Satisfactory medical evidence – what can an employer disregard?

In a decision likely to gain more attention because of its novel facts than its legal principles, the Federal Magistrates Court has ordered the reinstatement of an employee who was terminated on the basis that the employer did not accept the veracity of the medical certificates provided.  However, the case represents an important warning to employers about how ‘satisfied’ they must be in order to accept that an employee is medically unfit to work.

The decision on 19 November 2012 by Federal Magistrate Whelan, Marshall v Commonwealth of Australia (Represented by the Bureau of Meteorology) [2012] FMCA 1052, involved an application by the applicant, Adam Marshall (the Applicant), under the general protection provisions of the Fair Work Act 2009 (FW Act). 

The Applicant, who was engaged as a weather observer with the Bureau of Meteorology, alleged that the termination of his employment by the employer contravened section 340(1) of the FW Act, as it constituted adverse action by the employer because he had exercised his workplace right to take sick leave in accordance with an enterprise agreement, based on a diagnosed adjustment disorder.

The employer rejected this allegation, and argued that the Applicant was not medically unfit, or that he had not provided ‘satisfactory’ medical evidence, as at the same time he had advised the employer he could not attend work for normal duties, his treating doctors had certified him as fit to attend the auditions of the reality television show Beauty and the Geek.

The seemingly contradictory position, which included untrue statements from the Applicant to the television show that he had a ‘clean bill of health’, was explained by the Applicant’s doctor on the basis that ‘going on the show wouldn’t necessarily trigger or aggravate those symptoms’ and that ‘the environment of the ‘Beauty and the Geek’ would have been quite different and possibly could have been beneficial’.

In arguing that the Applicant was not medically unfit, or had provided satisfactory medical evidence, the employer relied on the decision in Anderson v Crown Melbourne Ltd [2008] FMCA 152 (Anderson), where the Court disregarded the medical evidence that was provided by an employee, as it appeared that the evidence was a ‘sham’ and simply obtained to allow the employee to travel to Perth to watch a football game. 

In the present case, the Court distinguished Anderson as being particular to its own facts, as it involved a calculated attempt to deceive the employer that the employee was medically unfit, when this was not the case.

The Court accepted as truthful and reliable the evidence of the Applicant’s doctor that the Applicant could be not fit for normal duties, but fit to audition for the television show, and did not accept the employer’s assertion that the Applicant deliberately manipulated his treating doctors into providing their diagnosis.  On this point, the Court remarked that ‘it is not difficult, also, to see why he was considered to be a suitable candidate for ‘Beauty and the Geek’.

Given the finding that adverse action was taken in breach of section 340, the Court ordered that the Applicant be reinstated to his position (with no loss of pay), as there had been no other performance issues or reasons why he would not be able to continue in his role.

Novelty aside, the case presents a reminder to employers that establishing that medical certificates are a ‘sham’ remains very difficult, and, despite what they may privately believe about the ‘truthfulness’ of a certificate, it will only be in extenuating circumstances that a Court will be prepared to ‘look past’ the evidence of a medical practitioner who certifies that an employee is unfit.

Circumvention of TUPE rules in Germany

In case of a transfer of undertakings, the employer in the purchaser’s company must - generally speaking - take over all employees’ employment relationships on unaltered conditions. Especially if the seller is in economic trouble and needs to find a purchaser quickly, this obligation worsens the seller’s position. Therefore, sellers tried to avoid this consequence by choosing the following construction: The selling company and the employees (represented by their works council) agree that the employees enter into a so-called “employment and qualification company”. The purchaser then acquires the assets with no employees clinging to them as no employees remain in the company and re-hires the required employees in a second step from the “employment and qualification company”. Therefore the purchaser may argue that agreeing on employment conditions to the detriment of the employees is possible as the TUPE rules are not applicable.

In a recently decided case the seller and the purchaser chose the aforementioned construction. However, the agreement provided that the employment with the seller should terminate on 31 May 2008 and that a new contract with the “employment and qualification company” should be entered into on 1 June 2008, 0.00h. The third part of the contract provided that the employee should enter into an employment relationship with the purchaser on 1 June 2008, 00.30h, e. g. with a fixed term instead of an open-ended employment contract. The German Federal Labour Court deemed the contractual construction invalid due to the circumvention of the TUPE rules. The court ruled that the construction’s main purpose was to interrupt the employment relationship’s continuity while the employees should obviously ultimately enter into the purchaser’s company on deteriorated conditions. The employees in the decided case therefore could enforce TUPE rules on their employment relationship. 

A TUPE can still be avoided by the aforementioned construction under the use of an “employment and qualification company”. For the avoidance of an invalid circumvention of TUPE regulations, it needs to be uncertain, however, if, how many and which employees the purchaser will re-hire.

No work no pay does not apply to full time shop stewards! (SA)

This case dealt with whether three full-time shop stewards were entitled to their salaries during a protected strike, where the “no work no pay” principle was applied to the striking employees by the employer. 

The contentious issue was that in terms of clause 2.5 of the South African Local Government Bargaining Council Main Agreement (main agreement) which the parties were bound by, every trade union has the right to elect full-time shop stewards who will be remunerated on the basis of the post they held at the time of their election.

In other words, full-time shop stewards, although considered employees and paid by the employer, are present at the workplace to act in the best interests of and carry out the official duties of the union.

Full-time shop stewards subject to the main agreement do not carry out any work related activities of the employer, although they are bound by the same conditions of service, policies, rules and regulations which apply to other employees. 

In this case the three full-time shop stewards maintained that they duly attended at work during the period of the strike and that they did not participate in the strike. 

In the result the Court found that the three full-time shop stewards were at work and were accordingly entitled to their salaries.  The Court also awarded SAMWU costs, including the costs of their Senior Counsel.

Employers must be cognisant of the rules and agreements that regulate their relationship with the union and strictly adhere to them.  

Share and share-a-right? (UK)

Following George Osborne, the Chancellor of the Exchequer’s announcement at the Conservative Party Conference last month, the government has issued a consultation paper on its shares for rights proposal: Consultation of implementing employee owner status.  This consultation paper sets out plans for a third employment status in addition to employee and worker which will be called an “employee owner”. The intention is that this status will provide companies with a new option to increase the flexibility of how they hire people and help their companies grow.

Under the new employment status, employee owners will have a different set of employment rights and will be able to accept between £2,000 and £50,000 worth of company shares. The sale of the shares will be exempt from Capital Gains Tax, but to prevent an employment tax charge, the employee may have to pay for the shares. Employee owners will have all of the rights associated with other employees except for unfair dismissal rights, right to redundancy pay, the right to request flexible working and time off for training. Further, mothers will be required to provide 16 weeks’ notice of a firm date of return from maternity leave instead of the usual 8 weeks’ notice.  The consultation paper envisages that the arrangements in relation to the shares would be a contractual matter between the employer and the employee, most likely to be structured using an employee share scheme.

Current employees will have the option as to whether they enter into such a scheme if it is offered by their employer; however, employers may choose to offer only that type of employment contract to new recruits. According to the government, this proposal is “principally intended for fast growing small-and medium-sized companies that want to create a flexible workforce”. Some companies, however, have spoken out against the scheme, warning that it is likely to deepen public mistrust of business and result in increased costs and stress. Some large companies have already indicated that this new type of arrangement will not work for them and many employers will be deterred by the cost of running an employee share scheme. Further, many have commented that it is unlikely that small businesses or family run businesses would be willing to give away a slice of their ownership.

Some employers have, however, backed the proposal, arguing that it will help smaller businesses attract young people with the incentive of shares as part of the wage package. In addition, it will allow companies to operate more flexibly in terms of making personnel changes, while minimising the risk of lengthy legal battles.

The consultation paper has requested views on the level of guidance or advice required for employees to understand what rights they are giving up. Under the current system, when employees sign away their employment protection rights upon termination of employment under a compromise agreement, they must receive legal advice as to the terms and effect of the compromise agreement from an independent legal adviser. The consultation paper does not mention such a scheme, but it would be surprising if employee-owners were not protected in a similar way.

The deadline for responses to the consultation was 8 November 2012 and the Government’s response is awaited. In any event, it is unlikely that these changes will come in to force before April 2013 as its implementation will undoubtedly require a significant change in primary legislation, which will no doubt provoke further debate and discussion.

Proposed amendments to Unfair Dismissal laws

On 30 October 2012, the Federal Government introduced new amending legislation to the Fair Work Act 2009 (FW Act), through the Fair Work Act Amendment Bill 2012 (Amendment Bill).

In a media release, the Minister for Employment and Workplace Relations announced that the Amendment Bill would implement a number of the recommendations from the Fair Work Act Review Panel.  The Government is still in the process of considering the remaining Review Panel recommendations.  Some of the key changes in the Amendment Bill are to unfair dismissal laws, which are proposed to be amended as follows:

• Amending section 394 to provide employees with 21 days from the date of termination, rather than 14, to file an unfair dismissal claim;
• Including a new section 399A, which provides an express power for Fair Work Australia (FWA) to dismiss an unfair dismissal application where an applicant fails to attend a conference or hearing, fails to comply with a direction by FWA, or fails to discontinue an application after settlement has been reached;
• Including a new section 400A, which provides FWA with the discretion to award costs against a party (i.e. the employer or employee) where the party has caused costs to be incurred by the other party, due to an ‘unreasonable act or omission’; and
• Amending section 401(1), to provide FWA with the discretion to award costs against a lawyer or paid agent who would be required to seek permission to appear before FWA under section 596.  This proposes to amend the existing position which only permits costs to be awarded ‘if FWA has granted permission’.

The last point is intended to clarify the current situation where FWA has held it does not have jurisdiction to award costs under section 401, on the basis that the offending party has not yet sought permission to appear before FWA, for example because a hearing had not yet taken place. 

For example, in Department of Education and Early Childhood Development v A Whole New Approach [2011] FWA 8040, Gooley C held that costs could not be awarded, as while the paid agent representing the employee had assisted in making the unfair dismissal application and engaged in correspondence with the Department (causing costs to be incurred), at the time the application for costs was made (after the matter had been discontinued), a hearing had not occurred and hence the paid agent had not yet sought permission to appear under section 596.

These changes, as drafted, are unlikely to create significant changes for either employers or employees.  Firstly, the extension of the filing period under section 394 will simply reflect the fact that FWA will often extend the period of time made for out of time applications (see for example the recent case of Patricia Bucknor v Aero-Care Flight Support Pty Ltd [2012] FWA 9059), where extenuating circumstances exist. 

The most significant development may be the potential for costs orders to be sought against an employer’s lawyers who assist in defending unfair dismissal claims.  Section 401(1) will now expressly state that costs may be awarded against a representative if the representative encourages the person (i.e. employer) to ‘respond to’ the matter, where there are no reasonable prospects of success.

The wording of the new amendment to section 401 will continue to exclude those lawyers and/or paid agents who are not required to seek permission to appear – such as union representatives.