05 Sep 2019

#fired! What does the High Court's decision in Banerji mean for non-APS employers?

By Jennifer Wyborn, Caroline Beasley

Private sector employers should continue regulating their employees in accordance with established codes of conduct and contractual principles in a manner consistent with the established framework for regulating employees' out-of-hours conduct.

Over the years, the courts and legislature have tried to strike a balance an employee's right to a private life with an employer's right to protect itself from the impact of its employees' conduct in their personal capacity and out of hours.

This balancing exercise has never before been so prominent, particularly when it comes to an employer's ability to regulate employees' personal use of social media. Two recent cases highlight this difficulty, and we explore below what private sector employers can take from these decisions.

The decision in Banerji

On 7 August 2018, the High Court handed down its highly anticipated judgment in Comcare v Michaela Banerji [2019] HCA 23 and found that an APS employee's anonymous tweets can breach the APS Code of Conduct and justify termination of employment.

For Ms Banerji, this decision meant that the termination of her employment for anonymously sending over 9000 tweets which were critical of her employer, the Department of Immigration and Citizenship, as well as immigration policies of the day, was valid.

In reaching this conclusion, the High Court was clear that even where an APS employee's personal use of social media was anonymous, and therefore possibly more difficult to link back to their APS employment, this use may still breach the APS Code of Conduct.

What about non-APS employers?

In our view the High Court's decision will have little relevance for most private sector employers. The relevance of this decision depends on whether the employment relationship is regulated by legislation or not, and whether a code of conduct applies to that particular relationship.

Doesn't everyone have a right to free speech?

No, and Ms Banerji was not arguing for this. The main argument put forward by Ms Banerji was that her termination breached the implied freedom of political communication. The implied freedom is not a personal right to free speech such as that in the United States because of the First Amendment. Rather, it operates to restrict legislative power. As such, where employment relationships are not regulated by legislation, the implied freedom will not apply to limit the extent to which employees' conduct can be regulated, and the comments of the High Court in Banerji will not be directly relevant.

My employees are regulated by a Code of Conduct like Ms Banerji… is the decision relevant to me?

Not necessarily… although like many other employment relationships the APS has a code of conduct which applies to regulate its employees' conduct, the legislative basis of the APS Code of Conduct was critical to its interpretation as valid by the High Court in Banerji.

In all of the judgments in Banerji, their Honours emphasised the role of the APS Code of Conduct in facilitating the objects of the Public Service Act in finding that the sections which applied to Ms Banerji's conduct were lawful. Where a code of conduct exists which is not supported by legislation in the same way as the APS Code of Conduct, the decision in Banerji will not apply to support the validity of that code of conduct.

My employees are covered by legislation ‒ will the decision apply?

Maybe. Even where legislation does apply to a private sector employment relationship, the implied freedom may not apply in the same way to those particular circumstances as it did in Banerji. Whether the implied freedom is relevant to regulation of employee conduct will require consideration whether any burden imposed on the implied freedom by law that applies to the employment relationship is "justified".

In Banerji the legislative tradition of the Public Service Act and the constitutional references to representative and responsible government which it supported were critical in the High Court finding that the burden imposed by the APS Code of Conduct on the implied freedom was "justified". It may not be the case that other laws relevant to an employment relationship are justified in the same way.

Why should I care about the decision?

While private sector employers may not be able to apply the Banerji case directly to their circumstances, we think that they can take comfort from the decision in a broad sense. The decision was a strong statement by the High Court that employers can regulate their employees' out-of-hours behaviour in a where it is damaging to the employer. The fact that it was a unanimous verdict from all seven judges adds to the significance of this case.

Can Israel Folau learn anything from the outcome in Banerji?

At the same time as the Banerji litigation has been unfolding this year, another high-profile case concerning social media use by employees has been in the headlines. Former Wallabies player Israel Folau was sacked by Rugby Australia for breaching its Code of Conduct by expressing his religious views on social media, including Twitter and Instagram. Rugby Australia argued that Folau's views were inconsistent with the values of the sport.

Unlike in Banerji, Folau is running a case on the basis that his termination was unlawful because it was on the basis of his religion, rather than on the basis of the implied freedom of political communication (in any event this argument would not be open to him). In a directions hearing in the Federal Circuit Court on 13 August 2019 the parties were encouraged to settle at a mediation which is scheduled for December. If that fails, a hearing will likely take place in February 2020. Folau's legal representatives have not ruled out settling the matter ahead of a hearing, and have emphasised that Folau would be most appreciative of an apology from Rugby Australia (although Folau is also claiming millions of dollars).

Although for the reasons set out above the Banerji decision is unlikely to be directly relevant to Folau's case, it may give some comfort to Rugby Australia because it shows that the High Court was sympathetic to the employer's ability to enforce a code of conduct to regulate an employee's out-of-hours conduct where that conduct was damaging to the employer.

In our view, if it goes to hearing, the final outcome of the Folau case will be most helpful to employers who are considering managing employees who may suggest that their religious views played a part in any management decisions. It is less clear whether employers seeking to regulate employees' out-of-hours conduct more generally will be able to draw specific lessons from this, but we think it is a matter of watching this space.

However, we note that any outcome in the Folau case may have limited effect in the face of potential new laws. In late August the government introduced three bills covering reforms to religious freedom. If passed into law, these bills would mean that large companies could lawfully impose conditions on employees which have the effect of discriminating against them on the basis of their religious beliefs or practices in particular circumstances. These bills are still being considered, and have been subject to criticism. We think that it will be a matter of also watching this space in relation to whether these reforms are passed into law.

What should private sector employers make of all of this?

The employment relationship is one based on trust and confidence and there is a long history of employers seeking to regulate their employees' conduct through contracts and codes of conduct.

As has been seen in Banerji, the particular context of the APS employment relationship means that employers in that space have legitimate ways to regulate employees' out-of-hours conduct to the extent that it may breach the APS Code of Conduct. While it is unlikely that most private sector employers, and Israel Folau, can take many specific lessons from this case, it does make clear that the High Court has strongly supported employers' ability to regulate their employees out-of-hours conduct.

Not much is known about the arguments that will be run in Folau's case at this stage, but we expect that the decision will be most helpful to employers in similar situations and are reserved about whether any decision made in that case will be relevant to employers seeking to regulate social media use by employees out of hours more broadly.

In short, private sector employers should continue regulating their employees in accordance with established codes of conduct and contractual principles in a manner consistent with the established framework for regulating employees' out-of-hours conduct, at least until there is a firm statement from the courts about steps that private sector employers can take in this space in the post-Banerji order.

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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.