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13 February 2017 The Fair Work Commission - Has it lost its way?

By Warick Ryan, Partner

Trust - the key ingredient

There is no mystery as to what lies at the heart of healthy staff/management relationships in a business – the key is trust!  (See my December post)

So, what happens to employment opportunities in our country when the business community loses faith in the Fair Work Commission - the institution established to umpire those relationships?

The Commission is charged with responsibility for upholding the objects of the Fair Work Act, including making decisions in a manner that are "fair and just" with outcomes that ensure flexibility "…for businesses, [and] promotes productivity and economic growth for Australia's future economic prosperity"

Well, according to one of its most senior members, the Fair Work Commission has so profoundly failed this object that he could not – in good conscience - continue as one its most senior members.   This month, VP Graeme Watson will quit the Fair Work Commission in disgust.  According to The Australian newspaper, the ex-top-tier law firm partner and soon-to-be-former vice-president of the Commission highlighted the lack of expertise of many of the Commissioners and an overall lack of understanding of the impact of their decisions on jobs in the community.

It's easy to understand why many Australian businesses have lost their faith in the Fair Work Commission, when Commissioners regularly make decisions that seem to favour employees who are incompetent or seriously disobedient.  Decisions that regularly endanger the safety or ongoing employment prospects of their co-workers and the viability of the business.

This loss of faith in the Fair Work Commission can have real implications for the wider workforce. I recently posted an excerpt from the Wall Street Journal outlining the dramatic trend towards outsourcing in businesses – a trend which is reflected within Australia… 

I understand that making decisions that weigh employees' right to fairness with the needs of businesses to function and prosper, is not straightforward.  However, VP's Watson's view that the Fair Work Commission can often be partisan in its decisions in favour of employees, is not made in a vacuum. 

'Your Honour - may I tender Exhibits A and B'

Let's look at two recent examples that clearly exemplify this loss of balance in the Commission:

A case in Victoria, where a male nurse:

  • posted and tagged to fellow employees a video which showed an obese woman in underwear engaged in an act with clear sexual overtones with a male also in his underwear – and sent it to a colleague with the title "getting slammed by [female colleague] at work yesterday"
  • left blobs of Sorbolene together with crumpled tissues on a male colleague's desk
  • when an investigation was carried out, contacted his colleagues (contrary to an explicit direction from management) and told them not to co-operate with the investigation (using, it might be noted, abusive language in that communication).

Commissioner Bissett found that it was a "serious matter", that the nurse's actions had exposed two colleagues to "humiliation and potential ridicule at work" and constituted a "valid reason" for termination and – indeed – that she "could appreciate why Bendigo Health reached the conclusion it did".  Nevertheless, she decided that the employer was not entitled to terminate the employee.

In other words, even though the employee:

  • exposed the employer to potential claims for hundreds of thousands of dollars in damages,
  • showed a complete disregard for the feelings and emotional well-being of his co-workers,
  • had sexually harassed another employee by associating her with the woman in the video, and
  • disregarded explicit management instructions crucial to the integrity of the investigation,


Commissioner Bissett found that the employer should have given the employee another go.  What further havoc might that employee have caused if the employer had not terminated him but had adopted the Commissioner's approach?

I do not doubt that Commissioner Bissett believed in a fair go for the employee who had been terminated.   However, it difficult to see in her decision, a similar concern for the fellow employees.

In another recent decision, Commissioner Hunt in a workplace performance case (unfortunately involving an HR Manager), exhibited a similar ignorance of the commercial and legal risks posed to a business by an employee's  consistently underperformance and its potential impact on the employee's colleagues.   

The facts were  simple: the HR manager, after many months of failing in her role, had made a mess of a pre-audit process - causing a huge amount of additional work for those around her - and had been terminated before the full audit took place.

The Commissioner found that:

  • the employer had met with the HR manager "… on a number of occasions to address with her the various shortcomings that he considered she had … [but] ... unfortunately [the employee] had not adequately improved her performance"
  • the issues raised with the employee shortly before her termination were "… important, serious matters that demonstrate [she] was not adequately performing her role. None of them are trivial or petty."

Despite this, Commissioner Hunt decided that the employer should have allowed the employee to carry out the actual audit - despite the likelihood of her making a mess of it.  In fact, the Commissioner said that only after the employee had failed with the audit (with all its potentially disastrous implications for the business and additional stress on fellow workers), should the employee have been terminated.

Commissioner Hunt's approach to this case involving an employee who "was not adequately performing her role" displays a concerning lack of insight as to the potential for a failed audit to threaten the jobs of competent and committed staff.  In the real world, a failed audit can have serious consequences – not the least for the ongoing employment of other staff.

Why Commissioner Hunt's apparent indifference to this commercial reality lends credence to VP Watson's trenchant criticism of the Fair Work Commission.

It's (not) all about the terminated employee

I understand that 'fairness' is a subjective matter.

I am also aware that employers are not always going to like the decisions of the Commission.

However, what most concerns me is how often (and these cases were good examples):

  • the debilitating impact of employee poor performance (week in - week out) or
  • the effect of dangerous or offensive employee misconduct on fellow staff, 

is glossed over by the Commissioners in their decisions.

Equally the Commissioners so often seem to disregard the risk of huge fines or compensation claims that lie with the employer and personally its managers, if  the employer allows such conduct to persist.

Finally, so seldom do Commissioners acknowledge in any way the future impact of such behaviour on the viability of  the jobs of existing staff or potential employees.

Importantly, Commissioners are required to take into account '... any other matters that the FWC considers relevant' (s.387(h)) in considering an unfair dismissal claim.  The threat that the terminated worker would have posed to the job security of other staff and the legal risks faced by the employer and management, had the worker been allowed to continue in the role,  are surely relevant matters in deciding whether the employer was entitled to terminate the worker.   Yet, in their unfair dismissal decisions, too many of the Commissioners focus almost exclusively on the impact of the termination on the personal circumstances of the employee.

Personal responsibility is at the heart of trust

I have highlighted many times in my articles, the need for the Commission to recognise the importance of employees' personal responsibility within a workplace.  However, in their decisions, few of the Commissioners seem to disclose any real understanding of the consequences of permitting a lack of accountability to be the key note feature of Australian workplaces.   This leaves employers with little confidence that they can safely take any meaningful action to deal appropriately with the minority of staff who do not conduct themselves productively and respectfully in the workplace.

In seeking to save the jobs of the unworthy few, Commissioners endanger the jobs of the deserving many

In the shadow of decisions like this, who can blame employers for weighing up whether to employ people directly or outsource the role?

Having read such cases – if your capital (or that entrusted by others) was on the line, what would you do?

A Commissioner's job is not always easy - balancing the competing interests of the employer and the employee.  Yet, in Graeme Watson's view, too many of the Commissioners in the current Fair Work Commission have lost that sense of balance, defaulting too often in favour of giving the bullying or dishonest employee another opportunity to behave badly.   

Without that balance in its decision making, the Fair Work Commission too often seems to tacitly endorse a culture of poor performance amongst employees.  A culture where behaviour that endangers the well-being of other staff or the viability of the business is excused. This inability to find that balance endangers the job opportunities of tens of thousands of committed, competent and responsible Australian workers, as employers become reluctant to take on the risks of employing staff. 

After all if they perceive that the Fair Work Commission is prone to penalise them for taking meaningful steps to protect the well-being of other staff (and their jobs), why would a business be enthusiastic about expanding job opportunities? 

Is it any wonder that VP Watson was so scathing in his criticisms of the functioning of the Fair Work Commission in its current form?

"There is an increasing understanding in the business community that the Fair Work Commission is partisan, dysfunctional and divided"


This article was first published as a LinkedIn blog. You can read it here.

Warwick Ryan, Partner  |  Phone: +61 2 9233 5544  |  Email: wpr@swaab.com.au

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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