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06 Aug 2010

Unfair dismissal: balancing employer and employee rights

by Joe Catanzariti

Employers now have guidance from Fair Work Australia on their rights to terminate employment where an employee's inability or an unwillingness to perform a job safely is evident.

The law regarding unfair dismissal can be complex due to the need to strike a balance between the rights of the employer and rights of the employee. Two recent cases before the Full Bench of Fair Work Australia have discussed this very issue and have handed down important decisions regarding the rights of the employer to terminate employment where an employee's inability or an unwillingness to perform a job safely is evident.

What are the inherent requirements of a position?

In order for an employer to lawfully dismiss an employee, there must be a valid reason for the dismissal related to the person's capacity or conduct. One such valid reason may be that an employee is no longer capable of performing the inherent requirements of their position. This raises interesting questions regarding the relationship between unfair dismissal and anti-discrimination laws.

The Full Bench in the recent decision of J Boag and Son Brewing Pty Ltd v Allan John Button [2010] FWAFB 4022 has provided some important guidance on how the inherent requirements of a job are to be assessed in determining whether there was a valid reason for an employee's dismissal.

The job, the employee, and the restricted duties

Mr Button was employed by Boags as a Brewery technician in June 2005.

Mr Button was born with a congenital defect in his bladder and requires the use of a drain for the rest of his life. In about March 2008 he was diagnosed with a hernia at the site of the drain. He was then placed on a restricted duties plan to ensure that he did not perform tasks that involved lifting weights above the limit specified by his doctor.

In October 2008 Boags arranged for an occupational therapy assessment which concluded he should continue on restricted duties. Further doctors reports and assessments indicated that Mr Button would have to be on restricted duties for an indefinite period. In July 2009 Boags decided that Mr Button could not perform the inherent requirements of his substantive role, could not be redeployed and therefore his employment should be terminated.

Mr Button applied to Fair Work Australia for an unfair dismissal remedy. Kaufman SDP held at first instance that there was no valid reason for Mr Button's dismissal. Kaufman SDP noted that ordinarily if an employee could not perform the inherent requirements of their role there would be a valid reason for dismissal, but the inherent requirements of Mr Button's role had been altered so that he was now able to perform them.

What must be considered - the requirements of the full job or of the modified position?

A critical point for the Full Bench to determine in this decision was the effect that a modification of a position following an employee's injury or incapacity has on the inherent requirements test.

The Full Bench held that Kaufman SDP's conclusion involved error because "when an employer relies upon an employee’s incapacity to perform the inherent requirements of his position or role, it is the substantive position or role of the employee that must be considered and not some modified, restricted duties or temporary alternative position". It held that the High Court's statement in the case of X v Commonwealth (1999) 200 CLR 177 – that it was the requirements of the particular employment, not some modified type, which must be considered – was relevant in determining whether there was a valid reason for dismissal.

The Full Bench held that it is well established that a valid reason is one which is “sound, defensible or well founded”, but not “capricious, fanciful, spiteful or prejudiced”.It noted that whether inability to perform the inherent requirements of the job is a valid reason for dismissal will depend on the circumstances of the case. In the present case, it was clear that both Mr Button’s position and his job had important features that he could no longer perform because of his lifting restriction. He was incapable of performing all of the inherent requirements of his job and, on balance, this constituted a valid reason for his dismissal. It was Mr Button's full position which had to be examined, not the modified position which he had been performing before his dismissal.

Kaufman SDP had further held at first instance that even if there had been a valid reason, the dismissal was harsh, unjust or unreasonable because Mr Button had satisfactorily worked with his disabilities for almost a year. The Full Bench held this was a relevant consideration, but it was not, of itself, sufficient to justify a conclusion that the dismissal was harsh, unjust or unreasonable. The Full Bench quashed the decision of Kaufman SDP and the matter was referred to Lawler VP to conclude.

Directions by employers and occupational health and safety considerations

The Full Bench has also recently examined an interesting situation where an Australia Post employee was dismissed after he refused to unload his truck on occupational health and safety (OHS) grounds in the case of Mr Wayne Darvell v Australian Postal Corporation [2010] FWAFB 4082.

Employees have a duty to obey lawful and reasonable directions from their employer, but a direction which would expose an employee to OHS risks may be considered unlawful or unreasonable, so the employee would not be required to obey it.

Facts

Mr Darvell's employment was summarily terminated by Australia Post after almost 20 years' service as a Postal Transport Officer. Mr Darvell was dismissed for a number of reasons, including his refusal to follow the directives of Australia Post in relating to unloading his truck, accepting an unlabelled package on one occasion and walking outside designated walkways.

He applied to Fair Work Australia for an unfair dismissal remedy. Hamilton DP dismissed his application on the basis that there had been a number of valid reasons for his dismissal. Mr Darvell appealed this decision to the Full Bench.

Was there a valid reason for dismissal?

The Full Bench held that Hamilton DP's conclusion that Mr Darvell's conduct constituted a valid reason for dismissal was reasonably open to him. A valid reason for dismissal existed because, similarly to Hamilton DP, the Full Bench was not persuaded that Mr Darvell had genuinely and reasonably believed he had OHS grounds to refuse to unload his truck.

This finding was based on Mr Darvell's actions and the surrounding circumstances leading up to his refusal. Following his refusal to unload his truck, Mr Darvell, acting as an OHS Representative, issued Australia Post with a provisional improvement notice (PIN) expressing his concern that Australia Post had failed to consult with employees over changes to loading practices.

The Full Bench held however that Australia Post had consulted on that exact issue just a month prior to Mr Darvell's issuing the PIN and he had refused to participate. To the Full Bench, "the fact that Australia Post had engaged in and further offered the very thing complained about in Mr Darvell's PIN … indicate that Mr Darvell's belief that he had occupational health and safety grounds to refuse to unload his truck was not genuine and/or reasonable".

The relevance of inconsistent treatment of employees

Mr Darvell further argued that Hamilton DP erred by failing to find the termination of his employment was harsh, unjust and unreasonable in circumstances where other employees had engaged in similar conduct but their employment was not terminated.

This ground of appeal centred on Mr Darvell's assertion that Hamilton DP had applied the wrong principle by placing the onus on Mr Darvell to prove that each instance of inconsistent treatment was not relevantly different to his case.

The Full Bench held that Hamilton DP's approach was consistent with the authority on this issue. It concurred with the views expressed in the decisions of Sexton v Pacific National (ACT) Pty Ltd and Daly v Bendigo Health Care Group that there must be sufficient evidence that the cases of employees are in truth properly comparable and also sufficient evidence to enable a proper comparison to be made. It was apparent that Hamilton DP had considered the issue of inconsistent treatment in his decision; Mr Darvell's poor performance record however had the effect that the cases were not comparable.

Implications

The decision in the Button case highlights that employers are able to place employees on restricted duties following an injury or incapacity without surrendering their right to dismiss the employee if it subsequently becomes clear that the employee will no longer be able to fulfil the inherent requirements of their full role.

The Darvell decision highlights that if an employee refuses a direction from their employer on OHS grounds, they must hold a genuine and reasonable belief that they are entitled to do so. Moreover, the case also highlights that while inconsistent treatment of employees may be an important factor, there must be sufficient evidence to enable a proper comparison and it is the dismissed employee who bears the onus of proving that the cases of differential treatment are relevantly similar.

These decisions have identified and outlined the right of the employer to terminate lawfully and fairly in circumstances where the employee cannot fulfil inherent requirements of their position, or refuses to obey lawful and reasonable directions. These findings, particularly coming from the Full Bench, establish useful guiding principles for employers who are in similar situations.

This article was written when Joe Catanzariti was a partner at Clayton Utz and does not necessarily reflect his views as Vice-President of the Fair Work Commission.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.