. The discrepancy was investigated
and it became apparent that of the 122,510
schnitzels purchased by Mr Amponsem,
9,465 were missing. Mr Amponsem had
similarly invoiced Laundy for 324 quiches,
but only 111 had been sold, and the
discrepancy could not be explained by stock
on hand or wastage.
On 1 March 2011, Mr Amponsem met with
senior management from the Laundy group
to discuss the discrepancy. Mr Amponsem
was told that the discrepancy showed that
he was either incompetent or a thief, and he
was advised to either repay the money or to
deliver the missing schnitzels. He was placed
on suspension.
Mr Amponsem was summarily dismissed
on 4 March 2011. As of that date, he had
accrued annual leave worth $11,305. This
was not paid by Laundy, on the basis that
Mr Amponsem dishonestly caused Laundy
to suffer financial loss. In other words,
Laundy attempted to set off the annual leave
payment against the loss it suffered as a
result of Mr Amponsem’s conduct.
Mr Amponsem commenced proceedings
in the Federal Circuit Court against
Laundy in an effort to recover his accrued
annual leave. He also sued for a bonus
he alleged was owed to him, although
the Court held that no bonus was owed.
Laundy counter-sued for $139,577,
being the loss suffered as a result of Mr
Amponsem breaching his contractual
duty of fidelity and fiduciary duties owed
to Laundy. Laundy claimed that Mr
Amponsem breached his contractual and
fiduciary duties in three ways, by failing to:
•
disclose the $1 profit he was making
on the schnitzels, and that his wife
owned the business supplying the
schnitzels
•
deliver $20,622 worth of schnitzels as
ordered and paid for by Laundy
•
deliver $5,910 worth of quiches as
ordered and paid for by Laundy.
Laundy’s claims were based on the
common law duty of an employee to
be loyal to their employer, being the
duty of fidelity, and the equitable duty of
fiduciaries to act in the best interests of
their principal.
The Northgong Hotel was aware that
the quiches were coming from Mr
Amponsem’s wife’s business, but was not
aware that the schnitzels were sourced
from his wife’s business, nor was it aware
that Mr Amponsem was taking secret
profits.
Employment Matters
2
January 2015
The duty of fidelity requires employees
to work under their employment
contract for the benefit, and only for the
benefit, of their employer. The duty also
prohibits employees from undertaking
certain conduct, including entering into
transactions in which there is a real
conflict between the employee’s interests
and the interests of their employer, and
using their position as an employee to
make a gain for themselves or another
person, to the employer’s detriment.
It should be noted that although all
employees are required to comply with
the duty of fidelity to their employer, not
all employees are considered fiduciaries.
A fiduciary relationship most commonly
arises where a person assumes a position
that carries with it the capacity to exercise
certain powers on behalf of another, who
is vulnerable to harm if those powers
are misused. Usually only very senior
executive-level employees are considered
fiduciaries.
Judge Manousaridis concluded that Mr
Amponsem was a fiduciary, because he
had been requested to acquire schnitzels
and quiches on behalf of the Laundy
group. Both his duty as a fiduciary and his
duty of fidelity required him to not pursue
a gain for himself while undertaking the
task of acquiring schnitzels and quiches.
The Court concluded that by purchasing
the schnitzels from his wife’s business for
between $1.80 and $1.90 and on-selling
them to Laundy for between $2.80 and
$2.90, without disclosing that fact to
Laundy, Mr Amponsem breached both his
contractual duty of fidelity and his equitable
fiduciary duties. It did not matter whether
Mr Amponsem believed he was acting in
good faith.
The Court concluded that the non-delivery
of schnitzels claim was made out, but that
the non-delivery of quiches claim was not.
The total loss assessed was $84,143.60.
Regardless of the reason for
termination, employers must still pay
out any accrued but untaken leave
entitlements under the Fair Work
Act. Only in certain circumstances
can employers set off entitlements
against other debts. Whilst the issue
did not arise in this instance, civil
penalties can result where there is
a failure to pay an employee their
accrued annual leave entitlements on
termination.
•
Employees have a duty of fidelity
to their employer, requiring them
to act in their employer’s best
interests, and, for example, includes
choosing suppliers on the basis of
how it will benefit the employer,
rather than personal connections and
interests. Where the duty of fidelity is
breached, employers have recovery
options.
•
Ensure that employer policies
(such as conflict of interest and
procurement policies) do not just
exist, but are implemented by direct
managers in the workplace.
•
Whilst not all employees will be said
to be a fiduciary, employees who are
given great trust and responsibility
may be said to owe greater duties
to their employer. This may provide
employers with additional avenues
of recovery in circumstances of
misconduct.
The fact that Laundy suffered financial loss
at Mr Amponsem’s hands did not absolve
it from paying him his accrued annual leave.
The obligations to pay annual leave under
the Fair Work Act 2009 (Cth) could not be
set off against the schnitzel swindle.
As part of the Court proceedings however,
Judge Manousaridis determined that in the
interests of justice it was better to make
one order, requiring Mr Amponsem to pay
Laundy $84,143.60 less his annual leave
entitlement of $11,305.
This meant that in making an underpayment
claim, Mr Amponsem ended up more out of
pocket (by $72,838.60) than he would have
been if he did not pursue his unpaid annual
leave.
These circumstances are very specific,
but there is some general guidance which
employers can take away from the case:
www.piperalderman.com.au
•
3
January 2015
Don’t label me a “scab”: the High Court
reconsiders the boundary between protected
industrial action and misconduct warranting
dismissal
Lawyers, Emily Haar and Eliza Hampton examine the decision in CFMEU v BHP
and explain the ramifications it may have on future general protections applications.
Overview
The “general protections” in Part 3-1
of the Fair Work Act 2009 (Cth) (Act)
are designed, among other things, to
protect employees exercising workplace
rights or engaging in certain “industrial
activities”. Where an employee can show
that adverse action (such as termination
of employment) has been taken against
them, section 361 provides that the
burden of proof lies on the employer to
establish that the action was not taken for
a prohibited reason.
The case of CFMEU v BHP [2014] HCA 41
tested the operation of these provisions.
In particular, it tested how far an
employee could take their expression of
dissatisfaction with their employer while
still being considered to be exercising a
right protected by the Act.
Mr Doevendans was a member of the
Construction Forestry Mining and Energy
Union (CFMEU). He had participated
in a lawful protest organised by the
CFMEU at the BHP Saraji coal mine in
Queensland as part of ongoing bargaining.
His conduct in the protest included
waving a sign at passing motorists which
read “No principles SCABS No guts”.
His employment was terminated some
months later on the basis that the words
used in his sign, in particular the term
“scab”, were inappropriate, offensive,
humiliating, harassing, intimidating and
in violation of BHP’s workplace conduct
policy.
Employment Matters
After his dismissal, the CFMEU commenced
proceedings against BHP in the Federal
Court alleging that Mr Doevendans’
employment was terminated because of
his participation in the industrial action,
in breach of the general protections. The
dispute reagitated the issues the High Court
had dealt with in Board of Bendigo Regional
Institute of Technical and Further Education
v Barclay (2012) 248 CLR 500 (Barclay),
concerning how to determine whether
the reason for taking adverse action is a
prohibited reason.
Federal Court – Primary Judgment
At trial, Justice Jessup concluded that the
general protections had been contravened
in two respects. First, Mr Doevendans’
conduct in holding and waving the sign
involved participation in a lawful union
activity for the purposes of section 347(b)
(iii). Because his dismissal was a result of
such conduct, it was concluded that the
dismissal was in contravention of the general
protections.
Second, holding and waving the sign could
be characterised as representing the views
and interests of an industrial association for
the purposes of section 347(b)(v). Because
the dismissal was a result of this conduct, it
contravened the general protections.
In essence, Justice Jessup concluded that it
was sufficient for the conduct which was
the reason for the dismissal to be in aid of
lawful union activity, for the dismissal to be
prohibited adverse action in breach of the
general protections.
4
He took an objective, rather than
subjective, view of the decision, and while
BHP’s evidence was accepted, it was not
enough to preclude a finding that the
action was taken for a prohibited reason.
Federal Court – Full Court
On appeal by BHP, Justices Dowsett and
Flick concluded that Justice Jessup did not
pay sufficient regard to the actual decision
making process of BHP in terminating
the employment of Mr Doevendans, in
concluding that prohibited adverse action
had been taken. They concluded that the
enquiry required by section 361 must
consider the subjective, or actual, reasons
for taking the action.
Justice Kenny, who gave a dissenting
judgment, agreed that Justice Jessup was
in error in considering that the employee
was dismissed because he participated in
lawful activity organised by the CFMEU.
Her Honour noted that the High Court
in Barclay rejected the proposition that an
employer must establish that the reasons
for the adverse action were dissociated
from union activity. Her Honour added
that an employee’s activity is not insulated
from adverse action by an employer
because it happens to be done in the
course of otherwise lawful industrial
activity. A person can still step beyond
protected action even when participating
in lawful protest.
January 2015
Justice Kenny did not, however,
consider that the primary judge was in
error in concluding that the employee
was dismissed for representing or
advancing the views or interests of the
union, which was the second alleged
ground of contravention found by
Justice Jessup.
The Full Court upheld the employer’s
appeal and set aside the orders made by
Justice Jessup. The union sought special
leave to appeal to the High Court and
was successful.
Decision of the High Court
The High Court upheld the Full Federal
Court’s decision. Chief Justice French,
and Justices Kiefel and Gageler formed
the majority. Justices Hayne and
Crennan dissented.
The Majority View
The majority held that sections 346 and
361 of the Act do not direct a court to
enquire whether the adverse action can
be characterised as connected with the
industrial activities which are protected
by the Act. Rather, a determination
of fact as to the actual reasons which
motivated the person who took the
adverse action must be made.
Chief Justice French and Justice Kiefel
stated that although the primary judge was
correct in finding that Mr Doevendans’
participation in protected industrial activity
did not form part of the reason for dismissal,
by considering whether his conduct
constituted industrial activity, his Honour
incorrectly added an additional step to the
considerations required by the Act. Once
it was found that the actual reason for
dismissal was not participation in industrial
activity, the burden of proof had been
discharged by BHP and this was the end of
the enquiry.
Justice Gageler, in a separate judgment,
approached the issue by considering
how the actions of Mr Doevendans were
considered by the employer in relation to its
internal policies. Again, it was held that once
it was found the employer had dismissed
Mr Doevendans due to a breach of its
workplace policy, that should have been the
end of the inquiry.
On this basis, the High Court dismissed the
appeal against the decision of the Full Bench.
The Minority View
Justices Hayne and Crennan each delivered
separate dissenting judgments, but both
preferred the approach of Justice Jessup at
first instance.
Justice Hayne required a distinction to be
drawn by BHP between the participation of
Mr Doevendans in representing the views
of the union through protected industrial
activity, and the manner in which Mr
www.piperalderman.com.au
5
Doevendans actually participated in the
activity. If a distinction was not drawn by
BHP when it terminated the employment
of Mr Doevendans, then in His Honour’s
opinion, the dismissal was connected
with Mr Doevendans’ participation in the
protected activity of the union.
Justice Crennan was not satisfied with
merely asking BHP why the decision
was made to dismiss Mr Doevendans
and agreed with Justice Jessup that
BHP’s evidence about the reason for
the dismissal was not conclusive on the
matter.
Potential Consequences
This decision confirms that a dismissal
for misconduct where the employee was
acting on union business at the time is not
automatically going to be a dismissal in
breach of the general protections.
Employers still need to be careful,
however. If the misconduct in question
is not sufficiently removed from the
industrial activity, adverse action may still
be held to be in breach of the Act.
Any employer considering taking action in
similar circumstances must be prepared
to demonstrate a valid and lawful reason
which clearly goes beyond the mere fact
of engagement in protected industrial
action. There are significant penalties
under the Act for employers who fail to
get this right.
January 2015
Accrual of leave during workers compensation
absence
Senior Associate, Ben Motro and Lawyer, Hannah Linossier explain the impact of a
recent Federal Circuit Court case which clarifies the previously unsettled position of
whether annual leave can be accrued by employees on workers compensation.
The Federal Circuit Court has held that in
New South Wales, a worker can accrue
leave and receive workers compensation
simultaneously. In the case of NSW
Nurses and Midwives Association v Anglican
Care [2014] FCCA 2580 Judge Emmett
resolved the interaction between section
130 of the Fair Work Act 2009 (FWA) and
section 49 of the Workers Compensation
Act NSW 1987 (WCA), holding that a
worker is entitled to accrue annual leave
whilst absent from work and receiving
workers compensation payments.
Background
NSW Nurses and Midwives Association
(NSWNMA) brought an application
on behalf of Ms Copas who worked
for Anglican Care as an Assistant in
Nursing. In December 2009, Ms Copas
suffered a workplace injury after which
she was unable to undertake work for
Anglican Care. Ms Copas continued
to be employed but was absent from
work and received compensation under
the WCA. NSWNMA argued that Ms
Copas was entitled to around $3000
for 18 months of unpaid annual leave
that she had accrued whilst on workers
compensation. Judge Emmett had to
consider whether Ms Copas was entitled
to accrue the annual leave during the time
she was absent from work on workers
compensation.
In coming to her decision, Justice Emmett
had to consider the previously unclear
interaction between the FWA and the
WCA.
Employment Matters
Interaction of FWA and WCA
Decision
Under the FWA, an employee is prevented
from taking or accruing leave when the
employee is absent from work because of a
personal illness or injury and for which they
are receiving compensation payable under a
law regarding workers compensation.
The NSWNMA submitted that Ms Copas
was entitled to have accrued the annual
leave by virtue of section 49 of the WCA
which it says is a law which permits
the taking or accrual of leave during a
compensation period for the purpose of
s130(2) of the FWA. In contrast, Anglican
Care submitted that section 49 creates
no entitlement whatsoever to take leave
or holidays or to accrue leave or holidays
and that s 130(2) of the FWA applies so
as to extinguish the applicant’s claim for
annual leave.
However, where a specific compensation
law (for instance the WCA) permits an
employee to take or accrue leave, then this
exemption does not apply and an employee
will be permitted to take or accrue leave
under the FWA, even though they are
receiving workers compensation.
Relevantly, section 49 of the WCA states
that:
“Compensation is payable under this Division
to a worker in respect of any period of
incapacity for work even though the worker
has received or is entitled to receive any
payment, allowance or benefit for holidays,
annual holidays or long service leave under
any Act (Commonwealth or State) award or
industrial agreement under any such Act or
contract of employment.”
Additionally, there is no provision of the
WCA that expressly provides that an
employee is entitled to take or accrue leave
(under the FWA or otherwise), whilst
they are receiving workers compensation
payments under the WCA. Previously,
many employers held the view that
employees were not entitled to take or
accrue leave (including annual leave),
because the WCA does not expressly
permit an employee to take or accrue
leave during periods in which an employee
is receiving workers compensation
entitlements.
6
In interpreting the sections, Judge
Emmett accepted that the WCA did
not in itself create an express right to
receive annual leave payments during
receipt of workers compensation, but
that the section “expressly provides the
opportunity for the worker to receive both
workers’ compensation and accrue annual
leave”. Therefore, Her Honour held
that a ‘beneficial construction’ of section
49 permits the accrual of annual leave
payments while on workers compensation
and that the FWA therefore ‘allows’ or
‘permits’ the worker to accrue annual
leave whilst on workers compensation
under the WCA.
In other words, because the WCA
does not prevent an employee from
taking or accruing leave, Justice Emmett
accepted that this implicitly ‘permitted’ an
employee to take and accrue leave.
January 2015
The NSWNMA was therefore
successful in its application and Judge
Emmett ordered that Anglican Care pay
Ms Copas around $3,000 in untaken
leave she had accrued during her
workers compensation absence.
Effect of this decision
Although this case addresses specific
provisions in New South Wales
legislation, it is possible that where
a similar uncertainty applies in other
states with like legislation, this
case could be used to support the
proposition that a worker can accrue
annual leave whilst absent from work
on workers compensation.
It is also important to be aware that
this decision may be impacted by the
Fair Work Amendment Bill 2014, which
proposes to remove section 130(2) of
the FWA. The effect of this amendment
would be to remove the exception on
the restriction to take or accrue leave
while receiving workers compensation
leave. However, this Bill is currently
before the Senate and its fate is not yet
known.
Employment Matters
7
January 2015
[ p u b l i c a t i o n
n a m e ]
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January 2015