Insights & News

August 14, 2024

In a recent Fair Work Commission decision[1], an employee of Fedex Express Australia (Fedex) lodged a flexible working request asking to work remotely four days a week. The request came following a series of similar requests made in accommodation of his family care duties and off the back of him already working remotely for much of the working week.

Like many current cases, the employee had continued working remotely from home following the lifting of COVID-19 restrictions. When directed back to the office two days a week, the employee commenced a pattern of taking leave on each of the days he was supposed to be in the office. When the requirement to work from the office increased to three days per week, the employee submitted a number of further flexible working requests, culminating in the dispute before the Commission. While some of the employee’s requests were agreed upon with the employer, his request to work from home four days a week indefinitely, was refused by Fedex. Instead, Fedex proposed alternative arrangements which in turn, were not accepted by the employee.

Notwithstanding Deputy President Lake’s observations that Fedex could have considered concerns regarding the employee’s wellbeing, and noting the full time working from home arrangements would be “isolating, particularly in potentially stressful home environment”, the Commission found that Fedex did not have reasonable business grounds to refuse the employee’s request, as it could not demonstrate a significant loss in efficiency or productivity, or a significant negative impact on customer service.

While Fedex was found to have genuinely tried to reach an agreement, and although it led evidence of the benefits of working in the office, the Commission ruled that Fedex was not able to prove the detriment to the business in refusing the flexible working arrangement and that accommodating such a request was in the employer’s interest for employee retention and job security.

This decision struck me as placing an incredible high bar on employers embroiled in disputes regarding flexible working arrangements.

Increasingly, we are seeing employees making flexible working requests to work almost exclusively from home. In a recent matter of mine, an employee in question had moved during the COVID-19 pandemic and was located more than an hour from her employer’s premises. She argued that because she had worked 100% remotely during the pandemic, there was no detriment to her continuing to do so, indefinitely. She cited carer responsibilities and a disability arising from the ‘stress’ of being directed back to the office two days a week.

While remote work has enormous benefits for all, the trend in employees resisting the call to return to the office, even for two or three days a week, may soon be up.

In our last edition of Kingston Reidable, Special Counsel Shannon Walker offered her insights on the Commission’s flexible workplace arrangement regime (you can read her previous article here). Notably, in the case of Shane Gration v Bendigo Bank [2] the FWC refused a working from home request in which the employee sought to work 100% of his 5 days working week from home.

In that case, the Commission upheld the reasonableness of the employer’s refusal, noting the importance of face-to-face interactions and attendance.

Echoing the Commission’s observations in the Gration case, one of the enormous downsides of employees working much of their week remotely is the decline in the cultural capacity of an organisation.

Another, the drain of on-the-job training opportunities; that intrinsic osmosis of being ‘in the thick’ of things and leaning into corridor conversations with more experienced colleagues. We’re also seeing a decline in resilience or what is often referred to as psychosocial or ‘brain’ capital—the cognitive, emotional, and social resources that employees bring to their roles and interactions with others. Fostering resilience, particularly in our younger workers, cannot be overstated.

As employers, we must recognise that the jobs of the future will increasingly demand these brain skills. Whether it’s for roles that require high levels of cognitive function or for positions where automation has shifted the nature of tasks, the value of an individual’s psychosocial capital is paramount. This is especially true as we witness the integration of artificial intelligence and robotics into our workplaces, which will inevitably reshape the skills required for success.

However, psychosocial capital is not a static asset. It can be nurtured and strengthened, or it can deteriorate in the face of unhealthy work environments. It is our responsibility, as employers, to ensure that our workplaces are conducive to the development of this capital, offering stimulation and positive dynamics that empower our employees. Conversely, we must be vigilant against the erosion of this capital through negative interactions, such as bullying or discriminatory behaviours, or in some cases, high levels of remote work.

The recent Fedex decision serves as a poignant reminder of the changing dynamics of work, whilst placing a significant burden on employers to justify the refusal of flexible working arrangements which see employees working almost exclusively from home. This decision, together with the push of employers to bring employees back to the office, is likely to encourage a surge in such requests, challenging employers to provide robust evidence of any likely detriment to the business, and also highlights the ongoing struggle between the desire of many employees to work remotely and the efforts of employers to bring employees back to the office.

While each request needs be assessed on its face, fortunately, the science of neuroscience supports the notion that in-person interaction is crucial for building psychosocial capital and offers important evidence that can be leveraged to demonstrate that while remote work offers certain benefits, the human element of face-to-face collaboration is essential for a resilient and adaptable workforce.

[1] Ridings v Fedex Express Australia Pty Ltd [2024] FWC 1845

[2]  [2024] FWC 717

On 20 August 2024, the Sydney office of Kingston Reid is proud to be hosting our Wise and Shine Breakfast Seminar, where we bring together a dynamic, multi-disciplinary panel to discuss the benefits of neuroscience in fostering stronger and more resilient employees, and how organisations might harness the science as part of their approach to managing psychosocial risks in the workplace more broadly.

Places are limited, please email [email protected] if you would like to attend this in person breakfast event.

Across the world, a number of jurisdictions have outlawed the use of certain types of restraint clauses (such as the US Federal Trade Commission banning the use of all encompassing “non-compete” clauses nationwide). We’re starting to see a similar sentiment take hold in Australia – restraints are becoming much more heavily scrutinised by both the courts and the government, reflecting that the tide may be changing (you can hear more about that in our Podcast episode (available here).

So, when and why should your business be using restraint clauses?

We take a look at some recent Australian decisions that illustrate the evolving legal landscape and its implications for your contract practices.

A quick refresher…

Employment contracts often include clauses that restrict an employee’s actions even after their employment has ended. As a quick refresher, the “family” of restraint clauses include:

• Non-compete restraints which bar the employee from working with or being involved in a competing business.
• Confidentiality restraints that prohibit disclosing employer’s secrets.
• Non-solicitation restraints that prevent soliciting employer’s clients.
• Non-dealing restraints that forbid providing services to those clients.
• Non-recruitment restraints that stop the employee from encouraging colleagues to leave the company.

The Debate

In Australia, we’re seeing restraint clauses face increasing scrutiny for their negative impact on both individual employees and the broader economy. See for example, a recent FWC decision, Andrew Goddard v Richtek Melbourne Pty Ltd [1] where the Fair Work Commission criticised the non-compete clause as overly restrictive when considering whether a dismissed employee had done all they could to mitigate their loss in assessing compensation for an unfair dismissal.

Deputy President Colman mused that it was unclear why restraints are common in the contracts of ‘ordinary workers’ and that the presence of such a clause (despite its likely unenforceability) explained why the employee, a grouting and grouting services salesperson, hadn’t tried to find another job in his sector in the 12 months after his dismissal.

Lochdyl Pty Ltd v Lind [2] strikes a similar chord, with the Magistrates Court of South Australia declaring a non-solicitation restraint clause void, due to its excessive restrictiveness. The employee in question was a hairdresser and the restraint in her contract tried to impose a two-year restriction on the employee diverting or attempting to divert from any business she had enjoyed, solicited or attempted to solicit from customers prior to the termination of her employment. Magistrate Vozzo determined that the restraint’s duration and scope were significantly more than what was reasonably necessary, as the nature of the hairdressing business allowed for the quick establishment of new customer relationships. This implied that any reasonable restraint would need to involve a shorter time period during which a hairdresser should be restrained from soliciting or attempting to solicit business. Consequently, the two-year restraint was deemed excessive and unenforceable. Additionally, Magistrate Vozzo found that the clause in question was ambiguously worded, lacking clarity in key terms, further contributing to its unenforceability​.

Finally, Justice Parker in Scyne Advisory Business Services Pty Ltd v Heaney [3] refused to grant an interlocutory injunction based on procedural grounds. Justice Parker found that, despite considering there was a serious question to be determined about the enforceability of the restraint, which would support granting a temporary non-compete restraint, Scyne’s significant delays in its attempt to enforcement the restraint meant that it would be unreasonable to restraint the ex-employee and prevent them from working while the case was heard. The decision signals to employers the critical need for timely action when seeking to enforce restraint clauses.

This isn’t to say that post-employment restraints are never being enforced – Samsung Electronics Australia Pty Ltd v Grenville[4] is a recent example of a court temporarily enforcing a non-compete and a non-solicit restraint while the case was being heard by the Court. The Court found that it was arguable that the restraint was necessary to protect Samsung’s confidential information and customer connections and ordered the temporary restrictions last for at least three months while the case was heard. In this case, Samsung also gave an undertaking that during this time the ex-employee’s old base salary would continue to be paid to him to mitigate his loss.

Key observations

Restraint clauses are important for ‘worst case’ scenarios – you know, like where an employee sends 10,000 work emails to their personal Hotmail account on their last day, or where a key senior executive immediately starts at your no. 1 competitor. However, while restraint clauses can serve as a tool for employers, they must be carefully crafted to ensure they are reasonable in scope and duration.

Pursuing excessive restraints that will likely be deemed unenforceable is not a good use of anyone’s time or resources. Excessive restraints are bad for employees, bad for the economy and thus bad for employers.

As employers, you should always consider whether the inclusion of a restraint clause is truly necessary. Thoughtfully crafted restraint clauses not only enhance their legal enforceability but also promote a fairer and more dynamic labour market, benefiting both businesses and employees.

Takeaways

1. Courts are adopting a stricter stance: Excessive or unwarranted restraint clauses are increasingly likely to be deemed unenforceable. Ensure your restraints are reasonable and justifiable.
2. Tailor restraint clauses to individual circumstances: Avoid using a one-size-fits-all approach. Consider the specific role, industry, and potential impact on the employee’s reasonable ability to practice their profession when drafting a restraint.
3. Focus on legitimate business interests: Restraint clauses should be proportionate and necessary, aimed solely at protecting genuine business interests such as your confidential information and customer relationships.
4. Review restraint clauses upon dismissal: Evaluate whether enforcing a restraint clause is appropriate when an employee leaves. In some cases, negotiating the application of the restraint, or parts of it, might be the better course of action.

[1] [2024] FWC 979

[2] [2024] SAMC 43

[3] [2024] NSWSC 275

[4] [2024] NSWSC 608

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

Safe Work Australia has announced the next step towards changes to the incident notification framework under the model work health and safety (WHS) laws.  The changes have been anticipated for some time and follow a review of the framework which found there was an opportunity to improve the coverage and operation of the provisions.

A key focus of the changes is to expand the framework to capture psychosocial hazards and related psychological injuries and illnesses.  The next step is for amendments to the model WHS laws to be drafted, which are expected to be released early next year.

Background    

Last year, Safe Work Australia published a Consultation Paper – WHS Incident Notification which sought feedback on options to improve the coverage and operation of the relevant provisions.

Currently, the incident notification framework under the model WHS laws requires a duty holder to notify their respective regulator of a death, serious injury or illness and dangerous incident. The options in the Consultation Paper were in response to recognised gaps in the framework, including that it does not accommodate the notification of injuries or illnesses that may develop over time nor exposure to hazards that pose a serious risk to health and safety if exposure is repeated or frequent.

The opportunity to respond to the Consultation Paper closed on 11 September 2023.

On 2 August 2024, Safe Work Australia announced the changes that will be taken forward.  The changes reflect the recommendations to improve the incident notification framework to which the government ministers responsible for WHS have agreed.  According to the media release, the changes will provide clarity for existing provisions and address the gaps in the current framework, particularly in relation to notifying for psychosocial hazards and psychological harm [1].      

What changes are on their way to the model WHS laws?

The changes include:

• clarifying how to apply the ‘causal link principle’ which requires duty holders to only notify incidents if they have arisen out of the conduct of the business or undertaking because incidents that are not work-related or do not otherwise meet this threshold continue to be notified [2];
• expanding the framework to require persons conducting a business or undertaking to notify other persons conducting a business or undertaking that a notifiable incident has occurred. In the Consultation Paper, this option arose in the context of multiple duty holders on site and a person with management or control having site preservation obligations [3]; a person with management or control cannot fulfil these obligations if they are not aware that a notifiable incident has occurred [4];
• clarifying notification requirements for incidents involving the fall of a person, electrical hazards and mobile plant (which will likely be through amending the definition of ‘dangerous incident’) [5];
• requiring notification of violent incidents arising out of the conduct of the business or undertaking that exposes one or more persons to a serious risk to their physical or psychological safety;
• requiring notification of a worker’s absence (or anticipated absence) from work for a period of 15 or more consecutive calendar days due to physical or psychological injury, illness or harm; and
• requiring notification of work-related suicides and attempted suicides of workers. This requirement will not be informed by the ‘causal link principle’ as stated above but instead, by whether there are indicators suggesting that there is a link to work or the work environment.

In the Consultation Paper, a number of other options had been canvassed (including periodic reporting for certain types of ‘incidents’, e.g., complaints or instances of unreasonable behaviour that exposes a worker(s) to a risk to their health and safety) yet many of these do not appear to be moving forward.   The details however will be known once the amendments have been released, which is expected early next year.  These amendments to the model WHS laws will not have effect in any jurisdiction until they are adopted by the respective governments in each jurisdiction and implemented in their own laws.

Key takeaways

Changes to the incident notification framework under the model WHS laws are on their way, which in turn, (given all government ministers responsible for WHS have agreed to the above), will result in changes across the jurisdictions.

The extent of the changes will not be known until the amendments have been released.  As we have often seen though, each jurisdiction can choose to implement a variation of the amendments and for some this may be necessary as there are jurisdictions which already have broader incident notification frameworks aimed at psychosocial hazards and related psychological injuries and illnesses.

When the changes are announced in the jurisdictions, duty holders will need to review, consider and likely adjust their internal arrangements for incident notification, including any with other duty holders.

Ultimately, with changes to the incident notification framework comes a likelihood that incident notifications will increase, providing greater visibility to regulators of what is occurring at the workplace.

[1] ‘Recommendations agreed to improve incident notification provisions’, Safe Work Australia (2 August 2024).

[2] Page 42 of the Consultation Paper.

[3] When a notifiable incident has occurred, the person with management or control of the workplace is required to ensure, so far as is reasonably practicable, that the site where the incident has occurred is not disturbed until an inspector arrives at the site or any earlier time that an inspector directs: section 39, model WHS laws.

[4] Page 47 of the Consultation Paper.

[5] Pages 38, 40 and 46 of the Consultation Paper.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

While there has been much discussion about some of the changes arising out of the Closing Loopholes reforms, an area that has received relatively little attention, but which may have a big impact, is the Fair Work Commission (FWC)’s new unfair contracts jurisdiction, commencing on 26 August 2024.

This new Part of the Fair Work Act 2009 (Cth) (FW Act) establishes a framework for dealing with alleged unfair contract terms within services contracts.  This is new territory for the FWC, which has not previously had a role in regulating the relationship between principals and independent contractors in this way.

What does the new jurisdiction involve?

A person who is a party to a services contract (or their union) will be able to apply to the FWC for an order granting a remedy because of an unfair contract term in a services contract.

Such an application can only be brought on behalf of a person who earns less than the independent contractor high-income threshold [1].  This amount will be prescribed by the Fair Work Regulations, but is anticipated to be set at a similar, if not the same, level as the high-income threshold for employment purposes.

Not all terms of a services contract may be challenged as being unfair.  Rather, only terms which in an employment relationship would relate to “workplace relations matters” are open to be assessed by the Commission for unfairness. Workplace relations matters take a defined meaning, and include matters such as remuneration, hours of work, and termination.

If the FWC is satisfied that a services contract includes one or more unfair contract terms, it can make an order to either:

• set aside all or part of a services contract; or
• amend or vary all of part of a services contract.

What about the Independent Contractors Act 2006 (Cth)?

These upcoming changes to the FW Act may, at first glance, appear to impede upon the territory of the Independent Contractors Act 2006 (Cth) (IC Act), which is similarly concerned with protecting and recognising the freedom of contractors that enter into services contracts.

However, the provisions within the IC Act have rarely been used, for reasons including because it is viewed to be relatively inaccessible for contractors seeking recourse for unfair contract terms, because of the inherent costs in bringing an application in the Federal Courts.

The FW Act will provide similar grounds to what is presently in the IC Act for assessing whether services contracts are unfair and also offer similar remedies (relevantly, the ability to vary or set aside a services contract).

The unfair contracts jurisdiction in the FW Act has been introduced with the intention of operating as a cheaper, faster and more accessible means for contractors (earning less than the threshold amount) to obtain relief for unfair contracts terms. To take into account the new framework in the FW Act, from 26 August 2024, the IC Act will also be amended so that only contractors earning above the contractor high-income threshold can pursue remedies under the IC Act.

Importantly, there are a number of fundamental differences between the two Acts, including that:

• the relevant review body under the IC Act is the Federal Courts (as opposed to the FWC under the FW Act);
• the IC Act applies to services contracts entered into on or after 1 March 2007 (as opposed to services contracts entered into on or after 26 August 2024, under the FW Act); and
• only a party to the contract can make an application under the IC Act (as opposed to an industrial organisation’s ability to make an application under the FW Act).

Given this, it is expected that there will be an increase in unfair contract claims from independent contractors.

How the FWC will approach the task of determining unfair contract terms

The establishment of an unfair contracts jurisdiction within scope of the FWC’s powers is an interesting development in industrial relations law, that seeks to expand the protections contained within services contracts, when independent contractors historically have had limited access to certain rights and entitlements that employees did, particularly under the FW Act.

For the first time, the FWC has capacity to look at – and set aside, vary or amend – the terms and conditions governing working relationships outside of employment.

In determining whether a term of a services contract is unfair, the FWC may consider:

• the relative bargaining power of the parties;
• whether the contract as a whole displays a significant imbalance between the rights and obligations of the parties;
• whether the term is reasonably necessary to protect the legitimate interests of a party;
• whether the term imposes a harsh, unjust, or unreasonable requirement on a party;
• whether the total remuneration for performing work under the contract is less than that of regulated workers or employees performing similar work; and
• any other relevant matter the FWC considers appropriate.

While the relative bargaining power of the parties will be assessed as at the time that the services contract was formed, the remaining factors, going to the question of whether the contract terms, are unfair are assessed at the time the FWC hears the application.

The FWC is empowered with a broad discretion to set aside, amend or vary a services contract. While the FWC cannot award compensation for an unfair contract, an order could include a variation to the services contract to increase payments made to a contractor.

Notwithstanding that this is a new jurisdiction for the FWC, it has indicated that it will have regard to previous jurisprudence on unfair contract terms in other jurisdictions.

In particular, there are cases of the Federal Court of Australia where services contracts have been varied to provide for new terms which have the effect of providing additional benefits under the contract.  For example, in a matter involving the termination of the services contract between an independent insurance agent and the principal insurance company that engaged them, the Court decided that the terms dealing with termination were unfair and made an order varying the contract to provide for payment of an amount $5,000 triggered upon termination of the services contract. The variation had the practical effect of providing the contractor with compensation.

Orders made by the FWC varying or setting aside contract terms cannot be enforced by the FWC.  If there is not compliance with the terms of the services contract as varied, the enforcement of that contract would be pursued through the Courts.

What this means for business

Given the informality and accessibility of the FWC process, it’s likely that businesses will face increased litigation from contractors.

This expansion of the law poses additional challenges for businesses as they will need to re-evaluate and potentially consider amendment of their current services contract terms to mitigate any claims of unfairness in the terms.

[1] At the time of publication, the independent contractor high-income threshold is not yet available.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

Section 596 of the Fair Work Act 2009 (Cth) (FW Act) provides that a party to a proceeding before the Fair Work Commission (FWC) may be represented only with the permission of the FWC. It follows that parties seeking to be represented in the FWC are routinely directed to make submissions addressing the criteria set out in s.596(2) of the FW Act.

Historically, this has included disputes brought under s.739 of the FW Act which relate to a dispute resolution procedure (DRP) in an industrial instrument. However, in a recent decision of the FWC in Martin Nash v PHI (International) Australia Pty Ltd [1], a party to a dispute was refused permission to be represented based on the drafting of the DRP, which the Member held only allowed for the initiating party (in this case, the employee) to be represented.

The facts

Three casually employed pilots raised a dispute with their employer under the DRP in their enterprise agreement. The dispute concerned pay-related issues that were not resolved at the workplace level. The employees filed proceedings in the FWC and were represented by their union.

The Respondent employer made a jurisdictional objection to the proceedings, sought permission to be legally represented at the hearing of their objection and made submissions pursuant to s.596(2). The Applicants objected to the Respondent’s application on the basis that the DRP did not allow the Respondent, as the ‘non-initiating party’ to the dispute, to be represented.

The relevant clause in the enterprise agreement stated:

“A person(s) initiating a dispute may appoint and be accompanied and represented at any stage by another person, organisation or association, including a Union representative or Company association in relation to the dispute…”.

Deputy President O’Keefe considered the DRP had used ‘plain and unambiguous language’ to require that only the party initiating the dispute could be represented. In the absence of a specific right for a non-initiating party to be represented, the Deputy President refused the employer’s application.

In his reasoning, the Deputy President noted he would have granted permission if ‘based solely on s.596(2)’.

Interaction of the Dispute Resolution Procedure and the FW Act

In deciding against permitting representation for the employer (as the non-initiating party), the FWC referred to relevant case law concerning the interaction between a DRP and the FW Act. The Deputy President purported to rely on the decision of Commissioner Hampton (as he then was) in Shop, Distributive and Allied Employees Association v Woolworths (South Australia) Pty Ltd & Woolworths Group Ltd [2] as authority for the finding that a DRP can in effect, limit ‘the operation of s.596(2) and thereby the FWC’s discretion regarding representation’. He found that limitations imposed by the parties to an enterprise agreement can in effect override the way the FW Act would otherwise require the FWC to deal with private arbitration matters.

Insights

It is common for DRPs in modern awards and enterprise agreements to provide that a party to the dispute may be represented in any step of the procedure. Indeed, this standard DRP clause in modern awards arguably includes an express right to representation.

Yet even in those circumstances, parties will routinely be directed by the FWC to file submissions addressing the criteria in s.596 of the FW Act, if seeking leave to be represented. Where parties have made submissions in respect of the express right to representation in the DRP they have at times been left unanswered or given little consideration and permission is granted under the provisions of the FW Act.

This recent decision of Deputy President O’Keefe may seem to be somewhat out of step with this routine practice of the FWC. However, the Deputy President’s decision is compelling as it places the agreement between the parties as to the powers and limitations of the FWC in private arbitration as paramount.

Key takeaways

The decision is a timely reminder for parties negotiating an enterprise agreement to pay close attention to the drafting of their agreement and in particular, to the DRP and include a provision allowing for representation. Parties who have negotiated an express right to representation now have a precedent to rely on when seeking to be represented pursuant to the terms of the DRP, as agreed between the parties to the dispute.

[1] [2024] FWC 1795

[2] [2021] FWC 617

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

July 22, 2024

June 24, 2024

From July 1 Kingston Reid, not yet 5 years old, will further consolidate its position as Australia’s largest specialist workplace law firm with the elevation of three Special Counsel to Partnership, bringing the firm’s National Partnership to 16. Managing Partner Alice DeBoos said it “is an exciting time, as we continue to expand and build for the future”.

Indicative of the firm’s national footprint, Brad Popple, Emily Baxter and James Parkinson hail from different offices (Melbourne, Sydney and Perth respectively), and are each “fabulous embodiments of the Kingston Reid way…… completely dedicated to the firm, our team and our clients” said DeBoos, adding that “these three will greatly enrich our partnership and our firm into the future”.

Brad, Emily, and James support their clients across workplace relations and employment matters, in both advice and litigation. But where similarities in their expertise may exist, each brings their own character to the practice of law and the expression of Kingston Reid’s values.

“It’s a really interesting time in employment and industrial relations law, and I’m proud to be able to help our clients stay at the cutting edge of navigating the challenges” shared Brad Popple. “Kingston Reid is unique in having a large national team of lawyers who are so intensely curious and passionate about what we do, and I’m looking forward to contributing as a Partner” Popple says.

“I am delighted to be joining the ranks of such frank, fearless, and fantastic Partners at Kingston Reid who are experts in their field and whose focus is on delighting and achieving the best outcomes for clients” Emily Baxter explains. “I enjoy my work as a lawyer and am passionate about solving problems and resolving legal issues. The dynamic and fast-paced nature of employment and industrial law in Australia makes for an exciting and challenging opportunity and I am looking forward to navigating the complexities and delivering innovative solutions for clients as a Partner at Kingston Reid”.

“With a significant amount of recent change and more on the horizon, workplace relations is at an intriguing crossroads” says James Parkinson. “I am honoured to join Kingston Reid as a Partner and continue walking in our clients’ shoes, alongside some of the most talented and professional legal practitioners in this space” Parkinson shared.

In addition to the newly minted Partners, three more lawyers have been promoted to Senior Associate, further demonstrating the firm’s commitment to developing legal talent and rewarding individual effort. Marcus Topp, Kat Weston and David Perrozzi (Melbourne, Sydney and Perth respectively) “demonstrate our core values through their approach to work, client service and their loyalty to firm and their colleagues” said DeBoos. “Kingston Reid’s collective success has enabled growth to the extent that we can promote six individuals this year, and I’m exceptionally proud of that fact”.

June 14, 2024

On 4 June 2024, the Work Health and Safety Amendment (Industrial Manslaughter) Bill 2024 (WHS Bill) was introduced into the NSW Legislative Assembly to amend the Work Health and Safety Act 2011 (NSW) by creating an offence of industrial manslaughter. If passed, the WHS Bill will set some of the highest WHS penalties in Australia, with individuals found guilty of industrial manslaughter facing up to 25 years in prison, while corporations could be fined up to $20 million.

The proposed offence

NSW is one of the last mainland states to introduce a dedicated industrial manslaughter offence, aligning it with other states that have already enacted similar laws. Under the WHS Bill, the proposed offence will be committed where a person:

• has a health and safety duty; and
• is a person or an Officer of a person, conducting a business or undertaking (PCBU); and
• engages in certain conduct, by an act or omission, that caused the death of a worker or another individual, to whom the person’s health and safety duty is owed; and
• engages in conduct with gross negligence.

As made clear in the second reading of the WHS Bill, the proposed offence will cover those individuals whose behaviour or decisions have the power to influence the activities and culture of a workplace (i.e. officers of a PCBU).

Interestingly, the WHS Bill attempts to provide guidance on when a body corporate may be considered grossly negligent. According to the WHS Bill, a PCBU may be grossly negligent if there is inadequate corporate management, control or supervision of the conduct (act or omission) of one or more authorised persons (defined in the existing WHS Act as an officer, employee or agent acting within their actual or apparent authority), or a failure to provide adequate systems for conveying relevant information to relevant persons within the body corporate.

This formulation is unhelpful and creates more questions than answers. For example, conduct may be readily established where multiple rogue individuals do not adhere to systems implemented or promoted by the business, exposing the PCBU and other officers. The Bill does not define what constitutes inadequate corporate management, control and supervision. Additionally, there is no clear standard for what makes a system for conveying information inadequate or who the ‘relevant persons’ are within the body corporate.

Other notable sections of the WHS Bill

No time limitation period for prosecutions: There is no limitation period for prosecuting industrial manslaughter offences. This means that legal proceedings can be initiated at any time following the offence.

Alternative verdicts: If a prosecution for industrial manslaughter is initiated and the court finds the individual or PCBU not guilty of industrial manslaughter, the court may still convict for a Category 1 offence, even if the time limitation period for a Category 1 offence has lapsed. This alternative charge is consistent with industrial manslaughter provisions across Australia. However, unlike other industrial manslaughter laws, NSW’s proposed provisions lack the requirement to afford the defendant procedural fairness concerning the alternative Category 1 offence.

Exemption for volunteers: The industrial manslaughter offence is not intended to apply to volunteers.

Enforceable undertakings: Enforceable undertakings cannot be accepted by the regulator for contravention of an alleged industrial manslaughter offence. This is consistent with the current approach taken to Category 1 offences.

Establishment of special unit: In addition to the WHS Bill, the NSW Government proposes to establish a special unit within the Office of the Director of Public Prosecutions that will be responsible for prosecuting industrial manslaughter cases.

Increased penalties

Under the new bill, individuals found guilty of industrial manslaughter could face up to 25 years in prison, while corporations could be fined up to $20 million. These penalties are significantly higher than the current maximums under the WHS Act, which are $399,479.85 and/or five years’ imprisonment for individuals, and $3,992,492.70 for PCBUs. The highest court-imposed WHS fine to date stands at $2,025,000. The new industrial manslaughter laws represent a dramatic increase in the maximum penalties.[1]

Below is a comparison of industrial manslaughter penalties across the Australian jurisdictions:[2]

Implications for Employers

While the new industrial manslaughter laws do not change the obligations of individuals and PCBUs duties under the WHS Act, the significant penalties that will apply following conduct that causes the death of a worker heightens the importance of taking a proactive approach to meeting those duties.

The duties under the current WHS Act already require individuals and PCBUs to ensure the health and safety of workers and others affected by their operations, as far as is reasonably practicable. These duties remain unchanged with the introduction of the industrial manslaughter laws. These laws only introduce more severe penalties for breaches that result in fatalities, but also create uncertainty in relation to what exact conduct will constitute gross negligence by way of inadequate corporate management, control or supervision of the conduct or authorised person(s) or the failure to provide adequate systems for conveying relevant information to relevant persons. The WHS Bill is yet to be debated in Parliament, and changes may occur during this process. Kingston Reid will provide updates as the changes develop.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

[1] As at June 2024. Penalties will increase in July 2024.

[2] As at June 2024.

June 13, 2024

The recent case of SafeWork NSW v Miller Logistics Pty Ltd; SafeWork NSW v Mitchell Doble [2024] NSWDC 58 (Doble) contrasts the challenges and complexities directors face in fulfilling their WHS due diligence obligations. While Doble serves as a good example of the due diligence expectations placed on directors, it also highlights the impracticality of relying solely on direct involvement, particularly in day to day WHS matters, as evidence of exercising due diligence for directors overseeing large and diverse business operations.

In Doble, the sole director of Miller Logistics Pty Ltd was accused of failing to exercise due diligence under section 27 of the Work Health and Safety Act 2011 (NSW) (WHS Act). The court found that Mr Doble had taken significant steps to ensure compliance with his due diligence obligations. He regularly attended management meetings where WHS was a standing agenda item, engaged in discussions about safety measures, and followed up on their implementation. Furthermore, Mr Doble ensured that the business had a WHS manager responsible for updating policies and procedures and addressing WHS issues promptly.

The court acknowledged that Mr Doble had engaged a competent WHS manager and took an active role in ensuring WHS compliance. Consequently, the court found that he had not breached section 27 of the WHS Act. While Doble provides PCBUs with some guidance on directors’ duties under section 27 of the WHS Act, there remains limited guidance from Australian courts on how directors of larger organisations, with extensive operations and numerous employees, can sufficiently discharge their duty of due diligence.

Even with the guidance now provided in Doble, ambiguity remains for larger organisations. This is partly because safety regulators around Australia historically have prosecuted directors who were directly involved in the events leading up to the incident. Many directors charged under section 27 were often ‘on the tools’. That is, they were actively engaged in the operational task leading to the incident. This direct involvement makes it easier for safety regulators to link the risk to the acts or omissions of the director.

Doble was a rare case in which the director who was prosecuted was not directly linked to the incident. Although Mr Doble was directly involved in WHS matters, the case highlights a key issue: a managing director cannot practically be aware of everything occurring at any given moment within the company. Managing an organisation, especially a large and diverse one, necessitates a high level of delegation. Therefore, to what extent does Doble provide guidance to large companies and organisations with complex, vertically integrated businesses? The answer is very little.

A review of case law over the past decade shows that in all cases involving the prosecution of a director, the director was almost always both ‘hands-on’ and the sole director.  To date there has not been a WHS prosecution in Australia of a director of a large company failing their due diligence duties under any model WHS laws. The lack of guidance for large corporate or ‘professional’ directors has led to some ambiguity about the extent of directors’ duties in large organisations.

Given that Doble is the first recent case dealing with a ‘hands-off’ director, further questions arise about the obligations of directors of large companies.

The reality is that many of the measures safety regulators provide guidance on are either vague or simply impracticable for large companies and organisations with multiple directors or officers overseeing diverse business operations.

Unlike the company in Doble, many large companies or organisations operate across multiple industries and geographical locations, employing hundreds or thousands of workers. This vast and dispersed workforce makes it impracticable for directors to be intimately involved in every aspect of WHS detail. Directors of such companies are responsible for strategic oversight and governance rather than day-to-day operational details.

Mr Doble’s direct involvement in WHS matters was feasible due to the company’s size and structure. He attended management meetings, engaged in discussions about safety measures, and ensured the implementation of WHS policies. However, replicating this level of personal involvement in a large, multi-layered organisations is simply unrealistic. Directors of large companies are typically required to oversee multiple business units, each with its unique set of WHS challenges.

Fortunately, the WHS Act does not require directors to personally manage every aspect of WHS in the business, but instead, to exercise due diligence, which can in part be achieved through appropriate delegation to persons who are competent. Large corporations employ specialised WHS professionals whose expertise and focus are dedicated to maintaining compliance with the WHS Act, with adequate consultation and oversight by directors.

The Doble case underscores the necessity for directors to be actively engaged in WHS compliance but also highlights the practical challenges faced by directors of larger corporations and organisations.

Further guidance will assist directors to understand the measures they need to take to meet their duties under the WHS Act. This is even more important now with various amendments and proposed amendments in different jurisdictions to include provisions whereby the conduct and/or attitudes of key individuals will be determinative of corporate cultures of their organisations.

Organisations should review their governance structures and assurance processes so as to arm their officers with the requisite tools to meet due diligence responsibilities.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.