HR UPDATE. Fair Work Australia Cases of Interest. November 2012

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1 Inside this newsle er FWA Cases of Interest Page No. 3 Employee unfairly dismissed for failing to provide medical informa on in rela on to a worker s compensa on claim 4 An employee s absence on workers compensa on 5 Income protec on insurance payments not considered paid absence or a period of paid leave VTA HR Network Mee ng Thurs 6 December 10am 12.30pm VTA offices Followed by end of year lunch sponsored by Fair Work Australia Cases of Interest Adverse ac on applica on dismissed as reason for inves ga on was to determine whether fraud had taken place An applica on for an injunc on to restrain an employer from taking adverse ac on has been dismissed. The Federal Court found the ac on had not been taken to restrict the worker s right but to establish whether fraud had taken place. Mr Hayward applied for workers compensa on on 31 August 2011 in respect of an injury he had suffered earlier that day. He claimed he had injured his neck and back while driving a truck. His doctor had diagnosed a severe whiplash injury caused by the fact that he was jostled about as a load was dumped into his tray. The employer, Leighton Contractors Pty Ltd accepted his descrip on of whiplash. Late in September 2011, the Leighton s health and safety superintendent received a phone call from the produc on superintendent at the mine, which cast doubt on the Mr Hayward s honesty about the extent of his injury. Mr Hayward had been referred to an occupa onal physician, who found some degenera ve changes in his cervical spine. This added to the health and safety superintendent s suspicion that the worker may have made a fraudulent workers compensa on claim, and he requested surveillance of Mr Hayward. Mr Hayward was examined by a neurologist in October 2011 because of his neck pain and limited neck movements. The neurologist reported that his symptoms appeared to be a result of a mild aggrava on of pre exis ng degenera on, but the fact that there had been li le if any improvement during the past two months was noted as rather unusual. On 16 November 2011, the surveillance report was received. Video footage revealed that Mr Hayward had full and free neck movement. Instead of being totally incapacitated by his neck injury, he had been seen freely driving a car and moving around without any apparent restric on. However, on the day of his appointment with the neurologist, the video footage showed him moving slowly and deliberately in the hospital precinct. On the basis of this informa on, the health and safety superintendent informed WorkCover that the worker s movements were not consistent with the documented injury. WorkCover contacted Mr Hayward s doctor, who confirmed that the worker s ll demonstrated grossly restricted neck movements which could not be explained on organic grounds. Con nue next page... Victorian TAFE Association Level 3/478 Albert Street, East Melbourne VIC 3002 Ph: (03) , Fax: (03) Reg. No. A37584B

2 Workplace Seminars VicSuper can host seminars at your Ins tute to help you, or your staff feel more confident about making decisions about super and re rement planning. Workplace seminars are provided at no charge and are available throughout metropolitan Melbourne and regional Victoria. To arrange a workplace seminar, please contact Sue Seabrook on or your local VicSuper representa ve. The health and safety superintendent also informed Leighton s senior employee rela ons adviser, who discussed it with the project manager at the mine. Mr Hayward s superiors were concerned that the compensa on claim might be fraudulent, and called a mee ng on 16 December 2011 to give him an opportunity to show cause as an immediate precursor to disciplinary ac on or the possibility of dismissal for serious misconduct. Mr Hayward was stood down pending an inves ga on. On 23 December 2011, Leighton wrote to Mr Hayward to confirm the issues raised at the mee ng and the fact that he had been stood down. The CFMEU sought an injunc on to restrain Leighton. The CFMEU contended that Leighton s ac on to conduct surveillance, provide the mee ng on 16 December 2011 with workers compensa on documents, allege that the worker was dishonest and stand him down cons tuted adverse ac on in respect of his workplace rights, which amounted to a contraven on of s340(1) of the Act. In the Federal Court, the CFMEU argued that Mr Hayward had only sought to exercise a workplace right, namely claim workers compensa on. In respect of his workplace rights, the CFMEU also argued that Leighton s had made improper use of workers compensa on documents, which had been a contraven on of s572a of the Queensland Workers Compensa on and Rehabilita on Act The first ques on was whether the Workers Compensa on and Rehabilita on Act cons tutes a workplace law as defined in sec on 12 of the Fair Work Act. Burne FM held that since the Workers Compensa on and Rehabilita on Act creates a regime for statutory compensa on of workers injuries, it regulates and defines the employer employee rela onship. Therefore, it was held to cons tute a workplace law under sec on 12(d) of the Act. Burne FM next considered whether Mr Hayward had a workplace right under the Workers Compensa on and Rehabilita on Act. Ul mately, Burne FM held that Mr Hayward had the following rights under the Act: his en tlement to claim WorkCover benefits and to prevent Leighton from making unauthorised use of or obtaining workers' compensa on documents as defined in sec on 572A of the Workers Compensa on and Rehabilita on Act. Leighton sought to argue that sec on 572A of the Workers Compensa on and Rehabilita on Act could not be the basis of a finding on workplace rights because it was inconsistent with a federal industrial agreement, namely, the Leighton Moorvale/Olive Downs/Codrilla Enterprise Agreement Con nue next page... 2

3 Leighton contended that the 2012 Agreement allowed it to inves gate an employee's conduct for the purposes of inves ga ng any alleged fraud. Therefore, sec on 572A, to the extent that it limited its access to workers' compensa on documents and impeded its inves gatory goals, was alleged to be inconsistent with the 2012 agreement and invalid by virtue of sec on 109 of the Cons tu on. However, Burne FM rejected this argument on the grounds that there was no inten on in the 2012 agreement to cover the field of access to workers' compensa on documents to the exclusion of sec on 572A. Rather, the two sources of rights were held to be supplementary to each other. Burne FM held that, as a ma er of principle, the mere commissioning of an inves ga on does not equate to a prejudicial altera on in an employee s posi on. Further to that, Burne FM also held that the use of Mr Hayward s workers' compensa on documents was not adverse ac on because the Leighton had only used the documents to consider whether Mr Hayward was being dishonest at a stage when it had not embarked on any concrete course of ac on. However, Burne FM held that the mee ng on 16 December and correspondences between Leighton and Mr Hayward from that date to 2 May 2012 cons tuted adverse ac on. These events caused a prejudicial altera on in Mr Hayward s posi on because: at the 16 December 2011 mee ng Mr Hayward was stood down; Mr Hayward was called upon to show cause in rela on to the allega ons against him; and the events generated a threat of dismissal. However, Burne FM was sa sfied that Leighton s true mo va on for the ac on had not been Mr Hayward s en tlement to his workplace rights. It had purely been undertaken to address a concern raised by a staff member that Mr Hayward may have tried to obtain workers compensa on benefits fraudulently. CFMEU v Leighton Contractors Pty Ltd (2012) FMCA 487 Employee unfairly dismissed for failing to provide medical informa on in rela on to a worker s compensa on claim Mr Chetcu was employed as a storeman at Coles and was required to operate machinery. In March 2011, he sustained an injury as a result of an accident at Coles, which was caused by an explosion of a ba ery on a forkli that he was opera ng. In May 2011, Mr Chetcu lodged a workers compensa on claim for his injury. The claim was ini ally accepted by Coles, and Mr Chetcu performed suitable du es for a period. On 23 August 2011, Coles subsequently declined his claim and withdrew him from suitable du es and told him to go home. Mr Chetcu then accessed accrued leave en tlements, those en tlements ran out in mid November Mr Chetcu ceased providing medical informa on to Coles during this me (August to November), but con nued to provide it to his solicitors. On 7 November 2011, Mr Chetcu s solicitors lodged an Applica on to Resolve a Dispute with the Workers Compensa on Commission (WCC). A few days later, Coles requested further medical informa on from Mr Chetcu in rela on to his fitness for work. Mr Chetcu s solicitors told him that he did not need to directly address Coles requests because the ma er was in hand and awai ng proceeding before the Commission. Con nue next page. 3

4 Coles then terminated Mr Chetcu s employment on 15 February 2012 for not following the lawful request to a end the mee ngs or provide the cer fica ons that we needed, a failure which Coles argued cons tuted serious misconduct. On 24 February 2012, the WCC issued a Cer ficate of Determina on in the form of Consent Orders which restored Mr Chetcu s en tlements. Mr Chetcu brought an ac on for unfair dismissal on the basis that his dismissal was harsh, unjust or unreasonable. He sought reinstatement and compensa on for lost wages. FWA found that Mr Chetcu s termina on was harsh, unjust and unreasonable because his failure to provide Coles with his medical cer ficates did not amount to serious misconduct. (VTA emphasis) Commissioner Roberts found that the Mr Chetcu s decision to stop supplying Coles with medical documents was based on the advice of his lawyers and his reasonable assump on that his claim was being properly handled by his lawyers. FWA also took into account other factors in making their decision, such as Mr Chetcu s excellent employment record, his age and his employment prospects in obtaining an equivalent job with equivalent pay to that which he held at Coles. FWA ordered that Mr Chetcu be reinstated with full con nuity of service and compensated for lost wages. Chetcu v Coles Group Supply Chain Pty Ltd (2012) FWA 6600 An employee s absence on worker s compensa on An employee s absence on workers compensa on can create some issues aside from rehabilita on and workers compensa on payments. For example the taking or the accrual of paid leave en tlements during workers compensa on. Under s130 of the Act, an employee is not en tled to take or accrue any leave or absence (whether paid or unpaid) under the NES (other than unpaid parental leave) when the employee is receiving workers compensa on, unless otherwise provided by a Commonwealth, state or territory workers compensa on law. However, in Victoria, unlike other States, there was an amendment in April 2010 specifying an inten on to this effect in the Accident Compensa on Act 1985 s97 and s114d. This amendment means that a worker can access annual leave or long service leave en tlements without affec ng their weekly payments. If a worker has no current work capacity, they can receive both weekly payments and payments for accrued annual leave or accrued long service leave for the same period. Payments received for their leave are not classified as current weekly earnings. For further informa on see the Worksafe Fact Sheet Weekly payments and your en tlements (enclosed with this HR Update). 4

5 Income Protec on Insurance Payments Not considered paid absence or a period of paid leave The applicant (L.M.) commenced employment with Standard & Poor s on 1 February 2011 and was dismissed at the ini a ve of the employer on 23 July There was no dispute between the par es that this me cons tuted a period of con nuous service, and there was no sugges on that the termina on was for reasons of redundancy. Nor was there any disagreement that the period of me during the period of con nuous service that L.M. was working or on authorised paid leave totalled four months and three weeks. What was in conten on was whether or not L.M. has at least 6 months con nuous service with Standard & Poor s and thereby protected from unfair dismissal. L.M. suffered from a prolonged illness which prevented her from a ending work between early August 2011 and her termina on in July During much of the period of unpaid absence L.M. did receive income protec on insurance payments. The income protec on policy was associated with her employment with Standard & Poor s, however the payments were made pursuant to the policy by the private insurer through the superannua on fund of which the L.M. was a member. Consistent with the insurance policy, payments ceased 60 days a er her termina on. The insurance policy was linked to the L.M. s membership of the Standard & Poor s Superannua on Fund and a successor AMP Fund and the premiums were paid by Standard & Poor s. The ma er before Commissioner Roe came down to a ques on: Is the period of absence due to the illness a period of unpaid leave or unpaid authorised absence? In his determina on, Commissioner Roe relied upon Webster v Toni and Guy Port Melbourne [2010] FWA 4540 where the applicant was paid by the Transport Accident Commission. I think it is clear that the terms paid or unpaid for the purpose of Sec on 22 clearly refers to a payment by or on behalf of the employer. Otherwise if an employee came to work for one day following hiring and was then off work due to illness for 12 months and was in receipt of some form of social security benefits during that period, they could be described as being on paid not unpaid leave and would be en tled to unfair dismissal protec on. I do not think that the legisla on can be read in this manner. The employer in this case is not making any payments to the employee either directly or indirectly. The payments in this case come directly from the Transport Accident Commission. If the payments came from the employer it would be a different ma er. ([2010] FWA 4540 at Paragraph 10) The Full Bench in Workpac Pty Ltd v Babach ((2012) FWAFB 3206) supported this view but found that that absence on workers compensa on was not an unpaid authorised absence within the meaning of s.22(2)(b). [37] Contrary to the appellant s submission, the fact that WorkPac chose to insure against such liabili es, and hence the payments were actually made by WorkPac s insurer, is irrelevant. The fact that the payments were made pursuant to a legal obliga on upon the employer is the cri cal considera on. The nature of the payment does not change because the employer has entered into an indemnity arrangement with a third party. We note that our conclusion in this regard is consistent with the decision of Commissioner Roe in Webster v Toni and Guy Port Melbourne Pty Ltd. In that case, the Commissioner concluded that an employee s period of absence due to a motorcycle accident was a period of unpaid leave or unpaid authorised absence within the meaning of s.22(2)(b). This was found to be so despite the fact that the employee was receiving payments from the Transport Accident Commission during the relevant period. Con nue next page.. 5

6 [38] There is an important dis nc on between the present case and the facts in Webster. The payments to Webster were not made pursuant to any legal obliga on upon his employer, rather the payments were made pursuant to a separate no fault statutory transport accident scheme. As the Commissioner observed in Webster: I think it is clear that the terms paid or unpaid for the purpose of this sec on refer to a payment by or on behalf of the employer... The employer in this case is not making any payments to the employee either directly or indirectly. The payments in this case come directly from the Transport Accident Commission. If the payments came from the employer it would be a different ma er. ((2012 FWAFB 3206 at paragraphs 37 38) In considering the Full Bench finding, Commissioner Roe noted that the fact that the payments were made pursuant to a legal obliga on upon the employer is the cri cal considera on means that the payment pursuant to income protec on insurance, the premium for which is paid by the employer, results in the period of absence for which the employee receives payment as a result of the insurance being regarded as a period of paid authorised absence. Commissioner Roe stated that whilst there is a legal obliga on upon Standard & Poor s to pay superannua on, this legal requirement to pay superannua on does not include any obliga on to pay income protec on insurance. In dismissing the applica on, Commissioner Roe noted in his findings that there was legal obliga on on Standard & Poor s pursuant to an employment related law or instrument to make the payments that L.M. is receiving. There is no obliga on under an Award or collec ve agreement for payments to be made to the Applicant for the periods of absence due to illness in this case. The circumstances are clearly dis nguishable from a situa on such as workers compensa on payments. I am sa sfied that the fact that payments were made pursuant to income protec on insurance under such a common law contract does not, in the circumstances of this case, make the absence a paid absence or a period of paid leave. L.M. v Standard & Poor s (Australia) Pty Ltd (2012) FWA 9634 Next HR Network Mee ng Thursday 6 December 10am 12.30pm at VTA offices Followed by end of year lunch sponsored by For further information concerning this Update contact: Leanne Sumpter, Workforce Services Consultant Victorian TAFE Association Level 3, 478 Albert Street, East Melbourne 3002 Ph: (03) , Fax: (03) lsumpter@vta.vic.edu.au Note that this HR Update is prepared by the VTA for the general information of member organisations. While it provides general background on the selected topic, advice should be sought in the first instance from the VTA office before acting on the material contained herein.