Telstra hearing heats up

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Telstra hearing heats up

In the continuation of a hearing for the imposition of penalties against Telstra for altering the employment of award and certified agreement-based employees, the Federal Court has found that Telstra failed to discharge the onus it carried in establishing that an e-mail was not sent for a prohibited reason.

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In the continuation of a hearing for the imposition of penalties against Telstra for altering the employment of award and certified agreement-based employees, the Federal Court has found that Telstra failed to discharge the onus it carried in establishing that an e-mail was not sent for a prohibited reason. (CPSU v Telstra Corporation Limited, [2001] FCA 813, 29 June 2001).

An e-mail instruction (which was not acted upon) to discriminate against employees whose employment was covered by awards or certified agreements, was held by the Full Court of the Federal Court of Australia to constitute an alteration in the employment of award-based and certified agreement-based employees. The decision in CPSU & Anor v Telstra Corporation Ltd, [2001] FCA 26721 March 2001, (reported in HR Link 38/2001), held that the e-mail had the effect of refining the manner in which employees were selected for redundancies, by requiring that preference be given in the process to employees who had signed Australian Workplace Agreements (AWAs).

Background

On 8 March 2000, Telstra announced that as part of a cost reduction program, the company intended to reduce staff by 10,000 by the end of June 2002. Coinciding with the staff reduction announcement, the Managing Director of Telstra's Employee Relations group sent an e-mail to the 275 managers and team leaders in the group. The Employee Relations group is responsible for managing Telstra's personnel, and the 275 managers and team leaders were the people who would be involved in effecting the 'downsizing' of Telstra. Broadly speaking, the e-mail informed the managers of initiatives expected in reducing staff numbers by the end of the 2001/2002 fiscal year. In this regard the e-mail addressed the issue of those employees whose employment was governed by AWAs.

The e-mail stated that:

'Staff members who have transferred to individual contract have placed their trust in their managers and the Company to create a work environment that reinforces respect and dignity for the individual, and which places primary emphasis on productive relationships in which individual accountability encourages each person to contribute to his/her full potential. Managers must not under any circumstances compromise these important values in the way they implement cost reduction initiatives, which lead to staff reductions. Managers will be held accountable to support the values of the Company's preferred model of individual employment.'

Four unions made an application to the Federal Court, claiming that Telstra had breached the provisions of section 298K(1) of the Workplace Relations Act 1996. Section 298K(1) provides that an employer must not for a prohibited reason injure or threaten to injure an employee; or alter or threaten to alter the position of an employee to the employee's prejudice. The prohibited reason in this instance is outlined in section 298L(1)(h), and is conduct carried out because an employee is entitled to the benefit of an industrial instrument. Therefore, the employees said to be injured or threatened in this instance were those covered by awards and certified agreements. The unions argued that the e-mail sent to the Employee Relations group constituted an instruction, to those implementing the 'downsizing' process, that they actively discriminate against employees whose employment was governed by awards or agreements.

The first instance decision (reported in HR Link 82/2000) held that the e-mail was no more than an instruction to treat the employees in a manner that was ultimately not acted upon. As such it was held that the e-mail instruction by itself was not enough to draw the conclusion that the employees have been injured or had their positions altered. The unions' application was accordingly dismissed.

The appeal

The unions appealed. It was held on appeal that although the process of selection for redundancy was required to be 'fair and consistent', the system was largely grounded in the subjective opinion and impressions of management. Thus it was reasonable to assume that managers would have understood the e-mail to be an instruction to give employees on individual contracts more favourable treatment in the redundancy selection process. To this end, the Full Court perceived that the e-mail had the effect of refining the criteria involved in the resource rebalancing process by requiring that preference be given in the process to employees who had signed AWAs.

Prior to the sending of the e-mail, award and agreement employees enjoyed the benefit of being subject to redundancies in accordance with a process that rated them on the basis of merit, that in turn was determined by application of specific criteria. The Full Court determined that the sending of the e-mail resulted in an adverse affection of, or deterioration in, that benefit. This was as a result of the additional detrimental criterion applicable to employees employed under awards or certified agreements.

The appeal was upheld and the Full Court ordered that the matter be remitted to the first instance judge, that being Finkelstein J, for determination in accordance with the appeal judgement.

The current proceedings

As such these proceedings were considered by Finkelstein J to be the continuation of the hearing by the unions for the imposition of penalties against Telstra. Section 298Vof the Workplace Relations Act 1996provides that in applications that claim an employer has for a prohibited reason injured or threatened to injure an employee; or altered or threatened to alter the position of an employee to the employee's prejudice, then it must be presumed that the conduct was carried out for the reason alleged unless the opposite is proved. Therefore, in these proceedings the onus was upon Telstra to establish that the e-mail was not sent for a prohibited reason.

It was the evidence of the Managing Director of Telstra's Employee Relations Group that the e-mail was intended to be an instruction to the Employee Relations Group that they not discriminate against employees on AWA's. It was not intended as an instruction that the Group discriminate against employees who were covered by awards or certified agreements.

Telstra argued that the existence of a redundancy regime that concentrated upon merit in the selection of the employees to be made redundant meant that the e-mail could not be construed as an instruction to discriminate against any employee, because the overriding principle that applied to the redundancy process was fairness and equity of treatment. His Honour rejected this argument finding that the existence of a detailed regime for redundancy with fair procedures to ensure an equality of treatment made it unnecessary for the Managing Director of Employee Relations to instruct managers to avoid discrimination. Thus the Managing Director of Employee Relations must have had some other purpose in mind when he sent the e-mail.

To this end, Finkelstein J held that Telstra failed to discharge the onus it carried in relation to section 298V. His Honour then turned his attention to determining the appropriate orders that ought to be made. Telstra has approximately 42,500 employees who are under awards or certified agreements. The main question in relation to orders is whether there has been one contravention or 42,500 contraventions of sec 298K(1). His Honour accordingly directed the parties to prepare written submission in relation to the appropriate orders.

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