BBAL402 Labour Relations and Employment Law- Lara Pty Ltd Case

Wendy is employed in a timber mill, LARA Pty Ltd. LARA Pty Ltd has a staff of 220 people and a dedicated human resources department that also manages any accidents in the workplace. There is also a Health and Safety Committee.

Her position is a full time timber mill worker. Her annual salary is $64,000 per annum.  She has held the position for three years.  Her duties are to cut raw logs into timber, flooring, decking and other basic timber products.  She likes working at LARA Pty Ltd because they let her start work at 9:15am Monday to Friday.  This allows her to drop her three children at school.  Her partner picks them up from school and looks after them until she gets home from work in the evening.  

When Wendy was inducted to the position, she was taught to operate the variety of saws required for the job.  However, she was not taught to undertake any safety checks or procedures. Most of the time, Wendy undertakes tasks without supervision. LARA Pty Ltd services the saws as regularly as is required.

On 14 February 2017, Wendy was using a table saw to cut a part of a raw log into pieces.  For some reason there was no guard on the table saw - perhaps the previous person who used it had taken it off.  Wendy was in a hurry so didn’t bother about finding it and putting it on.  She attempted to hold the part of the raw log which was on the saw table in her left hand while pressing the ‘on’ button, which was located on the right hand side of the table saw, with her right hand.  After pressing the ‘on’ button, she quickly put her right hand up onto the part of the raw log to push it through the saw table. This was the quickest way to cut the part of the raw log.  However, she overreached and her right middle finger got caught in the blade of the table saw.  The table saw cut half of her right middle finger.

There was a lot of blood and Wendy was rushed to hospital.  She had a number of operations and was in considerable pain and suffering which she took medication for.  She had to take two months off work.  She started to feel depressed because of the difference the loss of her finger would make to her life.  She was concerned about both the appearance and the functionality of her hand.

On return to work, she could only undertake light duties for two months.  LARA Pty Ltd found some administrative duties for her in the front office.   After that, she was cleared for normal duties.

At the beginning of May 2017, Wendy wanted to explore new possibilities, hopeful that that would help her out of her depression. An opportunity of Team Leader in her team became available. She applied, but was unsuccessful.  She heard a rumour that LARA Pty Ltd wanted someone to attend company meetings with the Managing Director and Board and also meetings with stakeholders and that the person had to be ‘presentable’.  Wendy thought it was the loss of her finger that deemed her unpresentable.  She asked the Managing Director of LARA Pty Ltd and he said ‘We just have to put our best foot forward in this economic climate and appearances do matter’.  Wendy discussed the situation with a colleague who said ‘You had no chance anyway, you are a woman. They need a man in that job because there is a lot of negotiating required with other men’.  She again went to ask the Managing Director.  He said ‘Women are given equal opportunity in this workplace.  It is just the person who can best do the job.  And the person has to be able to attend 8:00am meetings on any day they are called’.  Wendy observes that all of the team leaders at LARA Pty Ltd are men. Wendy believes she can meet all of the requirements of the position of Team Leader if they deal with each situation fairly.

Advise Wendy on what she was and is entitled to and what action she can take.

2a. Problem question. Answer both 2a and 2b:

Chuck was employed as a full time stock broker at Billions Pty Ltd, a South Australian firm, for 15 years.  The firm consists of a total of 50 employees and has two dedicated human resources staff.  His immediate manager was Axel.

Chuck was employed under an employment contract.  It was very basic and didn’t even include a termination clause.

Work had been stressful for the few years prior to Chuck finishing at Billions Pty Ltd due to the State’s bad economy. However, it became especially bad in the year prior to him finishing at Billions Pty Ltd due to the alleged recession.  The firm’s numbers had been down and it didn’t seem like they would recover in the near future.

Chuck had lost clientele and had made some risky calls on his buying and selling which led to some financial losses for the firm’s clients.  Twice, Axel sat Chuck down and told him that he had to do better.  Chuck took this advice on seriously each time and made changes to his methodology. However, in the economic climate, it was hard to improve the figures.

To cope with the stress, Chuck had been drinking large quantities of alcohol with his evening meal. On 2 May 2017, Chuck came to work and was spotted by the human resources manager in the lobby.  He wasn’t walking straight and when she approached him, he smelt like alcohol.  She told him to go home, take the day off, recover and come back to work the next day.  He did that.  While he kept drinking alcohol with his evening meal, he didn’t come to work again smelling like alcohol.

On 15 May 2017, Chuck was at his desk.  Axel came to his desk and said ‘You’re doing nothing as usual I see.  I’m really not sure what we pay you for.’  Chuck showed visible signs of getting angry.  Axel said ‘Woah! Lets take this outside’.  Chuck and Axel walked out together.  When they got outside, Chuck tried to punch Axel.  Axel moved out of the way and wasn’t touched.  Axel said ‘Chuck, you obviously hate me so much – I think it’s best if you don’t work here anymore.’  Chuck was upset and surprised.  He started to walk off the premises.  Axel yelled out after him ‘What do you have to say for yourself’.  Chuck just kept walking and didn’t return again.

Chuck wants his job back.  He filed an application for unfair dismissal with Fair Work Australia.  Assume he has done this within the required time and that the amount of his salary allows him to access the jurisdiction.  His matter has been set for a conciliation conference.

Chuck has instructed you to represent him at the unfair dismissal conference.  Provide in writing, what you would say if you were asked at the conference to present the Chuck’s side of the story.  Include a response to what you think Axel and Billions Pty Ltd might argue. 

Problem question 2(b):

Using the facts that are not in italics in problem question 2, assume Chuck earns $150,000 and cannot access the unfair dismissal jurisdiction.  He is determined to file proceedings following the termination of his employment whether he has a good chance of success or not.  What claim can he make for compensation for the termination of his employment and what are the prospects of his success and possible compensation/damages, having regard to the position of Axel and Billions Pty Ltd?

Answers

1. Issue

Whether Wendy has any rights for the loss she had to bear due to the loss of her finger at the workplace, or not? Whether Wendy can initiate actions against the company for disability discrimination, or not? Whether Wendy can initiate actions against the company for gender discrimination, or not?

Rule

Negligence is one of the torts in Australia and refers to the breach of duty of care on part of a person, who owed another person a duty of care, as a result of their actions. In Donoghue v Stevenson, the consumer had to be paid the compensation by the manufacturer due to the dead snail found inside the bottle. In case a worker loses their finger at work, compensation can be claimed from the employer for their negligence, as they failed in providing a safe system of work; maintaining a safe workplace, safe machinery and equipment; and their failure in providing the employee with the necessary facilities, instructions, training and supervision.

Under section 19 of the Work Health and Safety Act 2012 of South Australia, a primary duty of care has been imposed over the person who conducts their business. Such an individual has to make certain that the health and safety of the worker who works under the directions of such person and the worker who has be engaged by such person, is taken care of while the worker is at work. The same has to be done in a reasonable manner so that the worker is not put at any kind of risk.

Section 32 of this act governs that when the duty contained in section 19 with regards to health and safety of a worker is compromised or is not complied with, which results in the worker’s death, illness or a serious injury, then a Category 2 offence is committed by the person. And in such cases the maximum penalty which can be imposed on the person is: for an individual $150,000; for a person conducting the business $300,000; and for a body corporate $1,500,000.

In the case of SafeWork NSW v United Roof Tiling Pty Ltd, the employer was fined $120,000 due to the breach of the Work Health and Safety Act 2011 (NSW), where the employee was injured as due to the unsupported awning, several roof tiling fell on the employees. In SafeWork NSW v Thermal Electric Elements Pty Ltd, the company had failed in training, assessing or testing the work experience of a 17 year old student, before he was allowed to operate the brake press, and also left him without any kind of supervision, which resulted in the student crushing his left hand, fingers being lost and the loss of his fine motor skills. Due to these reasons the court penalized the company with $250,000.

Losing finger at workplace can result in disability. The Disability Discrimination Act 1992 in Australia imposes restrictions on discrimination against any individual, on the basis of their disability in education, employment, provisions of goods and services, clubs and associations, publicly available premises, accommodation and in any other context. Under this act, the employer is prohibited from discriminating against an applicant on the basis of the disability of the person. And discrimination is prohibited in both direct and indirect manner. When a person is treated in an unfavorable manner because of one of their attributes directly, it is direct discrimination. And when a person imposes a condition, practice or requirement which has a disadvantageous effect over the other due to their attributes, and which is not reasonable, it is a case of indirect discrimination. In the case of Butterworth v Independence Australia Services (Human Rights) the employer was ordered to pay a sum of over $13,000 to its former employee as he was not provided reasonable adjustments when he suffered a workplace injury.

Under the Sex Discrimination Act 1984, in Australia, any sort of discrimination, which is based on gender identity, sex, relationship or marital status, sexual orientation, pregnancy or such areas of life, is prohibited. This prohibition is placed in different areas like education, work, provisions of goods and services, clubs and associations, publicly available premises, accommodation and in any other context. Under this act, the employer is prohibited from denying the person an opportunity just because of the reasons stated above.

Apart from the anti discriminatory law with regards to the employment opportunities, in Australia, the Equal Opportunity for Women in the Workplace Act 1999 has been brought into force through which, it is mandatory to provide equal opportunity to the women in the workplace. It is crucial that the employees with different gender, ages, sexual orientation, ethnicity, educational background, work experience, physical ability and the like. The Fair Work Ombudsman is responsible for providing the education, as well as, assistance to both the employers and the employees in the prevention of discrimination in the workplace.

Application

In the given case study, LARA Pty Ltd had employed Wendy but they did not teach her about the safety checks or the procedures. Majority of the time, the work done by Wendy was carried on without any kind of supervision. This was the case even when saws were regularly used in the workplace, which is a foreseeable hazard. While Wendy was working on February 14^th 2017 on the saw, her right hand middle finger was half cut. It was partially her fault as she did not use the guard, as the same was missing from the table. Due to this injury, she had to take two months off and also got depressed.

Due to these circumstances, a case can be made by Wendy against LARA Pty Ltd for negligence. This is because the employer had to ensure that the workplace was safe from hazards. But, they failed to do so when they left Wendy to work in an unsupervised manner and also when they failed in ensuring that the machines had property safety guards as needed. So, a duty of care of the employer was breached in this case, on the basis of Donoghue v Stevenson, as the foreseeable loss was not prevented by the employer. So, she can claim damages for the period for which she could not join work, her medical expenses, and for the mental distress caused.

Further, the provisions of the Work Health and Safety Act were also breached in this case as the health and safety of Wendy was not taken care of by the company. And on the basis of provisions of this section, penalties would be imposed upon LARA Pty Ltd which can be a maximum of $1,500,000 as it is a body corporate. On the basis of SafeWork NSW v United Roof Tiling Pty Ltd and SafeWork NSW v Thermal Electric Elements Pty Ltd, Wendy would be eligible to compensation.

This case also deals with discrimination on two grounds, i.e., of disability and gender. Wendy was told that she was not presentable due to the injury that was caused to her and due to her disability she was not given the post she applied for. This would be deemed as an indirect discrimination. The company had made reasonable adjustment and given her administrative duties; though, they failed in giving her equal opportunity for the job post. So, a case can be made by Wendy for the disability discrimination. Further, the case study reveals that the gender is not given equal opportunity in the company; hence, a case can also be made for the gender discrimination.

Conclusion

To conclude, Wendy can make a claim against LARA Pty Ltd for negligence, breach of Work Health and Safety Act, Disability Discrimination Act, Sex Discrimination Act and Equal Opportunity for Women in the Workplace Act.

Chuck’s side of the story

The first and foremost thing which is to be highlighted in this case is that Chuck had been unfairly dismissed in this case. In this case, the employment of Chuck was terminated by the employer without giving Chuck the requisite reasons for his dismissal. And owing to this unfair dismissal on part of the employer, Chuck would like to claim both compensation and a reinstatement order from the Fair Work Commission.

In order to show that a case of unfair dismissal is properly present here, an emphasis is made upon each of the four requirements with regard to a case of unfair dismissal. The first requirement is to show that the employee was dismissed or that the employee was forced to leave. For this, the events which took place on May 15^th, 2017 prove helpful. Chuck was told by Axel that he did not see a reason for why Chuck was being paid. He also told Chuck that it was best that he did not work here. This implication of Axel made Chuck leave the work and this can be deemed as being forced to leave the workplace. Hence, the first condition is satisfied.

The next condition is to show that the dismissal had been unjust, unreasonable or harsh. This can be evidenced from the fact that even with the bas economy and the lost of clientele, and being told to do better, Chuck made serious changes to his methodology and made attempts to improve the figures. A worker who makes attempt and tries hard, cannot be blamed for the poor results due to the economic downturn. Hence, his dismissal was unjust when he was doing his work with full dedication.

The third case is to show an absence of genuine redundancy. There was no redundancy going in the company, even with the tough economic climate. Further, while Chuck was forced to quit, he was not given the reason of redundancy; instead, he was made to feel derogatory about his capabilities. Hence, there was an absence of genuine redundancy.

As per the Small Business Fair Dismissal Code, an employee can be summarily dismissed without giving any warning or notice when there are present reasonable grounds with regards to the conduct of the employee being serious enough to justify the immediate dismissal. For other forms of dismissal, it is crucial that the employee is given the reason for reason for their risk of being dismissed. And this reason has to be valid one on the basis of the capacity or the conduct of the employee with regards to their job profile.

Chuck had made clear attempts to improve his work but due to the economic downturn, the conditions were not improving. This cannot be based as the fault of Chuck and cannot be cited as the competency issues for Chuck as every company was dealing with bad results. Hence, Small Business Fair Dismissal Code was also fulfilled.

Counter Claims by Axel

Axel can raise a clear counter claim with regards to the lack of adherence to the Small Business Fair Dismissal Code. The anger and the actions of Chuck can be cited as the grounds for immediate dismissal. Chuck was intoxicated at workplace and even though when he was warned to not smell of alcohol, he did not next day. However, he did not stop drinking. Further, the incident which took place on May 15^th, 2017 affirms his serious misconduct. He tried to punch Axel which is a gross misconduct in the nation. These actions of Chuck affirm that his dismissal was fair.

b. Issue

Whether Chuck can successfully claim compensation from Axel and Billions Pty Ltd for the termination of his employment, or not?

Rule

Termination of employment refers to the end of the employment of an employee with the employer and it can take place in different manner, for instance, the employee may be fired or he may resign. As per section 117 of the Fair Work Act, 2009 when an employee has to be terminated, a notice has to be given of a minimum period to the employee by the employer in writing. This notice period is dependent upon the year of continuous service of the employee. However, where a notice is not provided, the employer is required to provide payment in lieu of notice of termination. This amount is calculated on the basis of the full rate of pay for hours of the employee, had the person worked till the end of the minimum period of notice.

However, there is one case where the notice or pay in lieu of notice is not required to be paid to the employee and this is the case of serious misconduct. When a person causes a serious or an imminent risk to the health or to the safety of a person at the workplace in a visible manner, the person can be dismissed immediately from the work without giving any notice or pay. This is because in case of serious misconduct, it becomes crucial that the person is stopped before harm is caused. Intoxication and assault are included in serious misconduct.

Application

In the given case study, Chuck had been intoxicated in the past and had not given up on his drinking habits. Even though he did not smell like alcohol but he was still using it. Further, he made an attempt to punch Axel, which would have been an assault had the punch connected. On the basis of the actions of Chuck, it can be stated that he was guilty of serious misconduct, which would make his claim for compensation for termination of employment, unsuccessful in the court.

Conclusion

Hence, Chuck cannot successfully claim compensation from Axel and Billions Pty Ltd for the termination of his employment due to his serious misconduct on the lines of intoxication and attempted assault on Axel.

3. The employment contract denotes an agreement between the employee and the employer wherein the terms and condition of the employment are set out. As is the case with any other contract, it can be drawn in writing, where all the terms are put down on a paper and signed by the parties; or it can be drawn in verbal manner by exchanging the terms in a spoken manner. The employment contracts are binding upon both the employee and the employer. In the employment contracts, there are certain terms which are not explicitly stated, instead are implied. These implied terms are raised due to the situation in which the contract is drawn. No matter how comprehensively the employment contract has been drafted, it would have certain implied terms. However, in the case of Commonwealth Bank of Australia v Barker, the matter was discussed upon the inclusion of implied term of the mutual trust and confidence in the employment contracts. In the following parts, this very aspect of the employment contracts have been discussed to conclude if such implied terms need to be included in the employment contracts.

In the matter of Commonwealth Bank of Australia v Barker, the Federal court of Australia had provided that in all the employment contracts of Australia, an implied term of mutual trust and confidence was included. The essence of these implied terms are that the employer would not conduct in a manner which is unreasonable so as to destroy the confidence and trust which an employer employee relationship has. In practice, this is not obvious, which begs the necessity of the same to be molded on the basis of the facts of the case and the nature of the relationship.

In Courtaulds Northern Textiles Limited v Andrew, the court upheld that there was an implied term with regards to the duty to maintain both confidence and mutual trust. And the lack of adherence to these implied terms has resulted in claims of constructively dismissed being raised against the employers. In this case, it was held that the duty is implied on the employer on the basis of reasonable, as well as, proper cause and to be conducted in a manner which destroys the relationship between the parties of confidence and trust.

The verdict of this case was given with regards case of United Kingdom, i.e., the case of Malik and Mahmud v Bank of Credit and Commerce International SA, where such implied conditions were deemed to be present in the employment contracts. The Federal Court’s judgment affirmed that the employer had undertaken the acts in a manner which could be deemed as both fair and reasonable, when they dealt with their employees. The Supreme Court of South Australia, comprehensively reviewed both the English and the Australian laws in the matter of Mcdonald v State of South Australia and came to the conclusion that as per the laws of the nation, the implied terms of confidence and mutual trust were deemed as a part of the employment contracts and so, these terms had to be implied in all the employment contracts.

Though, when the matter of Commonwealth Bank of Australia v Barker was appealed in the High Court, it failed to agree that this implied duty was present. This verdict is significant and has a great importance for the employers as the claims which have been uncertain, undefined and which have been brought forward by the employees by stating that the employer’s conduct was damaging or destroying, in a serious nature, for the employee-employer relationship, could be given away with this verdict. Hence, this case stated that the employment relationship had to be limited to the terms which had been defined under the contract, i.e., on the basis of the express terms of the contracts and the contract law, along with the applicable legislations had to be applied to such employment contracts.

The reason why this verdict was given was that it is not known to what degree a particular term can be implied. An employment contract is at times deemed to have implied contracts like the protection of the confidentiality of the business and its clients, not indulging with the competitors in a manner which is detrimental for the company, the duty of carrying the business of the company to the best of their abilities and the like. However, the limits, the magnitude, the criteria of the fulfillment or the adherence to these implied terms cannot be judged. The degree to which these terms are implied is not defined and this creates not only confusions, but also unnecessary hassle for both the employer and the employees. The employee had no idea if his normal or general conversation with his friend, who works for the competitor, would be deemed as a breach of employment contract or not. This is because even though his employment contract does not place a restriction on such communication, but an implied term may.

In the recent years, a number of attempts had been made by the dismissed employees to claim damages from their ex employers citing a breach of contract on the basis of mutual trust and confidence. Hence, it is crucial that the grounds of mutual confidence and trust and not implied in the employment contracts, but are explicitly stated in the contracts. This would enable the employer in being certain that if the fail to comply with a particular procedure or a policy, the employer would not be liable for claim on the basis of these implied terms.

Such an implied term of confidence and mutual trust needs to only be implied in such cases where it becomes necessary for the efficient and effective working of the contracts belonging to such a class. This has to be construed in the sense where the rights which have been conferred upon the employee through the contract would be rendered worthless, nugatory or be seriously undermined or that the substance of the contract may be deprived or drastically devalued. Hence, where the contract is effective without such terms, the implied terms should not be applied. And in case any implied term has to be implied, it has to be such that the same goes without saying. Though, this does not mean that the common law duties are not adhered with, especially with regards to the duty of care and competence, and the duty of fidelity on part of the employee.

So, the implied terms have only to be included where they are something which are common and which do not have to be stated in a specific manner. Some of the examples of the terms which can be implied in an employment contract include the implied duty which has been imposed over the employer to give the employee a safe workplace; the imposed duty of enjoying the land upon the landlord, when a contract is drawn between a tenant and a landlord; and the implied duty on each and every party under the contract to do their part of the performance under such contract.

It can be contested that the long standing relationship between an employee and employer can require a particular term under a contract to be implied. However, in such cases, the necessity would not be satisfied to fulfill the implied term being of reasonable nature. Hence, the test of necessity has to be an objective test and is not based upon the consideration of a specific relationship amongst the parties. Moreover, if in a particular employment contract, a term of mutual trust and confidence is implied, and in other employment contracts, it is not, a problem would be raised with regards to inconsistency of practice. In terms of a contract, the perspective content of the implied terms could not be spelt out. And based on these points, it can be stated that the employment contract would not be futile if such terms are absent from the contract. Hence, in general or specific terms, such implied terms cannot be implied under the employment contracts. In case such a duty is implied, it would go beyond the genuine law making purpose of the courts.

On the basis of points put forward here, and on the basis of the cases put forward, it can be concluded that the implied terms of mutual trust and confidence should not be included in the contracts of employment. The reason for the same stems from the difficulty in justifying the magnitude of the imposed duty which had been put on the employer. Further, the discussion carried above showed clearly that the implied duty is such which creates an unfair advantage for the employees to claim constructive dismissals. And even if the implied duties have to be included in the employment contracts, only such implied duty should be included in such contracts which go without saying. Hence, it is crucial that the implied terms of trust and confidence are not included in the employment contracts, whereby the employers are imposed a duty to act fairly and reasonably with their employees.

Bibliography

Articles/ Books/ Reports

Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31^st ed, 2012)

Cases

Butterworth v Independence Australia Services (Human Rights) [2015] VCAT 2056

Commonwealth Bank of Australia v Barker (2014) 312 ALR 356

Courtaulds Northern Textiles Limited v Andrew [1979] IRLR 84, EAT

Donoghue v Stevenson [1932] UKHL 100

Malik and Mahmud v Bank of Credit and Commerce International SA [1997] UKHL 23

Mcdonald v State of South Australia [2008] SASC 134

SafeWork NSW v Thermal Electric Elements Pty Ltd [2017] NSWDC 62

SafeWork NSW v United Roof Tiling Pty Ltd [2017] NSWDC 14

Legislation

Contract Law

Disability Discrimination Act 1992 (Cth)

Equal Opportunity for Women in the Workplace Act 1999 (Cth)

Fair Work Act, 2009 (Cth)

Sex Discrimination Act 1984 (Cth)

Work Health and Safety Act 2011 (NSW)

Work Health and Safety Act 2012 (SA)

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