We’ve come a long, long way together – 10 years of the Fair Work Act 2009
firstname.lastname@example.org | June 11, 2019
As July quickly approaches, so does the 10 year anniversary of the commencement of key parts of the Fair Work Act 2009 (Cth) (the Fair Work Act) including the unfair dismissal and general protections provisions of the Fair Work Act. In this article we reflect on the Fair Work Act and what the key cases have taught us about the Fair Work Act.
The impact that the Fair Work Act has had on employment law in the last 10 years cannot be understated.
The Fair Work Act has governed employment law in Australia during a period of significant change to the Australian economy, politics and technology.
In these respects:
- The mining and construction sectors have expanded and contracted.
- The Labor Party, which introduced the Fair Work Act, was replaced by the Coalition at the Federal level in 2013.
- Use of social media has become prolific and its impact of work has grown. For instance, according to the 2018 Yellow Social Media Report, 93% of 18-29 year olds and 90% of 50 to 64 years olds in Australia maintain a Facebook profile.
- The CFMEU and the MUA merged to create the CFMMEU super union.
With this in mind, it is an appropriate time to ask: What do we know about the Fair Work Act?
Since key parts of the Fair Work Act commenced on 1 July 2009, there have been approximately 80,000 decisions, including Fair Work Australia/Fair Work Commission decisions, that refer to the Fair Work Act. 18 of these were issued by the High Court of Australia.
Some of these decisions provide guidance on the meaning of the Fair Work Act in respect of key day to day issues.
However, there remain important parts of the Fair Work Act which are untested and unclear.
Understanding these can assist with navigating the Fair Work Act moving forwards.
What we can say is fairly settled
- In respect of unfair dismissal, an employer will generally have a valid reason to dismiss an employee who has sent sexually explicit material or comments over social media to colleagues:
In Luke Colwell v Sydney International Container Terminals Pty Limited  FWC 174 an employee was terminated for sharing a pornographic video on a Facebook Messenger chat which included a number of his colleagues.
When finding that the employer had a valid reason to dismiss the employee, Commissioner McKenna acknowledged the growing number of cases regarding dismissal, social media use and out of hours conduct.
Commissioner McKenna held that the connection between the employee’s conduct and his employment was satisfied as the employee was Facebook friends with his colleagues because of the employee’s relationship with the employer.
The decision reflects the general willingness of the Fair Work Commission to support employers in dismissing employees engaging in this form of conduct.
- Enterprise agreements are unique from legislation, regulations and contracts, meaning that a special approach is to be used when interpreting their terms:
In Toyota Motor Corporation Australia Limited v Marmara  FCAFC 84, the Full Court discussed what principles should be used to interpret enterprise agreements.
The Full Court considered this issue for the purposes of considering the impact of a “no extra claims” clause in an enterprise agreement.
The issue was that the clause sought to prevent the parties from varying the enterprise agreement. Whereas, the Fair Work Act permits parties to vary an enterprise agreement.
The Full Court found that enterprise agreements are not:
- delegated legislation to be interpreted like a regulation as they are not “made” by the Fair Work Commission, rather they are made by employees, employers and sometimes unions; or
- contracts as they are made between an employer and a majority of employees not one employer and one employee.
The Full Court found that enterprise agreements are a “statutory artefact” of legislative character because the Fair Work Act empowers an employer and the majority of employees to make enterprise agreements.
As a consequence of this finding, the Full Court indicated that the principles applicable to the interpretation of enterprise agreements are unique to enterprise agreements and that, in this respect, it was appropriate to draw upon statutory principles although these principles did not strictly apply.
Having set out this finding, the Full Court held that the “no extra claims” clause did seek to prevent the parties from varying the enterprise agreement. Accordingly, the clause was contrary to the Fair Work Act and unenforceable.
- Unions may commence an action pursuant to a dispute resolution clause in an enterprise agreement even where the dispute resolution clause doesn’t expressly permit this. This means that unions may have standing to enforce rights using the dispute resolution clause of the enterprise agreement even where this right is not expressly provided:
In Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union  FCAFC 146, the Full Court held that, due to
ss 53, 172, 182, 183 and 201 of the Fair Work Act and as a matter of interpretation, five unions referred to as parties to an enterprise agreement and covered by the enterprise agreement had standing to pursue the dispute resolution clause in an enterprise agreement.
This meant that the union was not limited to merely representing the employer’s employees in a dispute.
The Full Court appeared to accept that the union was not required to prove that the first two stages of the dispute resolution process (which were at the employee/team level) had been complied with because these stages would not be “practical” where a dispute was being raised by the union.
The Full Court’s decision confirms that a union may, in certain circumstances, commence an action pursuant to a dispute resolution clause in an enterprise agreement without the involvement of an aggrieved employee. It also indicates that not all stages of a dispute resolution clause need to be complied with in this circumstance.
- Rest and relaxation periods in an employee’s roster remain non-paid time for the purposes of an employee’s payment in lieu of notice pursuant to s117(2)(b) of the Fair Work Act:
In Short v CBI Constructors Pty Ltd  FCCA 2442, it was argued that fly-in-fly out employees working on a roster which included non-working time should be paid as if they were at work when being paid in lieu of notice, that is, by ignoring non-paid, non-working time in their roster.
Relevantly, s 117(2)(b) of the Fair Work Act provides that payment in lieu of notice is to be calculated on the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
The Federal Circuit Court held that there is nothing in the language of s 117 of the Fair Work Act that requires an employee to be paid for non-working time, in particular where the employee works a roster which compresses working time into set periods.
The Federal Circuit Court’s decision makes it clear that rostered working hours impact the calculation of payment in lieu of notice for s 117(2)(b) of the Fair Work Act.
- Payment of accrued but untaken annual leave on termination of employment may be higher than the employee’s base rate of pay if a modern award or enterprise agreement provides for payment of annual leave during employment which is higher than the base rate of pay:
In Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union  FCAFC 100, the Full Court considered the difference in the language requiring payment of annual leave taken during employment in s 90(1) of the Fair Work Act and accrued and untaken annual leave on termination in s 90(2) of the Fair Work Act.
The Full Court confirmed that s 90(2) of the Fair Work Act is expressed differently to s 90(1) of the Fair Work Act to ensure that where a modern award or enterprise agreement provides for annual leave to be paid at a rate which is higher than an employee’s base rate of pay during employment that this is also the rate to be paid at termination for accrued but untaken annual leave.
The Full Court indicated that the intention of s 90(2) of the Fair Work Act is to ensure that payments which would be payable when an employee takes annual leave during their employment, like annual leave loading, would also be paid to the employee when paid their untaken leave.
- An employer will breach the Fair Work Act if they take adverse action against an employee and the “substantial and operative” reason for this adverse action is a prohibited reason:
In Board of Bendigo Regional Institute of Technical and Further Education v Barclay  HCA 32, the High Court confirmed that and employer will contravene the Fair Work Act where the “substantial and operative factor” in the employer’s decision to take the adverse action against an employee is a prohibited reason.
The High Court confirmed that the question of whether an employer’s decision to take adverse action against an employer was for a prohibited reason involves the assessment of the employer’s (the decision maker’s) reasons for taking the adverse action from a factual perspective and not an objective/subjective perspective.
That is, the assessment is not an assessment of what an objective outsider would believe the employer’s reasons to be or an assessment of whether there was an unconscious bias towards a prohibited reason.
The High Court’s decision establishes that credible and strong evidence that an employer’s reasons for taking adverse action against an employee were not prohibited reasons is essential for an employer to successfully defend a general protections claim.
- Section 570 of the Fair Work Act, which limits the circumstances where costs can be awarded against a losing party in proceedings involving the Fair Work Act, can extend to claims outside the Fair Work Act. The extension applies where a non-Act related claim is commenced at the same time as an Act related claim and the non-Act related claim is within the court’s accrued jurisdiction:
In Melbourne Stadiums Ltd v Sautner  FCAFC 20, the Full Court held that the employee’s claims under the Fair Work Act and common law breach of contract claims were matters within the same proceeding.
Accordingly, s 570(1) of the Fair Work Act applied to the employee’s claims in respect of the Fair Work Act and his breach of contract claims.
Section 570(1) of the Fair Work Act provides that costs should only be awarded where the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause or has engaged in an unreasonable act or omission which caused the other party to incur costs.
As section 570(1) of the Fair Work Act makes it more difficult for a party to obtain costs against the other party, employee claims which couple breach of contract and general protections claims have become commonplace.
- The meaning of “casual employees” for the purposes of s 86 of the Fair Work Act is the traditional meaning in general law:
In WorkPac Pty Ltd v Skene  FCAFC 131, the Full Court held that the meaning of casual employees in s 86 of the Fair Work Act is its traditional meaning in general law. Further detail on this decision is available by following this link.
- Directors, human resource professionals and accountants may be accessories to contraventions of the Fair Work Act pursuant to s 550 of the Fair Work Act. The knowledge requirements for s 550, which includes being “knowingly concerned” in a contravention, often results in these parties been found liable under s 550 of the Fair Work Act:
In FWO v Oz Staff Career Services Pty Ltd & Ors  FCCA 105 and FWO v Oz Staff Career Services Pty Ltd & Ors (No.2)  FCCA 2594, the Federal Circuit Court held that a Human Resources Manager was liable as an accessory for contraventions of s 323 of the Fair Work Act and regulation 3.44 of the Fair Work Regulations 2009 (Cth).
The Federal Circuit Court ordered that the Human Resources Manager pay a penalty of $9,920 in respect of deductions that were made to employee’s wages and for a failure to keep accurate records.
In EZY Accounting 123 Pty Ltd v Fair Work Ombudsman  FCAFC 134, the Full Court held that an accounting firm that was aware of and facilitated its client’s systematic underpayment of its employees was an accessory to the employer’s contravention.
The Full Court found that it did not matter that the accounting firm did not intend to assist its client to contravene the applicable modern award.
Areas where clarity is still required:
- Whether an employer can lawfully terminate an employee for comments of a political or religious nature which are made outside of work and which are contrary to the employer’s mission or culture:
In Linfox Australia Pty Ltd v Fair Work Commission  FCAFC 157, the Full Court found no error in the Fair Work Commission Full Bench’s finding that free speech may justify a finding of unfairness in an employer’s decision to terminate an employee.
The Commissioner at first instance held that the comments made by the employee were “[W]ithin his right to free speech…even though many, including myself, would find much of the Facebook discourse which is in evidence to be distasteful”. The decision of the Full Court suggests that an employer may unfairly dismiss an employee where the reason for the dismissal was the employee’s use of social media to comment on religious or political matters.
On the other hand, in Banerji v Bowles (acting Secretary, Dept of Immigration and Citizenship)  FCCA 1052, the Federal Circuit Court held, when considering an employee’s application for an injunction on the basis of threatened and actual adverse action, that “even if there be a constitutional right [to free speech] of the kind for which the Applicant contends, it does not provide a licence [allegedly] to breach a contract of employment.”
The Federal Circuit Court’s statement suggests that comments of a political nature may justify an employer dismissing an employee’s employment.
- When a shiftworker will be entitled to the additional weeks’ annual leave pursuant to s 87(3) of the Fair Work Act:
In O’Neill v Roy Hill Holdings Pty Ltd  FWC 2461, the Fair Work Commission held that the threshold that an employee must satisfy in order to “regularly” work on Sundays and public holidays for the purposes of s 87(3)(a)(iii) of the Fair Work Act is at least 34 Sundays and 6 public holidays per year of employment.
The Fair Work Commission extracted the 34 Sundays and 6 public holidays threshold from cases which predated the Fair Work Act.
While it is arguable that Parliament intended the 34 Sundays and 6 public holidays threshold to apply for consistency and certainty, the meaning of s 87(3) is yet to be confirmed.
- What is a “complaint” for the purposes of the general protections provisions of the Fair Work Act:
One approach takes a narrow view on what is a “complaint”. The narrow approach requires that the employee to have a legal right to make a complaint in their employment contract or that the complaint is made formally.
The other and broader approach doesn’t require a legal right to make a complaint and captures most circumstances where an employee expresses concern about matters that could affect their employment.
In Walsh v Greater Metropolitan Cemeteries Trust (No. 2)  FCA 456 Bromberg J favoured the broader approach and held that an employee makes a complaint when they raise a matter or conduct which could reflect badly on them or could prejudice them in their employment.
The impact of this broader approach has been seen more recently Fatouros v Broadreach Services Pty Ltd  FCCA 769 where an email sent by an employee about another employee’s performance was considered a complaint.
- How an employer may seek an adequate remedy where an employee doesn’t provide the notice required by a modern award or contract of employment:
Some modern awards permit an employer to deduct wages when an employee fails to give the required notice of termination. However, the extent of the deduction is often limited. For instance, in clause 14.1(c) of the General Retail Industry Award 2010: “If an employee who is at least 18 years old does not give the period of notice required under paragraph (b), then the employer may deduct from wages due to the employee under this award an amount that is no more than one week’s wages for the employee.”
Section 324 of the Fair Work Act, which provides that deductions from wages must be required by a modern award, enterprise agreement or other law, or must be “principally for the employee’s benefit” arguably prohibits the forfeiture of wages for an award free employee and forfeiture which exceeds that permitted by a modern award.
In an apparent response to these difficulties, in Jetgo Australia Holdings Pty Ltd v Goodsall  FCCA 1378, an employer unusually commenced action against the ex-employee who failed to give notice under the relevant modern award. The Federal Circuit Court found against the employee for breach of the relevant modern award and ordered that the employee pay a penalty.
However, the Federal Circuit Court ordered that the penalty be paid to the Commonwealth and not the employer, leaving the employer without financial remedy for the employee’s failure to give the required termination notice.
What does the future hold?
The Coalition government is unlikely to introduce sweeping changes to the Fair Work Act in the next 3 years. Only a handful of its election promises concerned industrial relations. Its most significant proposal was to stop casual employees from “double dipping” on the casual loading and full time/part time entitlements where they are found to be full time or part time employees at law.
Regardless, it is undeniable that the Fair Work Act has and will continue to shape the employment law landscape into its tenth year and beyond.
HLS Legal provides comprehensive and current advice to employers in respect of the Fair Work Act, including, in respect of managing termination of employment, enterprise agreement disputes, annual leave and deductions from pay.
If you would like advice on such matters, please contact us on (08) 9322 5202.
This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.
 Yellow, 2018 Yellow Social Media Report (2018) https://www.yellow.com.au/wp-content/uploads/2018/06/Yellow-Social-Media-Report-2018-Consumer.pdf