Many advisors and members of self managed superannuation funds (SMSF) have been eagerly awaiting the decision of the High Court in Hill v Zuda Pty Ltd [2022] HCA 21. A background of the issue in this case is set out in our previous article.

Today, the High Court of Australia published its unanimous decision that regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 does not apply to SMSFs.

Broadly, provided the rules of the SMSF allow it, a member of an SMSF is not required to adhere to the prerequisites of binding death benefit nominations (BDBNs) set out in reg 6.17A, including the requirement that the BDBN must lapse three years from the date it was signed by the member.

It is important for all members, trustees and advisors of SMSFs to remember that the trustee and members remain governed by the rules of the fund which will need to allow for non-lapsing BDBNs (or indeed any other conditions) if the member is seeking to make such a BDBN.

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What is a Mutual Wills Agreement?

A Mutual Wills Agreement (MWA) is an agreement between two people to make their Wills in particular terms and to not alter those terms after one of them has passed.

This most commonly arises in blended families where each spouse has children from prior relationships and they wish to initially benefit each other, but then benefit their respective children upon the death of both of them. In that scenario, the MWA would be intended to prevent the last survivor of the couple from altering their Will to disinherit step-children after they had received the estate on their spouse’s passing.

A MWA does not arise merely by a couple executing Wills together but requires an actual agreement (usually documented in writing) to limit the future alteration of the Wills.

Limitations of Mutual Wills Agreements

A MWA can be a worthwhile estate planning tool in the right scenario. However, they are not as certain as other planning options. The key limitations are:

1. They cannot fully prevent the surviving spouse from spending or dispersing the inherited assets during their lifetime as they are not subject to direct oversight.
2. They cannot prevent third party claims against the surviving spouse. For example, inherited assets are not protected from family law claims if the surviving spouse re-partners, or from creditors if they go bankrupt.
3. They cannot prevent family provision claims against either party’s estate. For example, if the step-children are not on board with the plan they may challenge their natural parent’s estate rather than waiting for their inheritance upon the death of their step-parent.
4. A MWA cannot, at law, actually prevent the surviving spouse from validly revoking their Will and executing a new Will in different terms – even if this breaches the MWA. Instead, it would be necessary for interested parties to seek enforcement of the MWA via a Court declaration of constructive trust.

The case of Forster v Forster [2022] QSC 30

This case is an interesting recent example of the issues that can be caused by these limitations.

The facts of the case were:

1. Timothy and Annabel Forster were married for 24 years. It was a second marriage for each of them and Annabel had two children from her first marriage, while Timothy had three children (including James Forster) from his first marriage.
2. Timothy and Annabel executed Wills dated 20 August 2015 which generally operated to pass the estate to the survivor of them on the death of one of them, and to then equally divide the estate between their five respective children on the death of both of them.
3. A MWA was also executed on 20 August 2015, which relevantly provided that:
   a) each party was not to take any action to substantially diminish the assets which would otherwise comprise their estate (for example by substantial gifts to their own children during their lifetime), other than what is reasonable for maintaining their standard of living and for necessary health and aged care; and
   b) each party was to ensure that any Will executed by them accorded with the agreement to benefit each other and then all their respective children.
4. Upon Timothy’s passing, Annabel duly inherited the bulk of his estate, as well as receiving jointly held assets by survivorship.
5. Timothy’s children subsequently filed a claim seeking further provision from his estate, although these claims were withdrawn before proceeding to a hearing. It is not clear from the judgement whether the MWA assisted in resolving these claims or if there were other factors that made them unviable.
6. Timothy’s son James then commenced the further claim which was the subject of the judgement. In essence, James was seeking a court order that:
   a) Annabel disclose her financial position; and
   b) that she annually update that disclosure, for the purpose of James ensuring compliance with the terms of the MWA in respect to the limitation of dispersing assets during her lifetime.
7. It was James’ view that Annabel possibly already had, or would in the future, breach the terms of the MWA by dispersing assets. He did not have any real evidence to support that view but there was obviously a history of distrust and animosity between the parties.
8. James’ claim was prefixed on an argument that Annabel held both her own assets and the inherited assets on constructive trust by reason of the promise in the MWA not to disperse these assets and to eventually Will them to the children. The existence of a constructive trust then provided grounds under the Queensland Trusts Act 1973 for orders to be made regarding its oversight.

James’ claim was refused. The judgement of Ryan J found:

1. No constructive trust arises on the death of the first party to a MWA. Consistently with a long line of cases, the correct view is that a MWA gives rise to a ‘floating trust’ that does not crystallise until:
   a) the death of the second party to the MWA; or
   b) there was an attempt to disperse assets inconsistently with the terms of the MWA.
2. Even if a constructive trust had arisen, orders for its oversight would not be made as James had not demonstrated any reasonable grounds for apprehending that Annabel might breach the terms of the MWA (addressing specific prerequisites of the Trusts Act 1973).

Key Takeaways

The limitations of MWAs mean that they may not be appropriate in situations where:

• there is acrimony between interested parties (eg step-children and step-parents); or
• the parties are not comfortable placing a heavy reliance on the surviving spouse to act in good faith with limited oversight of their actions.

In these scenarios, more certain planning tools such as life interests, testamentary trusts or direct gifts may better assist in achieving the estate planning objectives.

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The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with a Disability (Disability Royal Commission) held Public Hearing 13 – Preventing and responding to violence, abuse, neglect and exploitation in disability services (a Case Study) (Public Hearing 13) from 24 to 28 May 2021 and again on 10 September 2021. Public Hearing 13 examined a case study on the experiences of people with a disability residing in accommodation at Sunnyfield Disability Services (Sunnyfield). This was the first hearing examining how providers of disability services prevent and respond to violence, abuse, neglect and exploitation of people with a disability.

On 5 April 2022, the Royal Commission published a Report on Public Hearing 13, and found “Sunnyfield failed to protect residents of the House against violence and abuse and was responsible for significant shortcomings in the services provided to residents”.

This article provides a summary of Public Hearing 13 and what steps Disability Service Providers and other organisations should take to safeguard children and vulnerable people to keep them safe from harm.

The Background to Public Hearing 13

On 1 May 2017, Sunnyfield commenced managing a property in Western Sydney, New South Wales, which housed four residents with a disability (the House). Sunnyfield’s operations according to witnesses presented as “chaotic” due to a poor handover with the previous provider and a lack of understanding of the needs of the residents. Concerns were raised for the care of the vulnerable residents almost immediately after Sunnyfield took over the property. These complaints went unanswered and unresolved by Sunnyfield. Regular complaints were made to Sunnyfield, the New South Wales Ombudsman (Ombudsman) who had oversight of disability services prior to the commencement of the NDIS, and the NDIS Quality and Safeguards Commissioner (NDIS Commissioner) between June 2017 and June 2019 raising concerns for professional misconduct, bullying, racism, intimidation, deceit, physical abuse and poor performance of staff roles.

It was not until 25 June 2019, that two Sunnyfield staff were suspended pending an investigation. An independent investigation commenced on 2 July 2019 and substantiated allegations against the staff members of physical and verbal abuse, mismanagement of medication and funding, and breaches of Sunnyfield’s contracts and policies. The independent investigator also raised systemic concerns which included a culture of blame and fear, as well as lack of trust and lack of respect between staff at the House. New South Wales Police investigated the allegations, and charged the workers with multiple counts of common assault and assault occasioning actual bodily harm. All charges were later dismissed, due to lack of evidence.

As part of the Public Hearing, the NDIS Commissioner and the Ombudsman’s actions in relation to the complaints were also scrutinised. The Royal Commission found that the Ombudsman had concerns regarding the employment history of staff prior to their employment with Sunnyfield and did not disclose this information to Sunnyfield when it should have, to ensure the safety of Sunnyfield residents. The Disability Royal Commission also found that the NDIS Commissioner had an obligation to visit the House when concerns were raised, and failed to do so. Sunnyfield also had an obligation to provide the independent investigator’s report to the NDIS Commissioner and failed to do so, arguing client legal privilege over the reports. The Disability Royal Commission found no such client legal privilege exists when a determination needed to be made for the resident’s safety and well-being.

Learnings from Public Hearing 13

A number of key concerns arose out of Public Hearing 13, including:

• a lack of appropriate communication between Sunnyfield and regulatory bodies resulting in complaints remaining unresolved;
• a lack of choice and control Sunnyfield residents and guardians had over their rights, resulting in unsafe and dangerous practices which caused harm;
• a lack of safety and security in the House;
• poor recruitment processes resulting in unsuitable staff working with vulnerable residents, and creating a toxic and deceitful culture amongst staff in the House which was unsafe for residents;
• poor complaints and feedback procedure where complainants were vilified, targeted and felt as though their concerns were going unheard;
• policies and procedures were inadequate to detect and prevent violence and abuse occurring in the House; and
• governance and leadership issues, including no people with lived experience of disability on the board of directors and a leadership team, or did the leadership team appropriately involve residents in decision-making.

Key Takeaways for Organisations

There are a number of key learnings from Public Hearing 13 for Disability Service Providers and other organisations working to safeguard children and vulnerable people.

• Organisations should ensure the voice of the client is at the forefront of its work to ensure that client’s best interests are met.
• Organisations should ensure there are effective policies and procedures in place during recruitment to ensure that employees working with vulnerable clients are suitable and do not pose a risk of harm to vulnerable people.
• Policies and procedures should also be robust in their capacity to ensure oversight and supervision of the organisation to protect vulnerable people from harm.
• Organisations need to have clear policies and procedures in place to support complaints and feedback and should ensure complainants feels validated and heard in a timely manner.
• Organisations should ensure they engage transparently with regulatory bodies to ensure the safety and well-being of their clients and their employees.

How Moores can help

Moores provides a range of safeguarding services for organisations to support them to implement policies, practices and procedures which can mitigate the risk of harm to vulnerable people whilst ensuring that organisations also comply with legislative requirements and regulators. Moores have expertise in harm prevention and mitigation for organisations working with vulnerable people including children, aged care and disability services and works closely with a number of key stakeholders to provide relevant and timely advice to our clients. Moores can provide independent professional investigations to ensure that complaints are properly responded to, and to ensure the safety and wellbeing of children and vulnerable people.

Moores’ safeguarding team provides comprehensive support and can assist with training, developing and implementing policies, processes and procedures to promote safety and reduce risk of harm, ensure regulatory and legislative compliance, and respond to concerns through investigations, crisis management and response.

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It is a common misconception that employers are prohibited from dismissing an employee for unsatisfactory performance or misconduct where the employee is absent from work due to illness at the time the dismissal is to take effect. Issues of absence on personal leave (paid or unpaid) must be handled carefully, however, there are options to finalise your performance management or misconduct process.

Legislative framework

The Fair Work Act 2009 (Cth) (FW Act) prohibits dismissing an employee because the employee is temporarily absent from work because of a prescribed illness or injury. The regulations go on to provide that a temporary absence of three months or less (in a single period or single day absences over 12 months) is considered a prescribed illness or injury. The FW Act also prohibits an employer discriminating against an employee due to, amongst other attributes, a physical or mental disability (which can include a temporary impairment).

The unfair dismissal framework in the FW Act (applicable to some employees) also requires that an employee is afforded procedural fairness before a decision to dismiss them from employment.

Dealing with changing circumstances

Managing ill and injured employees in the workforce can be challenging. An employer must often balance a number of objectives: complying with obligations under the FW Act, anti-discrimination laws, workers’ compensation laws (if a claim is made) and industrial instruments; empathy for the employee who is unwell; and fulfilling the employer’s operational requirements to keep its organisation running.

The matter is further complicated where an employee seeks to take personal leave during a disciplinary action process (eg. a process to manage unsatisfactory performance or alleged misconduct, including a factual investigation being conducted ahead of misconduct allegations). Employers may be left wondering whether an employee is genuinely unwell and unfit for work, or whether the employee is simply seeking to delay the disciplinary process or action.

There may be some circumstances where an employer can proceed with its disciplinary process but caution is always advised about proceeding too hastily due to risks, including:

1. a claim of procedural unfairness actionable under the FW Act (unfair dismissal framework);
2. an adverse action claim on the basis that the employer took disciplinary action because of the employee accessing their personal leave, not the subject of the disciplinary process;
3. discrimination on the basis of a temporary impairment (under the FW Act and/or anti-discrimination legislation); and/or
4. breach of employer policies that may require certain procedural steps to be taken where an employee in unable to participate in a disciplinary process (if applicable).

Therefore, additional steps are recommended for employers in most cases to mitigate the risks, and position the employer to better defend such a claim. An employee is not immune from having to communicate with their employer while on personal leave as it will be necessary to communicate about employment matters such as taking leave, notifications of changes in the workplace and/or temporary work arrangements. As such, an employee may not be able to refuse to communicate with an employer during personal leave.

An employer is however advised to ensure that approaches to communicate with an employee during personal leave have a reasonable basis and are actioned in a reasonable manner. An employer’s conduct has to comply with its safety obligations under relevant legislation and an employee may have a claim with respect to a ‘workplace injury’ that they allege arises because of the employer’s actions to engage with them while on personal leave.

At a minimum, during a disciplinary process interrupted by personal leave, an employer is recommended to:

• provide a reasonable opportunity for an employee to reschedule a meeting (as part of the disciplinary process) if they are unwell. That does not mean an indefinite delay but a matter that requires judgment in the circumstances;
• provide the employee with the opportunity to have additional supports and safeguards in the process (eg. assistance from a counsellor or doctor);
• consider whether the process can be delayed to accommodate a temporary absence (within reason); and
• seek independent advice if unsure about what to do.

Previous cases

Khiani v Australian Bureau of Statistics

The Full Court of the Federal Court held in Khiani v Australian Bureau of Statistics [2011] FCAFC 109, that the restriction on terminating an employee because of a temporary illness or injury does not stand to prevent an employer from dismissing an employee while the employee is absent on personal leave. Where the employee may be dismissed for another valid reason, “it is not to the point that the decision to dismiss happens to be made while the employee is on leave” [26].

This case was an appeal of a decision of the Federal Court, in which the employee had made a General Protections claim after she was dismissed while on sick leave. Prior to the dismissal, the employee had been subject to a performance management plan, and issued a formal warning letter about her unsatisfactory performance. She had also failed to attend meetings with management, which were required by the performance management plan, and the employer subsequently determined that the employee had taken insufficient steps to address her underperformance.

Dana Emery v Cutlers The Law Firm

In the Fair Work Commission’s decision in Dana Emery v Cutlers The Law Firm [2015] FWC 52, an employer who dismissed an employee while she was absent for three days due to illness was found to have failed to comply with procedural fairness obligations. The employee was dismissed due to a workplace restructure, which would result in two part-time positions being replaced by one full-time position. The employer did not consider the employee to be a suitable candidate for the full-time position, and did not inform her of his restructure decision until he notified her of her termination.

Although the employee had advised that she had an appointment to see her doctor and would soon provide a date for her return to work, the employer dismissed the employee by telephone while she remained on leave. The Commission found that there was no reasonable basis for failing to wait at least one more day or until such time as the employer could meet with the employee personally to provide her with an opportunity to respond. Further, his failure to engage in consultation with the employee about the redundancy of her role was described as ‘a cruel and callous way to behave’ [37] and was a breach of his obligations under the applicable Award, notwithstanding that she was on leave when the decision was made.

Boyd v Glenvill Pty Ltd

In the Federal Circuit Court case of Boyd v Glenvill Pty Ltd [2021] FCCA 265, the employee took sick leave due to stress and anxiety arising in the course of his employment, which occurred over a matter of months, and was terminated during that period of sick leave. The employer denied allegations that the employee was dismissed because he took sick leave, or because the employee’s absence on sick leave may have impacted the business negatively.

Instead, they claimed that he was dismissed due to performance issues (including a lack of sales in a sales-driven role). However, the employer had failed to communicate any performance concerns to the employee, and subsequently failed to communicate the rationale for the dismissal. Ultimately, the employer was able to demonstrate that the decision to dismiss the employee was made prior to his sick leave and not because of it, although it was made for other prohibited reasons (including that he had raised a complaint about his employment).

While the case was ultimately decided on other grounds, it is an important reminder of the role of clear communication and documentation in effecting a decision to dismiss an employee, in order to demonstrate that the dismissal was for a valid reason and to comply with procedural fairness obligations.

Tips for case management

The case law is a helpful reminder of the importance of ensuring a procedurally fair disciplinary process, particularly in light of the additional complexities that arise when an employee is on personal leave.

While it can be harder to provide an employee with a genuine opportunity to respond to concerns where the employee is absent from work on personal leave, it is not impossible. In these circumstances, an employer should carefully consider factors such as:

• whether any timeframes provided to the employee are reasonable within the circumstances;
• whether the employee has capacity to engage in the matter, assessed on a case by case basis and with regard to any available medical evidence;
• whether the employee has nominated a representative, such as a union officer, lawyer, or family member to receive correspondence on their behalf;
• whether the process can be delayed until the employee is able to participate; and
• if multiple extensions have been provided, whether there is a likelihood that the employee will be able to participate in the foreseeable future.

Carefully considering these factors, and documenting any decisions made, will be key to defending a claim against the employer’s process and decision.

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At Moores, our Workplace Relations team is well-equipped to guide employers through tricky situations in the workplace. Get in touch with the Workplace Relations team at Moores if you or your organisation would benefit from our team’s support and advice.

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The case of Frigger v Trenfield (No 10) [2021] FCA 1500 is a cautionary tale of the avoidable risks for anyone with a self managed superannuation fund (SMSF) with individual trustees.

In the case, the members and individual trustees of the SMSF, Mr and Mrs Frigger, were undischarged bankrupts, and therefore a trustee in bankruptcy was seeking to recover their assets. The dispute arose because Mr and Mrs Frigger said that some of the assets claimed by the trustee in bankruptcy were in fact owned by them as trustees of their SMSF and therefore out of reach.

The argument by Mr and Mrs Frigger arose because the Bankruptcy Act provides that assets held in a superannuation fund are not available to the trustee in bankruptcy. If the Friggers could prove the assets were those of the SMSF, they would be ‘off-limits’ to their creditors.

The Trustee in bankruptcy argued that the bank accounts, share portfolios and properties were acquired by Mr and/or Mrs Frigger in their individual names, and not as trustees of their SMSF. In some cases, this was because the asset was acquired by the Friggers prior to the establishment of the SMSF, and in others, because the asset is in one of the their names only.

Superannuation (and in particular the SMSF sector) is heavily regulated, which is unsurprising given the significant wealth held in superannuation funds in Australia. Some of the key compliance rules include:

• the obligation for trustees to ensure the fund is compliant;
• the obligation for trustees of SMSF to keep all money and other assets of the fund separate from any other assets held by the trustee personally (not in its capacity as trustee of the SMSF); and
• the prohibition on an SMSF acquiring assets from its members or the related parties of the members.

The assets in question included bank accounts, shares and properties – some of which were registered in Mrs Frigger’s sole name, some in Mr and Mrs Frigger’s joint names and even some owned by their daughter (who was, for a time, a member and trustee of the fund). Apart from the confusion about the name in which assets were registered, the Friggers had used the same bank account for their SMSF and for some business transactions.

Ultimately, the Federal Court judge found that Mr and Mrs Frigger failed to establish that the assets they claimed were held as trustees of the SMSF were genuinely held in that capacity. The Court referred to the Friggers’ lack of evidence as to their intention to hold the assets as part of their SMSF, the timing of the acquisition of the various assets and the inability to trace income through the balance sheets of the SMSF in reaching this decision. That meant those assets became divisible amongst their creditors.

Key lessons

A key obligation of a trustee is to ensure that assets are held separately from its own assets – this case shows that when it is not done correctly, those assets can be vulnerable.

One of the clearest ways to ensure that the assets are separately held and registered is to have a corporate trustee whose sole purpose is to act as the SMSF trustee – that way, the legal ownership is clearly separated from that of the members of the fund.

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Content warning: this article contains descriptions of sexual harassment and sexual assault

In a recent case that illustrates the significant consequences for employers and employees alike that arise where an employer fails to take reasonable precautions to prevent sexual harassment in the workplace, the Victorian Civil and Administrative Tribunal (VCAT) has ordered an employer to pay $150,000 to an employee that experienced sexual harassment in the workplace. In a second recent judgment, the Fair Work Commission (FWC) upheld an employer’s decision to dismiss an employee following an investigation that substantiated allegations of sexual harassment. In this article, we explore what these two recent decisions mean for employers.

VCAT finds employer vicariously liable to the tune of $150,000 for failing to take reasonable precautions to prevent workplace sexual harassment

In Oliver v Bassari (Human Rights) [2022] VCAT 329 (28 March 2022) an employee of a beauty therapy company, Heibech Pty Ltd (trading as “Man Oh Man”), was subjected to sexual harassment and was sexually assaulted by her colleague, Frederico Catalfamo. The sexual harassment took place over the course of the eleven months that the employee, Oliver, worked for the employer, and entailed sexual and suggestive questions and comments as well as unwanted touching. The sexual harassment ultimately culminated in Catalfamo sexually assaulting Oliver whilst she was having her hair washed. Oliver was subsequently diagnosed with PTSD and anxiety and experienced a number of negative symptoms as a result of the harassment and assault.

The Tribunal found that the employer was vicariously liable for the sexual harassment as:

• the employer’s response to the employee was “manifestly inadequate”, as the employer did not address the complaints with Catalfamo as they were made and did not investigate any of the allegations. No formal action was taken until five months after the final allegation was made (in relation to the sexual assault), when Catalfamo was given a written warning;
• the only precautions the employer took to prevent sexual harassment in relation to Catafalmo before the First Complaint were to:
  • make a handbook, which contained an anti-discrimination and equal opportunity policy, which contained a section on sexual harassment, available electronically; and
  • to discuss the handbook “in a rudimentary manner in one staff meeting”;
• there was no evidence that the employer ever implemented any educational programs on sexual harassment issues, monitored the workplace to ensure compliance with its sexual harassment policies or took appropriate steps to communicate its sexual harassment policies to all employees.

Oliver also argued that the sole director, shareholder and office manager of Man Oh Man, Youm Bassari, ‘assisted, authorised and/or encouraged’ the sexual harassment as Bassari did nothing to prevent the sexual harassment from occurring and continued to roster Oliver and Catafalmo to work together despite knowing of the sexual harassment. The Tribunal found that a person in authority (e.g. a manager) may authorise sexual harassment through mere inaction if:

• the person in authority has observed the conduct and done nothing to prevent it from reoccurring; and
• the perpetrator knows that their conduct has been observed by the person in authority.

However, in this case, VCAT found that Bassari’s inaction did not amount to assisting, authorising or encouraging the sexual harassment as Catafalmo did not know that Bassari was aware of the allegations as she never addressed them with him.

The Tribunal awarded general damages in the order of $150,000, noting that the affected employee was still suffering from the effects of the sexual harassment and assault four years after the incidents occurred.

Fair Work Commission upholds dismissal for sexual harassment

The case of Dunlop v BHP Billiton WAIO Pty Ltd t/a BHP [2022] FWC 790 (11 April 2022) concerned an employee, Dean Dunlop, who was suspended by his employer, BHP Billiton (BHP), immediately following two allegations of sexual harassment that were made against him by two contractors that worked for ESS Support Services, a contractor that provides services to BHP, including cleaning its mine sites. BHP subsequently terminated Dunlop’s employment three weeks later following an independent investigation in which the allegations of sexual harassment were substantiated. One contractor alleged that Dunlop had grabbed her in a “bear hug”, pinned her arms to her side and whispered a sexual comment in her ear. The other contractor alleged that, in a separate incident, Dunlop made a sexual comment to her, squeezed her breast and called her multiple times over the following days. The second contractor resigned from her employment with ESS and said that was because she felt too unsafe to return to work.

Dunlop argued sexual harassment did not occur and that the allegations were vague and malicious, and he was unfairly dismissed. The FWC heard evidence from the two complainants, an independent investigator, the complainants’ supervisor and Dunlop’s supervisor. The FWC found that all the evidence supported the allegations that sexual harassment did in fact occur. In considering the legislative requirements, the FWC found that Dunlop’s dismissal was not ‘harsh, unjust or unreasonable’ as sexual harassment is a valid reason for dismissal as it amounts to serious misconduct (following a recent change to the definition of serious misconduct in the Fair Work Act 2009 (Cth)) , Dunlop was informed of the allegation and was provided with an opportunity to respond but chose not to do so, and that the procedures followed by BHP in effecting the dismissal were appropriate.

What do these two cases mean for employers?

Both cases highlight the importance of having appropriate policies and procedures in place which clearly prohibit sexual harassment in the workplace and outline the procedure for managing complaints from employees. They also highlight the importance of making sure that employees are aware of the contents of these policies, taking proactive steps to monitor compliance with the policies, and that allegations are taken seriously and responded to in line with the procedures in place. The FWC found BHP had engaged in correct procedures for managing complaints and had followed their policies and protocols regarding an investigation, which resulted in a fair dismissal. On the other hand, VCAT found that Man Oh Man’s lack of action against allegations and poor policies and procedures resulted in them being vicariously liable for their employee’s conduct.

Both cases also highlight the importance of taking sexual harassment allegations seriously. As a result of Bassari and Man Oh Man’s inaction, VCAT found in favour of the affected employee and awarded her $150,000 in general damages. The Tribunal also confirmed that individuals in positions of authority (e.g. managers) may be held liable for assisting, authorising or encouraging sexual harassment through mere inaction. This is an important lesson for employers who fail to prevent and respond to sexual harassment in the workplace as more cases are going before the court and more employers are being held vicariously liable for the conduct of their employees.

Key takeaways

There are a number of things employers can do to ensure they are protected from unfair dismissal and vicarious liability claims:

• ensure appropriate policies and procedures are in place to deal with complaints and allegations of sexual harassment and sexual harm;
• ensure employees are aware of and have read anti-discrimination and equal opportunity policies, as well as your organisation’s code of conduct;
• provide training to employees on appropriate workplace conduct;
• take all allegations seriously and investigate allegations and complaints where appropriate;
• keep proper recordings of allegations and investigations, and
• follow correct procedures and steps to manage allegations and disputes.

How Moores can help

Moores works with organisations and employers to prevent sexual harassment and discrimination in the workplace and supports employers and organisations to respond appropriately and efficiently to complaints and allegations of sexual harassment and discrimination that are made.

Moores’ Workplace Relations & Child Safety teams can provide a range of comprehensive and specialist support and services to employers and organisations and provide support and advice in relation to disputes, investigations, the implementation of policies and procedures and training in relation to sexual harassment and discrimination.

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The contract in place between parties identifying a contractual relationship of service (rather than an employment contract ‘of service’) will usually be sufficient subject to the parties’ relationship being consistent, in practice, with the contractual terms.

There is no doubt the High Court rulings earlier this year provided clarity for many about delineating between the employment and independent contractor relationships (ZG Operations & Anor v Jamsek & Ors [2022] HCA 2 and Construction, Forestry, Maritime, Mining and Energy Union & Anor v Personnel Contracting Pty Ltd [2022] HCA 1).

A recent case in the Federal Circuit and Family Court has illustrated how those decisions have practical impact.

In Pruessner v Caelli Constructions Pty Ltd [2022] FedCFamC2G 206, Justice McNab found that a relationship between a construction company and a worker, contracting through a company run by his wife and him, was not that of employer/employee but that of principal and contractor.

Mr Pruessner established that he had provided services to Caelli Constructions for many years, both from 2005 to 2008 and then again from 2012 to 2020.

Mr Pruessner argued that notwithstanding that his company invoiced Caelli for the services (at least since 2012), he was in fact an employee of Caelli. Caelli disputed that, claiming that Mr Pruessner was at all times a contractor to the business.

The Court found in favour of Caelli Construction.

There was no written contract in place and therefore the High Court’s guidance did not have direct application in that regard. However, the Court was able to identify what terms were part of the contract that was effectively in place between the parties, and looked at the ‘post-contractual’ conduct to ascertain those terms (citing case law support to enable review of that post-contractual conduct because there was no written contract).

Key factors guiding the Court’s decision in favour of Caelli included that:

• Mr Pruessner invoiced for services provided and sometimes supplies/materials.
• The invoices weren’t always for the same hours each pay period. Rather, in some periods, no payment was invoiced (presumably because services were not provided).
• At times, Mr Pruessner’s son provided some labour for which Mr Pruessner invoiced Caelli. That suggested that personal service of Mr Pruessner was not required and that he could subcontract or resource the work as required.
• Mr Pruessner’s ‘company’ had financial statements and tax arrangements supportive of a business including that expenses were offset against revenue.
• Mr Pruessner was paid through his company (eg. salary) and have superannuation contributed by his company.
• The evidence established that Caelli and Mr Pruessner agreed to the contractual arrangement and did not intend it to be an employment relationship.

Although the case was decided in a construction context, it has broader application to many organisations, including those obtaining consulting services from independent contractors and other service arrangements.

The better protection for an organisation is to ensure that a written contract is in place to clarify the relationship basis and its terms. Failing that, it may be up to the Courts to determine.

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Domestic and family violence leave to increase to 10 days paid leave in awards – watch this space

The Fair Work Commission (Commission) has led the way on recognising the change needed to respond to domestic and family violence.

On 16 May 2022, the Commission issued its lengthy decision in support of a ‘provisional view’ that the award standard for family and domestic violence leave should be increased to 10 days paid leave.

The provisional view was expressed in the context of the Commission’s four yearly award review and revisited its earlier decision to reject the Australian Council of Trade Union’s push for 10 days paid leave. At that time, five days unpaid leave was provided for as a new entitlement in all awards. The Federal government soon followed by legislating that entitlement in 2018 as part of the ‘National Employment Standards’ (NES) so that all employees (not just award covered employees) would benefit from the entitlement.

The Commission’s provisional view is now the subject of further process steps to develop a model clause (for inclusion in awards) and provide the opportunity for feedback. Once those processes are completed, it should be expected that the Commission will formally vary all awards to include that new standard.

The Federal government will most likely consider changes to the NES required if it adopts the Commission’s lead.

OHS regulations to oblige employers to report on bullying and harassment matters and mitigate psychosocial hazards

The proposed Occupational Health and Safety Amendment (Psychological Health) Regulations (Vic) is another one to watch.

The regulations, if passed, will come into effect in July 2022. They will, amongst other things, require employers to take steps to mitigate and report on a range of matters related to psychosocial risks and hazards in the workplace. They will also compel employers with more than 50 employees to provide half yearly reports on ‘reportable psychosocial complaints including bullying and sexual harassment’.

That is a significant change that will affect many employers.

The consultation process has closed.

How we can help

At Moores, our Workplace Relations team is well-equipped to guide employers through tricky situations in the workplace. Get in touch with the team at Moores if you or your organisation requires further information or advice.

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Please contact us for more detailed and tailored help.

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The ACT Civil & Administrative Tribunal (ACAT) has determined that a clause in a School Enrolment Contract requiring one terms’ fees in lieu of advance written notice of withdrawal of a student at the end of the year constitutes an unfair contract within the meaning of the Australian Consumer Law (ACL). The Enrolment Contract was found to be a standard form contract, meaning the ACL was relevant.

Senior Member Elspeth Ferguson handed down the decision in the matter of Brindabella Christian Education Ltd v Respondent on 5 May 2022. Interestingly, the notice term could still reasonably be applied to children withdrawn during the course of the school year after resources based on student numbers for that year had been committed.

Payment of One Term’s Fees Clause

Clause 25 of the Enrolment Contract, which includes the notice term, is set out in full below:

25. I/we agree that:
    a) the Administration Fee paid by me/us is not refundable;
    b) all College fees are payable within two weeks of issue of each fee statement;
    c) one full College term’s notice in writing to the Principal is required for the intended withdrawal of the child, otherwise a full term’s fees will be charged. The written notice must be received by the College by the first day of the term. Any Notice received after the first day of term will render parents/carers liable for that term and the subsequent term in lieu of notice.

Unfair Contract Findings

The Enrolment Contract was found by ACAT to be unfair, as the School could unilaterally vary fees by publishing such variation without prior notice and without giving parents an opportunity to withdraw their child from the School without penalty. Parents that found the changes unacceptable must pay at least one and possibly two term’s fees following the variation, depending on when such variation takes effect. However, as noted above, the notice was less likely to be an unfair contract if a student was withdrawn during the School year, rather than at the end of the term four.

To be unfair for the purposes of section 23(1) of the ACL, a term of a consumer contract must meet all the following criteria under section 24(1):

(a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract;
(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

Significant imbalance

ACAT found there was significant imbalance under s24(1)(a) because the notice term, in the context of the Enrolment Contract, has the effect of permitting the School, but not the parents, to vary the terms of the contract; and of permitting the School to alter the upfront price payable under the Enrolment Contract without giving the parent a corresponding right to terminate the Enrolment Contract.

Not reasonably necessary

It was not clear from the terms of the Enrolment Contract that enrolment at the School was ongoing. The Senior Member of ACAT found that the School would have sufficient time to plan allocation and teaching resources for the following year when a student was withdrawn at the end of term four and could thus mitigate any loss occasioned by the termination of the Enrolment Contract.

‘Reasonably necessary’ in the context of section 24(1)(b) requires the term to be both reasonable ie ‘fair, proper, or moderate under the circumstances’ and necessary. The notice term was found to operate in the context of a rolling contract which permits the School to unilaterally vary the terms of the Enrolment Contract, including fees, without giving the parents a right to terminate without penalty. As such it was found to be neither reasonable nor necessary.

Cause detriment to a party if the clause were relied upon

If the notice term were relied upon the parents would suffer detriment because they would be required to pay school fees for a service that they neither wanted nor received. The extent of detriment suffered by the parents in this case is immaterial.

How Moores can help

Moores can advise whether this decision is binding on your school, and review your Enrolment Contract to ensure transparency of the terms of enrolment and how to lessen the impact of this decision on your ability to still require one term’s fees in lieu of notice. The increase in claims relating to periods of remote learning simply underscores the need to review your enrolment terms and conditions to ensure they still achieve key commercial outcomes.

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With the Federal Election only a few days away (Saturday 21 May), Australian political parties have been busy campaigning and addressing their key policy platforms and plans. From Liberal’s commitment to the remaining measures in its Omnibus Bill to Labor’s pledge to lift wage rates in light of the latest annual inflation rate, there has been no shortage of industrial relations and workplace related issues both old and new on their agenda. This article unpacks those issues and foreshadows what we can expect to see from the major political parties following election day.

Wage rates and the gender pay gap

The latest inflation figures released in late April revealed that headline inflation had increased to 5.1% annually in the March quarter. In light of these figures, the federal government was criticised for being complacent about the cost of living in Australia and allowing wage rises to fall significantly behind inflation.

The Labor party responded by announcing that it would support a wage rise in this year’s national minimum wage order that keeps pace with inflation. It is ultimately the Fair Work Commission’s (FWC) responsibility for conducting annual wage reviews and determining national minimum wage rises each year and Labor was criticised for the policy position, viewed by some as an interference with the FWC’s independence. Recent comments from the Prime Minister reflect a more conservative approach to wage growth with some indication that wage growth should be expected in 18 months, mindful of the inflationary impact of significant wage growth in the short term.

The Labor party has also committed to closing the gender pay gap by strengthening the ability and capacity of the FWC to order pay increases for workers in low paid, female dominated industries and legislating so that there is greater transparency around the current gender pay gap.

Similarly, the Greens have also committed to:

• increasing wages by proposing to establish a new minimum wage at 60% of the median wage; and
• increasing wages and closing the gender pay gap by guaranteeing annual award wage increases that are 0.5% above inflation in female-dominated industries, including education, nursing, cleaning and childcare.

Without making similar commitments, the Liberal party has promised to narrow the gender pay gap by strengthening the economy and increasing women’s workforce participation, arguing that the current gender pay gap of 13.8% is significantly lower than the 17.4% inherited from the Labor party.

The Liberal party, the Labor party and the Greens have also unveiled respective plans for supporting women in the workplace.

The Liberal party’s plan involves investing in women’s economic security by providing more flexible and accessible paid parental leave (discussed below) and encouraging women into trade apprenticeships, the manufacturing industry and digitally skilled roles.

The Labor party has vowed to go further to support fair pay and conditions for working women. In particular, if elected, it has promised to legislate an equal remuneration principle to guide the FWC in equal remuneration and work value cases and establish a Pay Equity Panel and Care and Community Sector Panel to assist the FWC in determining those cases.

Finally, the Greens have a plan that entails improving paid parental leave (discussed below), increasing women’s workforce participation by providing free childcare and flexible work arrangements and implementing all of the recommendations in the Australian Human Rights Commission’s Respect@Work report, challenging the federal government on the basis that it has failed to act on a range of recommendations in the report.

The Omnibus Bill

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (commonly referred to as the Omnibus Bill) was passed on 22 March 2021, albeit in a much-reduced form than when it was first introduced. Among other changes, the Omnibus Bill introduced a statutory definition of casual employee and a statutory obligation for employers to offer regular casual employees with 12 months of service conversion to full or part-time employment. (See our related article for more.)

The Liberal party has indicated that it is committed to passing the remaining measures in the Omnibus Bill that were not passed last year.

In summary, those measures include:

• greater flexibility for employers and employees concerning duties and location of work under modern awards;
• substantive changes to how enterprise agreements are made, including by:
  • requiring employers to take reasonable steps to ensure that employees are given a fair and reasonable opportunity to decide whether or not to approve an agreement; and
  • broadening the discretion of the FWC to approve agreements that do not pass the better off overall test on the basis that they are not contrary to public interest by way of reference to a range of factors, including the views and circumstances of employees and employers and the impact of COVID-19; and
• deterring sham contracting and wage theft by:
  • introducing a new criminal offence for dishonest and systematic wage underpayments; and
  • increasing the value and scope of civil penalties and orders that can be imposed for non-compliance.

The Labor party has not indicated whether it will support the passage of any of the remaining measures in the Omnibus Bill. However, the party has committed to criminalising wage theft at a federal level.

Leave entitlements

Family and domestic violence leave

The FWC recently reached a provisional view in the family and domestic violence leave review that there should be an award entitlement to 10 days’ paid family and domestic violence leave. This represents a significant increase from the current entitlement to 5 days’ unpaid leave under modern awards.

The FWC has sought the federal government’s view on whether it would incorporate the proposed entitlement in the National Employment Standards (NES). In response, the federal government has declined to endorse incorporating the proposed entitlement in the NES, preferring instead to leave employers and employees to agree on these entitlements through enterprise agreements and workplace policies.

The Labor party, on the other hand, has committed to ensuring that the proposed entitlement is available to all Australian workers covered by the NES.

Paid parental leave

The Liberal party has committed to enhancing paid parental leave by allowing the current 20-week entitlement to be fully transferable between carers and raising the eligibility requirement to access the proposed entitlement to household income of $350,000 or less. The Labor party’s plan is to increase total leave from 20 to 26 weeks but has not specified how leave would be shared or transferred between carers. The Greens have also committed to a 26-week entitlement, composed of six weeks for each carer (on a ‘use it or lose it’ basis) and 14 weeks to be shared between carers.

Religious freedoms

The federal government’s long-awaited Religious Discrimination Bill (Bill) was shelved in February 2022 following a marathon sitting of the House of Representatives and a range of changes that amended the bill from what the federal government had initially proposed. (See our related article for further commentary on the Bill.)

Religious freedom laws were a key policy platform for the Liberal party during the 2019 election, and the party has committed to revisiting the Bill if re-elected.

Though the Labor party has committed to protecting Australians against discrimination on the basis of religious belief and activity, the party has not provided further detail in relation to the Bill and to what extent it would seek to pass the Bill if elected. The party has, however, highlighted that the Bill fails to protect students from discrimination on the basis of their gender and sexuality.

How we can help

Moores assists many clients to confront and respond to the issues discussed in this article, many of which are ongoing and systemic and will take time and substantive legislative change to address irrespective of the results of the upcoming federal election.

Contact us

Please get in touch with our workplace relations team for further information on what Moores can do for you.

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Further reading

Greens Policies
Labor Policies
Liberal Policies