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Focus: Workplace Relations – July 2008

In this issue: we look at directions to undergo medical examinations; right of entry for unions; suspending employees; the Fair Pay Commission's wage-setting decision and a new remuneration cap for unfair dismissals.

• Employer's direction to undergo medical examination
• No easy right of entry for unions
• Direction not to work unlawful
• Fair Pay Commission's wage-setting decision
• New remuneration cap

Employer's direction to undergo medical examination

In brief: Under what circumstances may an employer direct an employee to undergo a medical examination or furnish a medical report? Lawyer Charlotte Ahearne reports on a recent Federal Court decision.

Background

Mr Thompson was employed by IGT (Australia) Pty Ltd as a graphic artist and animator. He had a history of back pain. Between 2001 and 2008, after exhausting his sick leave, he used annual leave and took leave without pay to an extent that was considered by IGT to be excessive. More recently, his absences from work in 2008 were not explained.

After several unsuccessful attempts to acquire a medical report from Mr Thompson detailing his illness or injury, and after receiving contradictory information from Mr Thompson about the nature and extent of his illness, IGT directed him by letter to attend a psychiatric assessment. The letter stated that the direction was given because IGT was concerned about Mr Thompson's fitness for work following a series of absences without satisfactory certification.

Mr Thompson sought interlocutory relief from the Federal Court in the form of an order that IGT withdraw its direction. Mr Thompson claimed that, by the giving of the direction, he had been discriminated against on the ground of his disability (a back injury) in contravention of the Disability Discrimination Act 1992 (Cth).

The decision

The Federal Court noted that employers have an obligation under the Occupational Health and Safety Act 2004 (Vic) to provide a safe place of work and that, in discharging that obligation, an employer may need to assess from time to time whether an employee suffers from a disability that might affect his or her work.

It was held that, provided the direction is made on reasonable terms and is shown to be 'reasonably necessary', it does not constitute a detriment in employment for the purposes of the Disability Discrimination Act, but is 'a necessary part or an incident of the employment'.¹

On the facts, the court considered that it was 'reasonable, and probably necessary' for IGT to give the direction in circumstances where:

• there was a history of absences because of a medical condition;
• there were inconsistencies in the statements made by Mr Thompson to his employers as to the state of his health; and
• there were a number of absences for which no reasons were given at all.

The court found that the direction was not made because of Mr Thompson's alleged disability, but to find an explanation for Mr Thompson's absences, to comply with its health and safety obligations, and to find out the extent to which Mr Thompson was able to perform the inherent requirements of his work.

The court did not accept Mr Thompson's submission that a psychiatric (rather than a physiological) examination was not rationally connected to his history of back injury.

Mr Thompson's application was dismissed and he was ordered to pay IGT's costs.

No easy right of entry for unions

In brief: The Full Bench of the Australian Industrial Relations Commission has upheld a decision to refuse a union official entry into a workplace because of a lack of particulars in the entry notice. Lawyer Catherine Ware reports.

Background

On 7 November 2007, the Australian Industrial Relations Commission (the Commission) denied a representative of the Australian Municipal, Administrative, Clerical and Services Union (ASU) entry to an Australian Taxation Office (ATO) workplace for the purposes of investigating alleged breaches of an agreement and to hold discussions with ATO employees.

Commissioner Spencer determined that the ASU did not provide sufficient particulars of the alleged breaches as required by the Workplace Relations Act (the WR Act) in the entry notice, and hence failed to prove on the balance of probabilities that reasonable grounds for suspicion of a breach existed.

The ASU appealed the decision.

Appeal decision

The Full Bench of the Commission² agreed with Commissioner Spencer's determination that the burden of proof to establish the reasonable grounds for suspicion lies with the person asserting that the reasonable grounds exist; in this case, the ASU.

The Full Bench reiterated that a 'common sense' approach is required when particularising the reasonable grounds for suspecting that a breach has occurred, on the basis that it is likely an employer may seek further particulars of the suspected breach when some ambiguity or lack of clarity is provided in an entry notice. Should a dispute arise as to the 'reasonableness' of the suspicion, then it would be for the Commission to make such a determination.

The Full Bench reinforced the Commissioner's decision at first instance that the ASU had not demonstrated in the entry notice that there were reasonable grounds for suspecting a breach of the agreement because of a lack of particulars in the notice.

Direction not to work unlawful

In brief: The Supreme Court of New South Wales has found that an employer could not suspend an employee indefinitely. The court also found that the employer could not direct the employee to work at a different location under a state award. Lawyer Kate Madgwick reports.

Background

Neonatologist Dr Downe was appointed by the Health Service as the director of the Neonatal Intensive Care Unit at Nepean Hospital in NSW (the unit) in 1990. Before accepting the position, Dr Downe was told by the Health Service that she would be required to visit the nursery units at Hawkesbury and Blue Mountains hospitals but that those nursery units were not likely to become neonatal intensive care units.

In mid-2004, while Dr Downe was on long service leave, a number of complaints were made against her by other doctors at the hospital and in the unit. Before she returned from leave, Dr Downe was notified by the Health Service that she was to be suspended from duties pending investigation of the complaints.

The complaints were investigated and, by February 2005, it was determined that the complaints had not been substantiated.

Nevertheless, the Health Service formed the view that there had been a breakdown in the relationship between Dr Downe and the other doctors in the unit and that Dr Downe should not return to work. The Health Service continued Dr Downe's suspension and sought to find an agreed solution to the situation without success.

In August 2006, the Health Service directed Dr Downe, who was still on suspension, to work as a staff specialist at Westmead Hospital, relying on a clause of the Staff Specialist (State) Award (the award) allowing an employer to direct a staff specialist to work at any hospital or other institution run by the Health Service.

Dr Downe commenced proceedings seeking an order to prevent or overcome her suspension and the direction to work at Westmead Hospital.

Decision

The court found³ that the direction given to Dr Downe to work as a staff specialist at Westmead Hospital was inconsistent with the specific provisions of Dr Downe's contract of employment, in particular, that Dr Downe would work at the unit that was at Nepean Hospital and would work as a director and not a staff specialist. The position at Westmead was not 'another location'; it was to be the only location and the Health Service was wrongfully seeking to substitute this location for the location agreed in the contract of employment.

The court considered that it would not be a breach of either the implied duty of mutual trust and confidence or the implied duty of good faith for an employer to direct an employee not to work for a defined period during the investigation of a complaint, provided the power to do so is exercised in good faith.

However, the nature of Dr Downe's position and the terms of her contract of employment contemplated that Dr Downe would have the opportunity to exercise her skill as a clinician, to continue to develop those skills and to exercise her duties as director.

In those circumstances, there was no implied right to direct Dr Downe not to perform work other than as was necessary for investigation of the complaints.

The court considered that, in this case, there were exceptional circumstances justifying the exercise of the court's discretion to make an order, despite the courts' traditional reluctance to compel personal service. The court declared that Dr Downe's continuing suspension and the direction to work at Westmead Hospital were unlawful and restrained the Health Service from giving directions inconsistent with Dr Downe performing her role as director of the unit.

Fair Pay Commission's wage-setting decision

In brief: The Australian Fair Pay Commission has awarded a $21.66 per week increase to the standard federal minimum wage and adult pay scales. The increases will take effect from the first pay period on or after 1 October 2008. Partner Jamie Wells and Law Graduate Will Brennan report.

The decision

The Fair Pay Commission decided that:

• the standard federal minimum wage will increase to $14.31 per hour (ie to $543.78 for a 38-hour week); and
• Australian Classification and Pay Scales for adult rates of pay will increase by $0.57 per hour.

The decision will apply to most employees covered under the federal system, but excludes employees covered by:

• pre-WorkChoices AWAs or certified agreements dealing with basic rates of pay; and
• preserved state agreements dealing with basic rates of pay.

New remuneration cap

In brief: The remuneration cap for unfair dismissals has been lifted to $106,400. Partner Jamie Wells and Law Graduate Will Brennan report.

Compensation for unfair dismissal

In addition to the amendment to the statutory cap, the Workplace Relations Regulations 2006 (Cth) also adjusts the maximum compensation that may be awarded by the Australian Industrial Relations Commission to a non-award employee in lieu of reinstatement. From 1 July 2008, that limit is now $53,200.

Footnotes

1. Thompson v IGT (Australia) Pty Limited [2008] FCA 994 at [52].
2. [2008] AIRCFB 96.
3. Downe v Sydney West Area Health Service (No 2) [2008] NSWSC 159.

For further information, please contact:

• Jamie WellsPartner, Brisbane
  Ph: +61 7 3334 3268
  Jamie.Wells@aar.com.au
• Peter ArthurPartner, Sydney
  Ph: +61 2 9230 4728
  Peter.Arthur@aar.com.au
• Gavin MacLarenPartner, Melbourne
  Ph: +61 3 9613 8941
  Gavin.MacLaren@aar.com.au