A recent Federal Circuit Court case* found that both the employer and the HR Manager had contravened the Fair Work Act (FWA) with the effect that both may face penalties for the contravention.

The case involved an employee who worked in a South Australian plant of a large glass bottle manufacturer. The employee sustained a shoulder injury at work. Following a significant period of time involving workers compensation and rehabilitation, the employer and the employee entered into a new contract. The new contract was for a modified role taking into account the employee’s limitations resulting from the injury. Nearly a year and a half after this arrangement was put in place the employer was advised by WorkCover SA that they no longer needed to provide alternative arrangements for the employee. The employer, through the HR manager, provided the employee with a termination letter and failed to pay out the full notice the employee would have been entitled to under the FWA.

The employee brought the case on the basis that the employer had failed to abide by the FWA notice provisions. Both the employer and the HR Manager were listed as Respondents in the matter. The defence raised on their behalf was founded on a legal principle called the doctrine of frustration. The employer argued that the contract of employment was unable to be performed by the employee, and had come to end on this basis. The employer argued that the effect of this was that they were not obliged to comply with the notice provisions.

Judgment was made in favour of the Applicant employee, with Judge Simpson saying that the actions of the parties demonstrated that the alternative role was intended by both to be ongoing. Judge Simpson found that it was the notification from WorkCover SA that caused the employer to take the steps it did. If the contract had been ‘frustrated’ there would have been no reason for the employer to provide a termination letter with a termination date four weeks in advance. The result of this is that the employer had breached the FWA by failing to pay out the employee’s notice.

The other interesting aspect to the case is the use of the accessorial liability provision in the FWA. We have written about this mechanism previously. Put simply it provides that an action may be brought against others involved in a contravention. The key word is ‘involved’. In this case, the HR Manager was held to be involved in the underpayment of the employee’s notice entitlements.

A further hearing will determine what penalties and other orders will be made in respect of the matter.

 

Sarah Waterhouse

Solicitor

BlandsLaw

 

*Cerin v ACI Operations Pty Ltd & Ors [2015] FCCA 1654