Emerging issues for Australian labour law: The challenges for regulating effectively in the new economy

1. 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

2. 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

3. 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

4. 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

5. 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

6. 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)

7. 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”

8. 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)

9. 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

10. Applying dismissal principles to new spheres

11. 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 (Neilsensurvey, 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.

12. 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”

13. 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

14. 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

15. 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

16. 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

17. In contrast …. • Stutsel v Linfox Australia Pty Ltd (2011) • Mr Stutseldismissed 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’

18. 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

19. 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?

20. New workplace bullying provisions in the Fair Work Act2009 • Part 6- 4B of The Act A worker is bullied at workif:                      (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.

21. 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)

22. 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

23. 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

24. 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’

25. 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’

26. 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

27. 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

28. 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

29. THANK YOU! QUESTIONS? THOUGHTS?