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Focus: Workplace Relations – May 2004

In this issue: We look at changes to the federal award severance scale, workplace bullying, deciding when a labour hire company is an employer, and three articles about workplace privacy issues. 

• New privacy legislation set to apply in NSW
• Changes to the new federal award severance pay scale?
• Workplace bullying fines for directors
• Labour hire company ruled to be employer
• MEAA found guilty of privacy and copyright breaches
• Abolish employee record exemption: Privacy Commissioner

New privacy legislation set to apply in NSW

In brief: From July, private sector organisations in NSW must comply with new standards relating to the collection and management of personal health information. Partner David Cross and Law Graduate Scott Aspinall report.

Protection

The trend towards increased legislative protection for private information continues with the commencement of the Health Records and Information Privacy Act 2002 (NSW) (the Act),  which commences on 1 July this year.

Borrowing heavily from the structure of the Commonwealth Privacy Act, the NSW legislation sets out 'Health Privacy Principles' (HPPs), which apply to the collection, storage, management and access to 'health information'. That phrase is defined widely to include personal information about:

• the physical or mental health or a disability (at any time) of an individual, or
• an individual's express wishes about the future provision of health services to him or her, or
• a health service provided, or to be provided, to an individual.

New requirements

New requirements for the way in which information is collected and dealt with are extensive and include:

• supplying the individual concerned with information about who will have access to information supplied;
• requirements relating to consent to collect and hold information; and
• security requirements relating to storage of health information.

The Act provides for penalties of up to $5,500 for breaches of the HPPs.

Implications

The broad definition of 'health information' extends a private sector organisation's obligations. Although 'employee records' are exempt, this will apply only if the information is related to the employment relationship itself. If NSW employers have not already done so, now is the time to review policies that relate to this sensitive area.

Changes to the new federal award severance pay scale?

In brief: The Australian Industrial Relations Commission may alter the new federal award severance pay scale before it even takes effect. Senior Associate Andrew Cardell-Ree reports.

As reported in Focus: Workplace Relations, March 2004, the Commission's Full Bench has increased the severance pay scale for federal award employees retrenched after five or more years' service. The Commission is now considering whether it needs to change the new scale, even though it has yet to take effect.

The new scale

The new federal severance pay scale, which applies to employers of 15 or more employees,¹ peaks at 16 weeks' pay for employees dismissed due to redundancy after nine years' service. It drops back to 12 weeks' pay for retrenched employees with 10 or more years' service. The relevant (and new) part of the scale is:

Avoiding a windfall under federal awards...

The Full Bench decided to reduce severance pay by four weeks on achieving 10 years' service. It said that if it did not, employees would receive a windfall gain from receiving both pro rata long-service leave and (more than 12 weeks') severance pay. On achieving ten years' service, the standard federal award long-service leave provision gives an employee an entitlement to pro rata long-service leave equivalent to one month's pay, or just more than the four week drop that the Commission has built into the new federal severance pay scale.

...but not state long-service leave laws

Many federal awards do not contain the standard provision, and instead allow the relevant state long-service leave legislation to apply. Only the Victorian and Western Australian laws mirror the federal standard. New South Wales and the Australian Capital Territory laws give employees pro rata long service after five years, and laws in the Northern Territory, Queensland, South Australia and Tasmania give employees pro rata long service after seven years. If the Commission intended to take into account pro rata long-service leave benefits of employees in setting the new severance pay scale, it has not achieved that aim, unless the relevant federal award contains the standard long-service leave provision or the employees are located in Victoria or Western Australia.

Further submissions

On 22 April 2004, the day before the new scale was to take effect,² the Commission's Full Bench reconvened to hear the employer groups ask for a change to the scale to take account of the discrepancy between the Commission's reasons and the scale it has proposed.

The Commission gave the Australian Council of Trade Unions a week to file written submissions responding to the arguments put forward by the employer groups, and gave the employer groups a week after that to file their submissions in reply. The time allowed has passed, and there is no indication of when a decision is likely to be handed down.

Implications

It is not clear what, if anything, the Commission will do to address the employer groups' concerns.

The simplest option would be to insert the existing standard long-service leave provision into all federal awards, overriding state long-service leave laws, and so creating a uniform approach to long-service leave in all federal awards. Alternatively, the Commission may vary the proposed federal scale to take account of the currently prevailing state or territory long-service leave laws, effectively creating three different severance pay scales:

• one to complement the federal long-service leave provision (and the long-service leave laws in Victoria and Western Australia);
• one to complement the laws in New South Wales and the Australian Capital Territory; and
• one to complement the laws in the Northern Territory, Queensland, South Australia and Tasmania.

Of course, the first option would not inflict the same administrative burden on employers with employees in different states, but either would achieve the aim of preventing employees 'double-dipping' benefits triggered by dismissal on redundancy.

Keep reading Focus: Workplace Relations for updates on this important area.

Workplace bullying fines for directors

In brief: A single episode of workplace bullying has cost a company $24,000 and two of its directors $1,000 each in fines for breaching workplace safety laws. Senior Associate Andrew Cardell-Ree and Law Graduate James Thompson report.

Background

In December 2001, five workers at a joinery used a cling-film machine to wrap the body of a 16-year-old labourer. They fastened the bound youth to a trolley and pushed it to the edge of a four-metre drop. Over the course of the next half-hour, they filled his mouth alternately with sawdust and glue. The labourer was asthmatic and had serious trouble breathing. Eventually, a contracted site foreman cut him free.

The company had no policy prohibiting bullying, undertook no investigation and took no action against any worker. One of the directors was forewarned of the incident and did not discourage or prevent it, and another was the floor supervisor when the incident occurred.

The company and two of the directors were prosecuted under the Occupational Health and Safety Act 2000 (NSW) (the Act) for allowing an episode of bullying. The Act obliges an employer to ensure the health, safety and welfare of all employees at work and makes managers and directors liable for the company's breaches (subject to certain limited exemptions, such as having used all due diligence to avoid a breach).

The court attacked what it described as a 'culture of initiation'.³ It found that the company's failure to intervene, investigate or discipline any of those involved amounted to tacit approval of the conduct, which breached the Act. The court fined the company $24,000 and each director $1,000.

Implications for managers and directors

Somewhat surprisingly, this is the first time that managers or directors have been prosecuted under occupational health and safety (OH&S) laws for allowing an episode of bullying. The managers in this case not only failed to meet this duty, but also encouraged its breach. If this had not been the first prosecution of managers for allowing bullying, the directors' penalties might well have been higher.

The decision confirms that without a widely known and uniformly enforced policy prohibiting workplace bullying, a company, its managers and directors are liable to criminal sanction for breaching OH&S laws, and that even a floor supervisor may be a manager under the Act. More importantly, the decision suggests that WorkCover is likely to prosecute managers and directors for the OH&S breaches of the company, representing a distinct shift in policy. If that is the case, the fines imposed on managers will quickly exceed the $1,000 imposed here, and managers turning a blind eye to any form of workplace bullying will do so at their peril.

Labour hire company ruled to be employer

In brief: A recent decision of the Australian Industrial Relations Commission Full Bench has confirmed an earlier decision that a labour hire company is the true employer of a worker placed with a host. Partner David Cross reports on the decision which is the latest in a series of cases examining the issue.

In Bianchi v Staff Aid Services (PR94525), a Full Bench of the Australian Industrial Relations Commission had to consider whether Ms Bianchi was an employee of Staff Aid Services, a labour hire company. Ms Bianchi had brought unfair dismissal proceedings against Staff Aid Services and initially, Staff Aid Services defended the proceedings on the basis that Ms Bianchi was not an employee and so the proceedings were beyond jurisdiction (it being the case that the unfair dismissal remedy is claimable only by employees). Commissioner Lewin ruled that Ms Bianchi was an employee of Staff Aid Services. The matter was then appealed.

Ms Bianchi was engaged on the basis of a written contract, which repeatedly referred to her as an 'independent contractor'. Staff Aid Services had a contract with Coles Myer, among others, under which it supplied persons to perform labour. Ms Bianchi was such a person.

Indicators of employment

In determining the matter, the Full Bench noted the well-known principle that the labels given by the parties to their relationship are not conclusive. Instead, the Full Bench looked at the full range of relevant indicators. These were:

• control – in the present case, Coles Myer had complete day-to-day control;
• whether work is performed for others – Ms Bianchi performed work exclusively for Coles Myer;
• whether the person has a separate place of work or advertises to the world at large – neither of these occurred;
• whether the work could be delegated or sub-contracted – in this case, it could not;
• whether the putative employer has the right to suspend or dismiss – the contract conferred such a right on Staff Aid Services;
• whether the putative employer presents the worker to the world at large as a part of its business – this did not occur;
• whether income tax is deducted – it was;
• whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks – here, it was in the nature of a salary;
• whether holidays are provided – they were not;
• whether the work involves a profession, trade or distinct calling – this was unskilled work and so it did not fit this description; and
• whether a significant portion of remuneration is spent on business expenses – not in this case.

On balance, it decided that Ms Bianchi was an employee of Staff Aid Services.

At first instance, Commissioner Lewin also made a finding of joint employment. The Full Bench ruled that this was an unsafe finding, particularly in light of the fact that Coles Myer (the other possible employer) was not given an opportunity to appear at the hearing.

MEAA found guilty of privacy and copyright breaches

In brief: A recent decision of the Federal Court illustrates the comparatively rare use of the enforcement provisions of the Privacy Act, as well as an interesting conjunction of copyright law and industrial law, reports Partner David Cross.

In Seven Network (Operations) Limited v Media, Entertainment and Arts Alliance,⁴ Justice Gyles of the Federal Court was asked to award an injunction and damages in favour of the Seven Network on the basis that the MEAA was guilty of:

• breaches of the Privacy Act;
• breaches of copyright; and
• coercion contrary to section 170NC of the Workplace Relations Act (the WRA).

The dispute arose out of an attempt by the Seven Network to reach an enterprise agreement directly with its employees (under section 170LK of the WRA). In the lead up to a vote on the issue, the MEAA sought to organise a form of market research / publicity campaign among employees. To that end it engaged the ACTU's call centre (Member Connect). The MEAA supplied Member Connect with a list of employees of Seven Network that was an internal Seven Network document, which had somehow come into the hands of the MEAA. Member Connect used the list to telephone employees in the lead up to the vote on the agreement. The employees were asked to express views about conditions within Seven.

Injunction to protect personal information and copyright

In terms of the substantive application for relief, Justice Gyles found as follows:

• the phone canvassing conducted by Member Connect did not amount to coercion;
• the list of employees was a Seven Network document that it had compiled and, accordingly, in which it held copyright;
• the document's copyright had been breached through its use by the MEAA and Member Connect;
• MEAA had contravened principle 1.1 of the National Privacy Principles when it received the results of the telephone polling from Member Connect. Principle 1.1 prohibits an organisation from collecting personal information unless it is necessary for one or more of its functions or activities.
• MEAA had failed to comply with National Privacy Principle 1.5, which requires organisations to inform persons that it is collecting their personal information and to obtain their consent;
• the Privacy Act grants the Federal Court power to issue an injunction and that claim can be made by any party, not just a party that is directly interested.

Justice Gyles granted injunctions preventing continuing use of the employee list in breach of copyright. Justice Gyles also ordered the MEAA to pay damages of $10,000 and Member Connect to pay damages of $2,500.

An injunction was also granted in relation to breach of the privacy principles.

Costs

Finally on the question of costs, the MEAA sought to argue that the proceedings fell within the immunity of section 347 of the WRA. Under section 347, proceedings brought in relation to the WRA will not be the subject of an order for costs unless commenced vexatiously or without reasonable cause. Justice Gyles ruled that the claims for breach of copyright and breach of the Privacy Act were so removed from the WRA that an order for costs could be made.

Abolish employee record exemption: Privacy Commissioner

In brief:  The Acting Federal Privacy Commissioner believes the law should be changed to make employers comply with the Commonwealth Privacy Act when using employee records. Senior Associate Andrew Cardell-Ree reports.

The exemption

In general, an organisation must comply with the minimum standards set out in the Commonwealth Privacy Act (the Act) when collecting, using or disclosing personal information about an individual. However, as reported in Focus: Workplace Relations - April 2001, an employer is not required to meet those minimum standards when handling personal information if:

• the information is contained in an employee record about a current or past employee; and
• the information is used for a purpose connected directly with the employment of the employee.

As long as there is a sufficiently close connection between the employee's information, the employment and the use of the information, the employer is free to give that information to another organisation without regard to the usual privacy obligations. This is so even if the information is 'sensitive information' as defined in, and generally protected by, the Act.

Privacy review

On 29 November 2001 the Commonwealth Government promised that once the new private sector privacy laws had been in place for a time, it would review the adequacy of the protection they give to employee records. In February 2004 the Government released a discussion paper on information privacy and employee records and called for submissions.

In a submission focused on the need to give employees' personal information better protection from 'the risk of improper exploitation of material within the employment context, or simply mistaken misuse', the Acting Federal Privacy Commissioner (Acting FPC) says the employee record exemption should go. Employers already have a system in place to protect the privacy of customers' and suppliers' personal information, he says, and they can extend that system to incorporate their employees.

The Acting FPC argues that the exemption does not offer an appropriate balance between the interests of employers and employees and points to the employer who informed other staff of one employee's HIV status. In that example, the exemption excused the disclosure and the Privacy Commissioner was unable to investigate. He adds that abolishing the exemption would placate international trading partners concerned about the lack of protection of any personal information of employees they may share with a business in Australia, and that the extra transparency in information handling systems would encourage better industrial relations between employers and employees.

Implications

It is not clear when submissions will close or what changes, if any, the Government might make. Even if it makes no changes to the existing laws, recent moves to introduce State laws to similar effect suggest that employers will face more complicated privacy laws as they navigate across state borders.⁵  The Acting FPC argues that a change to the Act would be preferable, because it would offer employers a uniform approach between States, and minimise the disruption to their business.

With a Federal election looming, any changes at a Commonwealth level may be a little way off.

References

1. See our previous article in Focus: Workplace Relations - March 2004
2. The new scale was due to come into effect in the nine awards involved in the test case on 23 April 2004. The scale does not apply to other awards until a party to it (and typically the relevant union) applies to the Commission for such an order and the order is granted.
3. Inspector Gregory Maddaford v M A Coleman Joinery (NSW) Pty Ltd, Brian Gerard Coleman & Graham Gerard Coleman NSWCIMC (5 May 2004).
4. [2003] FCA 1366.
5. See Focus: Workplace Relations - March 2004