Presentation for Legal Studies State Conference 2014 Emerging issues for Australian labour law: The challenges for regulating effectively in the new economy Dr Troy Sarina Macquarie University Presentation for Legal Studies State Conference 2014

Who Am I? Dr Troy Sarina Department of Marketing and Management, Faculty of Business and Economics, Macquarie University Email: troy.sarina@mq.edu.au Areas of interest Labour Law Employment relations strategies Employee engagement Professional experience Human Resources Country Road Australia National Industrial Relations Manager, Qantas Airways

Outline of presentation Developments in unfair dismissal: the role of social media at work and the legal response Comment on the emergence of the Bullying provisions in Fair Work Act (2009) Reassessing the impact of the Fair Work Act (2009) to deliver sustainable industries => Focus on Australian aviation

The origins of statutory unfair dismissal provisions Borne out of weaknesses associated with common law remedies for termination - No reinstatement (no specific performance of personal contracts) -limited damages (‘reasonable notice’) The law needing to step in to balance principles of contract with the reality of working lives of citizens At common law, contract of employment could be terminated with notice for a good reason , a bad reason or no reason at all Court saw demanding someone to complete their work against their will could almost amount to slavery- so there has been a need to address these deficiencies and ensure workers are not robbed of their livlihood

What were the guiding principles of unfair dismissal provisions? ‘Fair go all round’ principle (see s.381 (2)) - Balancing the needs of all the parties that are involved in the dispute (employers and employees) ‘First Federal enactment seen in Industrial Relations Reform Act 1993 (Cth) (see. S.170DE) Now found under Part 3-2 of Fair Work First enactment of unfair dismissal laws was enacted in SA in 1974 under Don Dunstan. ILO CONVENTION NO.158 OF 1982 BUT THIS DIDN’T ADDRESS THE UNFAIR ASPECT OF THE EQUATION Article 4 The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service. Article 5 The following, inter alia, shall not constitute valid reasons for termination: (a) union membership or participation in union activities outside working hours or, with the consent of the employer, within working hours; (b) seeking office as, or acting or having acted in the capacity of, a workers' representative; (c) the filing of a complaint or the participation in proceedings against an employer involving alleged violation of laws or regulations or recourse to competent administrative authorities; (d) race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin; (e) absence from work during maternity leave.

Who is eligible to bring a claim? See ss. 382 ff. - ‘minimum qualifying period’ = 6 month (S.383) - Covered by an award or enterprise agreement OR under high income threshold ($129,300 July 2013) - employee must have been dismissed or forced to resign because of the employers conduct - Dismissal must be ‘harsh, unjust or unreasonable’ (s.385)

What constitutes are ‘harsh’ dismissal? See s. 387 - Has a valid reason been given? - Notification of the reason? - Opportunity to respond to reasons related to capacity or conduct? - Allowed to have a support person present at discussions? - Warning od unsatisfactory performance? -Size of employer’s enterprise (relevant to procedures followed) and presence of HRM - “Any other matters FWA considers relevant”

Remedies? Reinstatement to same or no less favourable position with the same entity Continuity of employment: s. 391 (2) Restoration of lost pay Compensation in lieu of reinstatement: s. 391 (1)- capped at 6 months pay (s 395(5)) Factors considered? Effect on viability of employer’s enterprise, employee’s length of service, reduction for any employee misconduct (s.392(2), “Any other matter the FWA considers relevant)

A useful resource for understanding unfair dismissal Unfair dismissal benchbook http://benchbooks.fwc.gov.au/unfair/ New publication by FWC outlining: - the origins of unfair dismissal regime - how disputes can be resolved - summary of case law on important cases

Applying dismissal principles to new spheres

The rise of social media and the implications for the law 80.1 % of people use the internet Facebook reaches up to 69.5% of 17 million people in Australia who are online (Burson-Marstellar survey 2013) Australians use social media forums for 7 hours and 17 minutes per month (Neilsen survey, 2013) See: Thornthwaite, L (2013), ‘Social media, unfair dismissal and the regulation of employees’ conduct outside work’ in Australian Journal of Labour Law, 26, pp.164-184. And people are using this forum in the workplace Marketing campaign by companies- encouraging people to participate at work in online blogs Union organising Workers sharing information – personal and work related A forum for airing grievances Employers can now delve in to the lives of their workers

Using social media at work Voicing workplace grievances Employers investigating worker lives “cyberloafing” – use of social media to mock or bully workers => adverse impact on productivity at the workplace Leading to the “blurring of the lines between private and public life”

How has this boundary been defined by the law? At common law, an employee is under the duty of fidelity and good faith in relation to their employer (implied duty) Statute and other industrial instruments have curtailed this control e.g. Awards See for example Ross, VP in Rose v Telstra Corporation Ltd [1998] AIRC 1592, employees are “entitled to a private life” However, there are limitations to this entitlement, See for example McManus v Scott-Charlton (1996) 140 ALR 625 To render loyal and faithful service to their employe Rose 1998 case- a case where termination was held to harsh due to a brawl in pub after work. It was held in that case that the employer had no entitlement to control the emplooyee’s out-of hours conduct. [ In McManus v Scott-Charlton,109 the applicant was disciplined with a pay reduction for failing to comply with his employer's direction to not privately contact a fellow employee outside the requirements of his official duties. This direction was a consequence of complaints by the fellow employee of off-duty sexual harassment by the applicant. Justice Finn held that the disciplinary action was appropriate, summing up the relevant principles as follows: My conclusion is, then, that it is lawful for an employer to give an employee a direction to prevent the repetition of privately engaged in sexual harassment of a co-employee where: (i) that harassment can reasonably be said to be a consequence of the relationship of the parties as co-employees (ie it is employment related); and (ii) the harassment has had and continues to have substantial and adverse effects on workplace relations, workplace performance and/or the 'efficient equitable and proper conduct' ... of the employer's business because of the proximity of the harasser and the harassed person in the workplace.110

Has the growth of social media enhanced the ability for employers to control the lives of employees? See Applicant v Respondent [2010] FWA 1062 Comments made on Facebook leading to dismissal Cased turned on whether applicant was outside time limit to make application to FWA Applicant was dismissed for making comments on facebook after being directly told not to as the person they were having conversations with were a direct competitor

Establishing a connection between the alleged conduct and work Lukazewski v Capones Pizzeria Kyneton [2009] AIRC 280 - Application to dismiss a vexatious claim under the unfair dismissal regime -Mr Lukazsewski claimed he was dismissed due to a post on facebook stating that he was “pissed off” (with no explicit reference to his employer) - Held that there were legitimate grounds for appeal as there was real doubt as to whether Mr Lukazewski had in fact been dismissed for a valid reason Case of Mr L posting some comments about Mr Jenkins (owner of pizzeria) demanding Mr L’s girlfriend come into work even though she had called in sick. Mr Jenkins called him up to talk to about the comments and ask who were they addressed to him and Mr L replied that they were. Mr Jenkins took this as a sign that Mr L did not want to work for him any longer, to which Mr L replied ‘fine’. After various other encounters Mr Jenkins had summarily dismissed Mr L and his girlfriend. Case turned on whether the claim was indeed Vexatious. Commissioner whelan considered whether the claim was manifestly flawed to consider it vexatious and gave particular attention to the fact that Mr L had not made any pay in lieu of notice required by statute to terminate Mr L’s employment. There was some dispute as to whether Mr L had an expectation that his work would continue until 31 Jan then he has a valid claim.

The lines remain “blurred” between private and public life Damien O’Keefe v Williams Muir’s Pty Ltd T/A Troy Williams The Good Guys [2011] FWA 4311 - Focused on the comments made by Mr O’Keefe on Facebook regarding errors in payment for commissions he was owed - Mr O’Keefe’s statements related to serious misconduct - Reference to handbooks and policies at the workplace which required workers to be courteous and polite to stakeholders - Source of the allegation, he “wonders how the f—k work can be so f—ling useless and mess up my pay again. C—unts are going down tomorrow” - Conduct found to have undermined the business as well as the implied duty of trust and fidelity within the employment relationship -Application of unfair dismissal failed and appeal was not allowed “The [employer] has rightfully submitted, in my view, that the separation between home and work is now less pronounced that it once used to be” – Deputy President Swan He argued that dismissal was unfair. He made comments away from work and on his own computer When questioned he stated that the comments were aimed at the Store’s female operations manager. Sacked because of calling female a c-nt and indication of a threat. Despite the fact that the settings were set to maximum privacy and only a select group of people could see the posts but some were colleagues from work and the store manager found out about the posts the following day. Deputy President Swan did find there were other avenues for him to raise his grievance as well as formal procedures in the employee handbook which gave him access to the Fair Work Ombudsan which he had refused.

In contrast …. Stutsel v Linfox Australia Pty Ltd (2011) Mr Stutsel dismissed for alleged serious misconduct after posting comments that were both racially derogatory and sexually discriminatory towards two separate managers. Application upheld Roberts C gave weighting to a number of factors including: the fact that Mr Stutsel was inexperienced with facebook, the he used the maximum privacy setting (characterised NOT as a public forum), he had removed the comments quickly and had shown genuine contrition, and the fact that the company did not have a social media policy in force. The nature of the way in which the comments are made will effect the way they should be understood This conversation had ‘the flavour of a conversation in a pub or café, although conducted in an electronic form’ Case appealed in 2012 but was unsuccessful. Mr Stutsel had an umblemished service record for 22 years His wife and daughter had set up a facebook site that he thought was clearly a private forum Reasoning in slide comes from Commissioner Roberts at first instance. Held there was no valid reason for termination. Full Bench of FWA had reservations about the pub charaterisation as they felt it created a permanent record which could easily be forwarded. However, court was also very adamant of the need to impose unrealistic standards on ordinary conversations shared by workmates as part of their ordinary discourse about working lives. Posts may have been a valid reason for termination BUT the nature of the comments and the width of publication needs to be considered.

More recently.. Little v Credit Corp Group Limited t/as Credit Corp Group [2013] FWC 9642 - Mr Little- Manager at Credit Corp -Posted on Facebook comments about sexually harassing a new worker as well as comparing their work to being anally raped -Further derogatory comments on a Christian based financials services site - Appeal dismissed - DP Sams found: applicants comments would cause hurt and humiliation to employees as well as damage the reputation of CCG at large. - Mr little was entitled to express his views in a forum such as facebook but could not do it in a manner that injured CCG’s business Claimed comments were on a private forum and he didn’t act against the best interests of CCG Deputy President Sams rejected the managers ‘gartitutious, self-serving’ excuses and argued he had a very warped sense of rationalising his conduct ‘Sexual comements made about the new employee were grossly offensive and disgusting and were more than likely to cause hurt and humiliation’ ‘Comments also would likely impact on CCGs relationship with CAP and damage its wider reputation. He could express his views but was not allowed to do so in a manner that injured CCG’s business

Factors considered in social media dismissal cases The nature and severity of the comments The source of the post Whether the employer or employee are named Whether co-workers have viewed the post Public availability of the post Whether the employers business has been damaged Was the comment deliberate Was is withdrawn quickly Did the employee display remorse about the post? Has the organisation adopted and communicated a comprehensive social media policy? Now these types of decisions show that decision makers are holding both employers and employees to higher standards of behaviour due to increased awareness in relation top social media

New workplace bullying provisions in the Fair Work Act 2009 Part 6- 4B of The Act A worker is bullied at work if:                      (a)  while the worker is at work in a constitutionally-covered business:                               (i)  an individual; or                              (ii)  a group of individuals;                             repeatedly behaves unreasonably towards the worker, or a group of workers of which the worker is a member; and                      (b)  that behaviour creates a risk to health and safety.              (2)  To avoid doubt, subsection (1) does not apply to reasonable management action carried out in a reasonable manner. Only 66 claims have been made so far, still to be heard Many of the claims related to section 789 FD “reasonable management action carried out in a reasonable manner”.- everyday actions to control work are excluded from these provisions Remedies Stopping a group from continuing the conduct Monitoring the conduct Requiring compliance with an employers policy Requiring the employer to review policy Directing the employer to further training Civil penalties up to 60 penalty points

Re-evaluating the ability of the Fair Work Act to deliver sustainable industries By promoting collective bargaining at the enterprise level as the main industrial tool for achieving the objective of increased productivity and fairness (see section 176 of The Act) Ensuring the process of bargaining is governed by good faith obligations that extend to both parties (see section 228 of the Act)

What have been the outcomes at Qantas? A ‘hybrid’ approach which has delivered some success: Highlights include pre tax profit of $1.4 billion in 2008 Maintain pre tax profit from 2008-2013 Return in 2013 to top 10 ranked airlines in the world (SKYTRAX, 2013) By comparison, other ‘legacy carriers’ have not survived However, there have also been some considerable difficulties: Continued incidences of industrial disputation. ‘High mark’ being the lock out of 2011 Struggling to return international carrier routes to profitability Alleged decline in employee morale A $235 million half year loss (2014), announcement of 5000 job losses Pre tax profits of QF group 2010 - 317 million 2011 - 552 million 2012 - 95 million 2013 - 192 million Struggling international arm of the business in QF. Loss of over $400 million in 2011/12, $236 million in 2012/13

Why have these outcomes occurred? Main proposition: Notwithstanding its achievements, ER outcomes at Qantas have not been optimal, thus hindering its ability to adapt to a more competitive aviation market Legal framework governing ER struggles to reconcile contradictory objectives ‘Single employer’ regulatory model encourages firms to ‘externalise’ activities to reduce costs ‘Good faith bargaining’ (GFB) encourages parties to pursue ‘integrative’ (i.e. mutual gains) outcomes Result? Employers and unions working towards different objectives, thereby limiting long term competitiveness 170 MW – Genuine attempt at agreement-making/bargaining

Theoretical framework Product market conditions shape ER strategy (Brown, 2008) Transition from protected to liberal product markets will place prevailing employment conditions under pressure Employer response conceptualised as a ‘strategic choice’ (Walton et al., 1994) Integrative – cooperative, mutual gains outcomes Distributive – adversarial, zero-sum outcomes Avoidance – bypass unions, negotiate directly with workforce Externalisation – a variant of ‘avoidance’ Bypass workforce, engage new workers through other firms to reduce labour costs; common among ‘legacy firms’ (Harrison & Kelley, 1993; Rieple & Helm, 2008) Externalisation produces ER risks, e.g. inferior conditions, low morale quality (Davis-Blake & Broschak, 2009; James et al., 2007; Walsh and Deery, 2006) Disaffected stakeholders may seek to damage employer’s reputation if unable to achieve beneficial outcomes (O’Callaghan, 2007; Fombrum et al., 2000); may produce ‘mutual losses’ rather than ‘mutual gains’

Impact of the single employer model The single employer model of bargaining under the Fair Work Act (2009) maintains managerial prerogative despite the nature of the commercial relationship between Qantas and subsidiaries “The operating Agreements between Qantas and Jetconnect and the employment contracts entered into between Jetconnect and its pilots cannot held to be shams. Even though Qantas exercises a considerable degree of control and influence over the operation of its subsidiary, this is not sufficient to disregard the legal personality of the subsidiary” Boulton J and Hampton C in Australian and International Plots Association v Qantas Airways Ltd (2011) 211 IR 220 Given market pressures faced by Qantas, and the capacity to use the single employer model to reduce labour costs, management decisions to externalise can be seen as a ‘rational choice’

The impact of good faith bargaining Aimed at encouraging the parties to pursue ‘integrative’ outcomes BUT… Has had little impact changing the behaviour of the parties Reinforces ‘distributive’ approaches to bargaining Emergence of less frank discussions High levels of mistrust of management due to the pursuit of ‘low road’ ER strategies in subsidiaries Reflects similar findings regarding the impact of GFB ‘The good faith bargaining provisions – they look good on paper but when push comes to shove at the negotiating table they really don’t mean anything’ Forsyth et al (2012), Fair Work’s Influence in the Bargaining Process: Research Report- Fair Work Australia Research Partnership

Conclusion Qantas Group’s survival an achievement Positive ER with some unions and Qantas But hybrid ER strategy has had negative consequences ER would be enhanced by adopting a ‘high road’ relational coordination approach GFB (and integrative bargaining) compatible with this approach, but undermined by incentives offered by single employer model But addressing fragmented ER outcomes could raise labour costs significantly, with no guarantee of productivity dividends A pure ‘low road’ ER approach unviable (unless all employment is offshored, which may negatively impact market share) Qantas case suggests that core components of the bargaining framework enshrined in labour law are incongruous, which frustrates the parties’ ability to pursue ‘mutual gains’ strategies Qantas at a crossroads – maintaining hybrid strategy will become increasingly difficult

The market realities facing Qantas ‘Qantas is, however, the national carrier. It is competing on its own as a fully privatised entity with purely commercial motivations against an ever-increasing range of mainly state-owned or supported airlines. It is carrying the legacy baggage that its competitors generally don’t have.’ Stephen Bartholomeusz, Business Spectator, 28 November 2013 See, Sarina, T and Wright C (2014), ‘Mutual gains or mutual losses? Legal contradiction ,organisational fragmentation and employment relations, outcomes at Qantas Group’, currently under review Journal of Industrial Relations

THANK YOU! QUESTIONS? THOUGHTS?