Employment Law Update – May 2023

date
08 June 2023

Warning: This article contains details about sexual harassment which may be upsetting for some readers. Reader discretion is advised.

May 2023 has once again seen the Fair Work Act 2009 (Cth) under scrutiny from the federal government with a new set of amendments being formally passed relating to Workplace Gender Equality. This however is not the end of the proposed changes with a further bill being tabled in parliament focusing on protecting worker entitlements. These amendments have very real consequences for employers in particular for employers with over 100 employees following the creation of the Workplace Gender Equality Agency.

In addition to these legislative changes the area of Employment Law has also seen some cases of note exploring whether swearing or criminal charges are sufficient grounds for a dismissal, and a sex discrimination claim relating to inequality of pay. A summary of these three cases can be found below under Significant Cases.

Legislative Changes and Announcements

Proposed changes to the Fair Work Act (Protecting Worker Entitlements)

The Fair Work Act has recently been the subject of significant amendments, which started taking effect from December 2022 with yet more amendments to take effect later this year. These changes were discussed in more detail in our article here.

In addition to these changes the Federal Government is proposing further changes (which are yet to be formally passed by parliament).

There are 4 major alterations being proposed:

  1. Added protections for Migrant Workers;
  2. Inclusion of Superannuation as a part of the National Employment Standards;
  3. An expansion of the circumstances when a deduction from a payment due to an employee can be authorised by that employee; and
  4. Changes to parental leave entitlements, to allow working parents to take up to 20 weeks of their entitlement “flexibly” (up from 6 weeks currently). Further, pregnant employees would be able to access their flexible parental leave up to 6 weeks before the expected birth date. Restrictions about concurrent parental leave will also be removed.

Look forward to a full exploration of these changes in a future update once the Bill is formally passed and given Royal Assent.

Workplace Gender Equality Amendment

This amendment has now formally passed Federal Parliament resulting in the establishment of the Workplace Gender Equality Agency (WGEA). The WGEA will publish aggregate data obtained from relevant employers in respect of the Gender Pay Gap.

The amendment also creates obligations on all organizations with over 100 employees. Specifically:

  1. That the organisation produces a report to WGEA outlining their gender pay gaps which will be publicly displayed on WGEA’s website.
  2. The CEO of each organisation will need to provide the organisation’s governing body a report from WGEA which will demonstrate how the organization performs in respect of gender pay equality when compared to the relevant industry.

We recommend conducting reviews into any pay discrepancies within the organisation for employees in the same or substantially the same position given that employees may opt to commence proceedings if they become aware of a discrepancy.

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Significant Cases

  • Austin Health v Tsikos [2023] VSCA 82

    In issue

    Was the Applicant discriminated against due to her sex by reason of her employer’s refusal to negotiate over-agreement pay rates, despite 6 male colleagues being offered such rates.

    The background

    Ms Tsikos, was employed by Austin Health as a manager in the Orthotic and Prosthetic Department. Ms Tsikos discovered that Austin Health paid her male colleagues (including one of her subordinates) above the classification in the enterprise agreement and their remunerations was far more than hers.

    Over a period of several years, Ms Tsikos made six unsuccessful attempts to negotiate her remuneration. In a final attempt, she wrote to Austin Health noting men in her Department had been paid more than the classification in the enterprise agreement, other female employees were also unsuccessful at negotiating similar outcomes and she made a request to discuss increasing her remuneration package. Austin Health acknowledged Ms Tsikos’ letter but refused to offer her any opportunities to negotiate her remuneration.

    The decision at trial

    The Court of Appeal held that Austin Health directly discriminated against Ms Tsikos under the Victorian Equal Opportunity Act 2010 (Vic). It determined that Ms Tsikos was treated less favourably in circumstances where:

    1. Austin Health failed to negotiate Ms Tsikos’ remuneration despite her numerous requests;
    2. Austin Health’s paid six male employees in the Department above the enterprise agreement rates while denying Ms Tsikos and other female employees the same opportunity to negotiate their remuneration;
    3. there was a significant disparity in pay between Ms Tsikos’ remuneration and that of her male colleagues; and
    4. expert evidence provided by a social psychologist highlighted that unconscious bias contributed to Austin Health’s systemic discrimination.

    Implications for you

    The decision is particularly timely given that equal remuneration and gender pay equality have been at the forefront of the Secure Jobs Better Pay reform. With the recent changes made to the functions of the Fair Work Commission, employees being subjected to pay inequality on the grounds of their gender can now pursue a claim under State and Federal anti-discrimination legislation as well as under the Fair Work Act. The Fair Work Commission has the power to make an equal remuneration order which requires certain employees to be paid equal salary for work of equal or comparable value. This means there may be an increase in unconscious bias cases filed in the future and employers must ensure they understand pay inequalities present in the workplace and take active steps to resolve the issue.

    Austin Health v Tsikos [2023] VSCA 82 (17 April 2023)

  • Warren Power v Lyndons Pty Ltd T/A Lyndons [2023] FWC 1060

    In issue

    Is swearing and the use of profane language, sufficient to form a valid reason for dismissal on the basis of sexual harassment?

    The background

    Mr Power was employed by Lyndons as a Sales Representative and was dismissed by reason of serious misconduct due to Mr Power engaging in bullying and sexual harassment.

    The alleged misconduct was in the form of comments made by Mr Power to another employee of Lyndons (Mr Mitchell), where Mr Power stated “I’ll f*ck you in the arse” and/or “suck my d*ck” (the Words).

    An investigation into this allegation was conducted with Lyndons formally conducting an internal investigation which concluded that the allegation was substantiated. Accordingly, Mr Power was dismissed by reason of serious misconduct.

    This case turned on the alleged misconduct and whether or not it occurred, and if it did, whether it was sufficient to justify a dismissal.

    The decision at trial

    The Fair Work Commission held that the dismissal was not unfair, and this was on the basis that

    1. The Commission was satisfied that the allegation was substantiated given that there were 3 witnesses who each were found to be credible and who all affirmed hearing Mr Power say the Words to Mr Mitchell;
    2. Mr Mitchell’s evidence that Mr Power had said the Words to him and these words were unwelcome was accepted;
    3. The Commission accepted that the Words fell within the definition of sexual harassment and formed a valid reason for dismissal;
    4. Mr Power’s suggestion that swearing was commonplace within the workplace was noted, however the Words used by Mr Power were far beyond standard swearing;
    5. Mr Power was also found to have given Mr Mitchell bear hugs which each time were unwelcome, and Mr Petrel often needing to struggle to free himself; and
    6. It was held that the substantiated conducted amounted to sexual harassment as defined in the Fair Work Regulations and amounted to a valid reason for dismissal.

    It was also noted within the judgement that Mr Power had attempted to coerce a witness to alter their evidence which the Commission noted could have itself been a breach of other laws including the victimization provisions of sexual harassment legislation and criminal laws with respect to inference with witnesses.

    Implications for you

    The decision is particularly timely given the recent changes to the Fair Work Act 2009 (Cth) in regard to sexual harassment. It also suggests that employers can commence an investigation and potentially even look to dismiss an employee for sexual harassment where the conduct in question is predominately verbal. It should be noted however that even where the employee has engaged in serious misconduct, it is vital that the organisation adopts a fair process to effect the dismissal, as demonstrated in this instance. Failure to do so may lead to the FWC holding that the dismissal was unfair despite the finding of a valid reason for dismissal. If you have any queries around how to fairly conduct disciplinary proceedings or an investigation, please contact us.

    Warren Power v Lyndons Pty Ltd T/A Lyndons [2023] FWC 1060 (5 May 2023)

  • Julian Strangio v Sydney Trains [2023] FWC 730

    In issue

    The key question contemplated by the Commission was whether a dismissal based on undisclosed criminal charges was unfair for the purposes of the Fair Work Act 2009 (Cth).

    The background

    Julian Strangio was a long serving station manager who had been charged with 13 criminal charges relating to the supply of cannabis. These drug related charges were laid 11 months prior to Sydney Trains being advised of them by way of an anonymous tip-off. Upon further investigation, it was discovered that Mr Strangio also had a previous criminal conviction from 2001. Mr Strangio neither disclosed this historic conviction, nor the charges that were laid 11 months prior to the tip-off. Sydney Trains code of conduct required workers to immediately notify the employer if charged with a serious criminal offence. Mr Strangio was subsequently dismissed by reason of his failure to do so. Mr Stangio claimed that he fully intended to disclose the charges but was advised by his legal representative to refrain from doing so until the police finalised the charges, in the event that any were dropped.

    The decision at trial

    Commissioner McKenna held that the dismissal was not unfair and dismissed the application. The Commissioner found that:

    1. The failure to disclose the charges was not an insignificant breach, rather it was “a breach which went to the heart of the trust” that Sydney Trains was entitled to have in respect of an employee;
    2. The Commissioner’s acknowledgement that ordinarily criminal changes/convictions do not necessarily constitute a valid reason for dismissal but in this case, were sufficient given the evidence adduced that it is requirement of all rail safety employees to work without prescribed drugs in their system;
    3. Mr Strangio was required to assist with the drug testing of employees and to explain to new employees that should they test positive it could put their employment at risk. Accordingly, Sydney Trains submitted that the nature of the criminal charges made it difficult for them to have confidence in his ability to perform these duties.

    The correct action that should have been taken by the employee was to disclose the charges per the reporting requirements under the internal policy when the charges were first laid and then provide an update when the police finalised the charges.

    Implications for you

    For Employers this case is important because it affirms that a failure to disclose a criminal charge of conviction can form the basis for a valid reason for dismissal even if the employee has an otherwise untarnished and lengthy employment history with the organisation.

    Importantly, consideration must be given to whether the charges are of a nature that is incompatible with the employee’s duties and completion of their role.

    Julian Strangio v Sydney Trains [2023] FWC 730 (5 April 2023)

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