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Focus: Workplace Relations – October 2005

In this issue: we look at coercion of subcontractors; bargaining about contract labour; workplace privacy; age discrimination; and unfair termination where a new appointment results in a demotion. 

To coerce or not to coerce?

In brief: The Federal Court of Australia has dismissed a complaint against Multiplex Limited that it coerced a subcontractor in breach of section 170NC of the Workplace Relations Act 1996 . Lawyer Luke Gattuso reports.

Section 170NC

Section 170NC of the Workplace Relations Act 1996 (Cth) (the Act) prohibits taking or threatening 'industrial action or other action' (other than protected action) with intent to coerce another person to make a certified agreement.

Background to dispute

Multiplex Limited (Multiplex) was the head contractor of the Berwick Community Hospital project in January 2004. There were approximately 20 subcontractors working on site and the project was running well behind schedule.

SJ Cordell (Cordell) was responsible for installing louvres at the site. Scaffolding was required to install the last louvre, which was to occur by 29 January 2004 at the latest. Cordell engaged No Bolt Operations Pty Ltd (No Bolt) to provide and erect scaffolding, but this arrangement was unsatisfactory to Multiplex as:

  • No Bolt could not attend the site until 29 January 2004; and
  • with the requirement for No Bolt staff to attend a site induction before commencing work, and the risk of poor weather, it was likely there would be insufficient time to complete the task on that day.

The evidence revealed that before coming on site, all subcontractors were required to furnish Multiplex with their paperwork, which included documents evidencing payments to a portable long-service leave scheme and a superannuation fund, certificates of currency in respect of workers' compensation and public liability insurance, a job safety analysis and a copy of an enterprise bargaining agreement.

When No Bolt provided Multiplex with its paperwork, Multiplex was concerned that it did not include an enterprise bargaining agreement. While there was no strict requirement for a subcontractor to be party to an enterprise bargaining agreement, Multiplex was concerned that the absence of an agreement might lead to further delay because of industrial disputation.

Multiplex subsequently arranged for the work to be carried out by another subcontractor with past experience on the site. This arrangement had the added advantage that the subcontractor's workers had already attended a site induction. No Bolt was advised that its services were not required.

Mr Ponzio, an inspector of the Building Industry Task Force, asserted that Multiplex had taken action to coerce No Bolt to enter into an agreement with the Construction, Forestry, Mining and Energy Union (CFMEU).

The decision

The Federal Court found that Multiplex had not breached s170NC of the Act.1

The court accepted that Multiplex was concerned about avoiding industrial disruption, but found that it:

  • was unconcerned about No Bolt's industrial arrangements or lack of them; and
  • had no intention of coercing No Bolt to enter into a certified agreement.

The court observed that even if Multiplex did have the requisite intent, the acts could not amount to coercion under s170NC because:

  • the court drew a distinction between coercive conduct and conduct that might be regarded as discriminatory. Even if the absence of an enterprise bargaining agreement had been a substantial and operative factor in Multiplex's decision to exclude No Bolt from the site, this would have been insufficient to establish coercion;
  • s170NC is concerned only with the conduct of the parties to a bargaining process. In this case, No Bolt had no direct bargaining relationship with Multiplex. In effect, the CFMEU would be the proper subject of a s170NC claim, as the likely party to an agreement; and
  • the court accepted the narrow interpretation of 'other action' considered in previous cases. Even if Multiplex had the necessary intent to coerce No Bolt to make an industrial agreement, and such coercive conduct had occurred, it would still not have been 'industrial action or other action'.
Conclusion

The intent to coerce is an integral part of establishing a breach of s170NC of the Act. Practically, there must be a negation of choice imposed on a party as a result of overbearing or unconscionable pressure. Further, the conduct must relate to a bargaining process between the parties.

The case confirms that, whatever arguments might be put under trade practices law, industrial legislation banning coercion is directed to conduct between parties negotiating industrial arrangements, not principals vis-a-vis subcontractors.

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Bargaining about contract labour

In brief: In the wake of numerous Australian Industrial Relations Commission decisions, the Federal Court has had an opportunity to consider whether a contract labour clause in an enterprise agreement pertains to the employment relationship. Lawyer Stacey Kelly reports.

Background

Following a breakdown of enterprise bargaining negotiations with Pacific National (ACT) Pty Ltd (Pacific), the Australian Rail, Tram and Bus Industry Union (the union) notified an intention to strike.

Pacific sought an injunction in the Federal Court to restrain its employees from engaging in the proposed strike.2 Pacific argued that the agreement proposed by the union contained provisions that did not pertain to the employment relationship, meaning that:

  • the agreement could not ultimately be certified; and
  • industrial action taken in support of the agreement was not protected action.
Was the strike action protected?

One provision in dispute was the contract labour clause, prohibiting contract labour displacing Pacific's full-time employees, and allowing contract labour to be used only as supplementary labour.

The court distinguished the contract labour clause in the proposed agreement from the one considered by the Full Bench of the Australian Industrial Relations Commission in Re Schefenacker.3 The Schefenacker clause, which pertained to the employment relationship, required the employer to instruct labour hire agencies to increase the wage rates of their employees by the same percentage as for employees engaged directly, but did not prohibit the displacement of existing employees.

Applying its earlier decision in Wesfarmers,4 the court confirmed that a requirement to use contract labour only as supplementary labour, and in limited circumstances, is not a matter that pertains to the relationship between employer and employee. On this basis, the court granted the injunction.

What guidance?

The application heard by the court was interlocutory in nature and Justice Tamberlin observed that:

  • the law in this area is not clear; and
  • the position of the union is not beyond reasonable argument.

While the decision supports the view that a clause prohibiting the engagement of contract labour may be difficult to pursue through robust bargaining strategies, there are a range of more modest scenarios regulating the interests of contractors that are more likely to be upheld. The employer's prospects of resisting industrial action taken to support a contractor claim will continue to depend on a question of degree, until a court is asked to decide finally where the line should be drawn.

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Workplace privacy

In brief: The Victorian Law Reform Commission (VLRC) has recommended a regulatory scheme for workplace privacy protection in Victoria. Lawyer Nicky Friedman reports.

The scheme proposed by the VLRC includes:

  • an obligation on employers not to breach the privacy of workers or prospective workers unreasonably. Workers include employees, independent contractors, outworkers and volunteers;
  • advisory, approved and mandatory codes of practice;
  • a requirement for authorisation from a regulator to carry out activities affecting workers' privacy when they are not working, or to perform genetic testing of workers;
  • a prohibition of certain activities (including surveillance in workplace bathrooms);
  • a power for the regulator to investigate complaints about workplace privacy; and
  • civil penalties for breach of the obligations.

The VLRC report has been tabled in Parliament and is now with the Attorney-General for consideration.

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Virgin flair found unfair

In brief: Queensland's Anti-Discrimination Tribunal has found that Virgin Blue subjected eight former Ansett employees to age discrimination when they sought employment in 2001. Partner Peter Arthur and Lawyer Megan Brayne report.

Background to complaints

Following the collapse of Ansett Airlines, Virgin Blue Airlines (Pty Ltd) (Virgin Blue) received hundreds of applications for cabin crew positions.

Virgin Blue's recruitment process involved a number of steps, including a group assessment process. Applicants were assessed – in groups of 10 or so – against the behavioural competencies of assertiveness, teamwork, communication and 'Virgin Flair' – defined as 'a desire to create a memorable positive experience for customers, the ability to have fun, making it fun for the customer'.

The complainants claimed that Virgin Blue discriminated against them by placing undue emphasis on a work culture equating youth (and its outward physical manifestations) with the ability to 'have fun' – a factor that formed a vital part of 'Virgin Flair'. The airline denied its actions were discriminatory in any respect.

QADT decision

The Queensland Anti-Discrimination Tribunal (QADT) accepted that Virgin Blue's 'behavioural competencies' were legitimate criteria for the selection of employees, and that the methods of testing these competencies – including the requirement for candidates to prepare and perform a dramatic routine under the scrutiny of an assessor – were reasonable.5 

However, the QADT concluded that when the assessors subjectively applied these criteria, they did so in a way that was discriminatory – ie by 'unconsciously' preferring younger candidates when assessing the relative abilities of candidates to 'have fun'. The QADT came to the view that the assessors, because they were also young, were likely to prefer candidates 'of the same age, social class and life experience'.

While not determinative of the matter, it weighed against Virgin Blue that they were unable to provide an alternative explanation for why only one out of 750 applicants over the age of 35 had been appointed during the relevant period, when this group constituted approximately 10 per cent of all applicants.

The QADT ultimately determined that the complainants had made out their claims of direct discrimination, preferring the view that a person applying lawful criteria in an unlawful and discriminatory manner discriminates directly rather than indirectly.

QADT reasoning

The interesting conclusion in the case is the idea of discrimination by the assessors occurring 'unconsciously'. The Anti-Discrimination Act 1991 (Qld) provides that a person's motive is irrelevant to determining whether direct discrimination has occurred. However, the finding that discrimination may occur 'unconsciously' suggests that there was no motive to be discounted in any event.

While the QADT suggested the case was limited to its own specific facts, prudent employers that use behavioural competency testing should take care to ensure that such tests are producing age-neutral results on an ongoing basis. Other steps that might be considered are:

  • more thorough training for those conducting psychological assessment procedures;
  • where possible, encouraging heterogeneity amongst those engaged to conduct assessments, or the use of multiple assessors; and
  • revising statistical data of the organisation's practices which can, as for Virgin Blue, demonstrate the necessary element of discrimination.

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Unfair termination where new appointment results in demotion

In brief: Appointing a new employee over the head of another can effect termination of employment unintentionally. Partner Jamie Wells and Articled Clerk Alexandra Feros report on a decision of the Australian Industrial Relations Commission.

Background

Mr Stevenson was employed as manager of the Strada Restaurant, one of three operations carried on at Guardian Hall Pty Ltd's (Guardian Hall) conference centre. In this role, he was fully responsible for all day-to-day operations of the restaurant, including hiring and controlling staff, ordering supplies, setting menus, and developing the pizza operation. Mr Stevenson reported to Mr McArthur, Guardian Hall's general manager.

Six months after his employment commenced, Guardian Hall announced the appointment of a Mr Sammutt as general manager of the restaurant. Mr Sammutt was to be responsible for the restaurant's operations, previously Mr Stevenson's main responsibility. Under the new arrangements, Mr Stevenson would be required to report to Mr Sammutt rather than directly to Mr McArthur. Staff were advised that Mr Sammutt would be taking over Mr Stevenson's duties and responsibilities at the restaurant.

Effect of appointment

Mr Stevenson regarded the appointment as a demotion and a repudiation of the fundamental terms of his employment. He wrote to Guardian Hall a week after Mr Sammutt's appointment confirming that he accepted Guardian Hall's repudiation as having constructively terminated his employment. He then claimed for unfair termination.

AIRC consideration

The Australian Industrial Relations Commission (AIRC) found that Mr Stevenson was entitled to regard himself as dismissed from his employment on the appointment of Mr Sammutt.6  Further, the AIRC determined that the termination was unfair, because:

  • there was no valid reason for termination. Mr Stevenson had turned the failing restaurant into an almost profitable operation within a very short time, and he had received a commendation from Guardian Hall directors, as well as assurances regarding his good work prospects;
  • he was not told of any valid reason for termination. In particular, he was not given advance warning of Mr Sammutt's appointment, nor of the changes to his reporting relationships;
  • he was not given an opportunity to respond before the decision to terminate;
  • he was not given any warnings about poor performance issues;
  • he had accepted employment with Guardian Hall at a comparatively low rate of remuneration, but worked excessive hours without overtime with the expectation of receiving further bonus payments; and
  • he suffered a serious setback to his career and loss of income. In this regard, the AIRC noted that Mr Stevenson had five children, including a set of quads less than 12 months old.
Implications

The decision of the AIRC sounds a warning to employers that change reporting relationships and other responsibilities when restructuring their businesses. Those affected should be given advance notice of the changes and the impact this will have on their responsibilities. Also, the case suggests that performance history and the personal circumstances of an employee may be given some weight in determining whether demotion will constitute unfair termination, effectively allowing for some review of managerial discretion over the business' operational requirements.

 
Footnotes
  1. Ponzio v Multiplex Ltd [2005] FCA 1410.
  2. Pacific National (ACT) Pty Ltd v Australian Rail, Tram & Bus Industry Union [2005] FCA 1383.
  3. Re Schefenacker Vision Systems Australia Pty Ltd, AWU, AMWU Certified Agreement 2004 and others, 18 March 2005, Justice Giudice President, Vice President Lawlor, Commissioner Simmonds, PR956575.
  4. Wesfarmers Premier Coal Limited v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (No 2) [2004] FCA 1737. See Focus: Workplace Relations, January 2005.
  5. Nicole Julie Hopper and others v Virgin Blue Airlines Pty Ltd [2005] QADT 28.
  6. Barnaby Stevenson v Guardian Hall Pty Ltd, 27 September 2005, Commissioner Tolley, PR963106.

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