Top five issues for retailers this yearJanuary 28, 2016
It appears that 2016 is shaping up to be a big year in the workplace relations space now that the Productivity Commission has released the Government’s long awaited inquiry into Australia’s workplace relations system. We also expect the full bench of the Fair Work Commission to make its decision in relation to the long running penalty rates case as part of the statutory 2014 Award Review process.
Looking back to some of the most topical decisions and outcomes from the last 6 months, we set out 5 key issues that are likely to be relevant to your workplace this year:
1. Government regulatory focus and Award Review
It will be an interesting year ahead as the Government grapples with implementing the Productivity Commission’s recommendations into Australia’s Workplace Relations system. The report notes that the system is not dysfunctional, but is in need of repair rather than replacement. Key recommendations are explained in our recent FCB Alert.
As many of you are already aware, FCB acts for all of the major retail associations in pursuing changes to the General Retail Industry Award 2010 (‘GRIA’) through the modern award review process. A key component of this review is our application to reduce the Sunday penalty under the GRIA from 200% to 150%.
This is the most significant industrial relations matter for the retail industry for the past 30 years, and the outcome will have a direct or indirect impact on every retail business in Australia. If the application is successful, it will be considered to be the most significant win ever in the industry. The Federal Government has also shown its support to reduce Sunday penalty rates. The final hearings will take place in April 2016 with a decision likely to be made by the end of the financial year. If you are interested in supporting the cause, please don’t hesitate to contact us.
2. Beware of adverse action when planning corporate restructures
With some high profile retailers announcing big decisions following poor financial results, it is a timely reminder that businesses are constantly feeling the pressure to reduce costs and find more efficient ways of conducting business.
The recent decision in NTEU v Swinburne University of Technology  FCA 1080, demonstrates that restructuring proposals that involve employees losing the benefit of an enterprise agreement may constitute unlawful adverse action. In this case, Swinburne University developed a commercial proposal to deliver certain courses via a newly established entity, Swinburne College. Part of the rationale included cost savings by engaging new employees to teach the courses under the terms of the modern award, rather than the existing enterprise agreement that would otherwise apply to academic staff. Although the proposal was never implemented, a number of preparatory steps were taken by Swinburne, including the preparation of non-legally privileged internal briefing papers articulating the strategy.
Ultimately, Swinburne admitted to contraventions of the general protections provisions under the Fair Work Act. When ruling on the penalty, the Federal Court held that making, and then taking steps to implement the IR strategy and engaging new employees at a lower cost to teach courses, Swinburne engaged in adverse action because employees had an entitlement to the benefit of an enterprise agreement. Swinburne was ordered to pay a penalty of $14,000 plus the union’s legal costs.
In light of this decision, employers will need to be cautious when dealing with restructuring proposals and outsourcing arrangements, especially where these might involve employees losing the benefit of a particular industrial instrument, such as an enterprise agreement. We strongly encourage our clients to seek legal advice when developing IR strategies of this nature.
3. Vexatious sexual harassment complaints
In Richardson v Oracle Corporation Australia Pty Ltd, the Full Court of the Federal Court awarded $130,000 in damages to a former female employee for sexual harassment, finding the employer vicariously liable for the actions of one of its male employees. While that case makes it clear that judges are willing to award large sums of money to employees subject to proven sexual harassment at work, other decisions show complainants will suffer the consequences if a claim is brought where events have been fabricated or are otherwise lacking in merit. For example:
- Last year, in Chen v Monash University  FCA 130, a female professor who filed some 53 claims of sex discrimination and sexual harassment against a colleague at Monash University, was ordered by the Federal Court to pay her employer’s legal costs in the staggering sum of $900,000 when she lost the case. In dismissing all claims, the Court found that the professor had engaged in a “subjective reconstruction of innocent events through the prism of unsatisfied expectations of a personal and professional nature”.
- A similar outcome occurred in Yeoh v IBM Australia Ltd  FCCA 724, in which the unsuccessful employee was ordered to pay her employer’s legal costs of $150,000.
To reduce the risk of an employer being held vicariously liable for the sexual harassment conduct of an employee, we encourage clients to have an up to date sexual harassment policy compliant with the judicial expectations emerging from the case law; ensure training is conducted for all employees regularly; and undertake prompt, transparent and appropriate investigations if a complaint is received. It is also prudent to seek advice in relation to case management strategies in relation to costs if dealing with unreasonable litigants.
4. Enterprise Agreement negotiation and the BOOT
The high profile decision of Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Ltd  FWCFB 7090 demonstrates the difficulties for businesses in satisfying the requirement for an agreement to meet the Better Off Overall Test (‘BOOT’) prescribed under the Fair Work Act. It will also have ramifications for those embarking on enterprise agreement negotiations with the SDA.
The BOOT requires that each award covered employee and each prospective award covered employee are better off overall under the terms of the agreement compared to the modern award. In the vast majority of retail agreements, penalties rates are reduced, with this being offset by higher base rates of pay. In terms of the BOOT this can create challenges where particular employees work solely, or predominantly, at times where penalty rates would otherwise apply.
In this case, an employee of Coles, Mr Duncan Hart was successful in obtaining permission to appeal a decision of Commissioner Bull to approve the Coles Store Team Enterprise Agreement 2014-2017 (‘the Agreement’). The Agreement covers over 77, 000 employees. Mr Hart alleged that under the terms of the Agreement, he and other employees would not be better off overall compared to the modern award. Prior to the Agreement being approved, Mr Hart via his representative wrote to Commissioner Bull outlining a number of concerns he had in relation to the agreement satisfying the BOOT.
In granting Mr Hart permission to appeal the approval decision, the Full Bench considered that the appeal grounds related to the satisfaction of the BOOT, which is of fundamental importance. The Full Bench found that the application of the BOOT requires a consideration of the terms of the agreement in relation to all employees and prospective employees. It noted that while Commissioner Bull considered the BOOT in considerable detail, sought the assistance of the internal research team and addressed the concerns raised by the parties in addition to seeking undertakings from Coles in relation to his concerns, this was not ultimately enough. The Full Bench considered that the material relating to the BOOT sent to the Commissioner by Mr Hart’s representative was not considered by him, and should have been. As the Agreement affected a large number of employees who could be disadvantaged if the BOOT was not properly satisfied, the Full Bench determined it appropriate to grant the appeal and allow the parties to adduce additional information regarding the BOOT.
The SDA faced a backlash on both mainstream and social media in the lead up to the approval of the Agreement, and following the granting of the appeal, with some assertions made about the closeness of the union’s relationship with major retailers. This decision will place even greater pressure on the SDA to be seen to be fighting for its members’ rights. This means for any retailers who are, or will be, negotiating an agreement with the SDA, you can expect a more aggressive approach from them in negotiations.
5. Conduct outside of working hours
We expect to see greater emphasis on the controversial area of employment law in which the boundaries between work and private lives are becoming increasingly blurred, particularly in relation to social media use and criminal offences occurring outside of working hours. For example, in Applicant v Employer  FWC 506, an employee was dismissed for sexual harassment when he ‘groped’ the bum of a hotel waitress at a hotel where he was attending a work related training course. The conduct was held to have occurred “at work” even though at the time of the incident the employee was not at his normal workplace, had completed his training activities for the day, and was having a drink in the hotel bar.
In general, the principles emerging from unfair dismissal decisions indicate that the conduct of an employee occurring outside working hours can amount to a valid reason for dismissal, provided there is a relevant connection between the employee’s behaviour or activity and the nature of the employee’s employment. Of particular relevance, will be whether the conduct compromises the inherent requirements of the employee’s role, or has a risk of seriously damaging an employer’s reputation. This area is still evolving, so advice should be sought before taking disciplinary action of dismissal decisions in these circumstances.
If you have any questions about how any of these issues may affect your business, please call us on (02) 9922 5188 or email Bianca Seeto, Partner and co-head of our national retail team.