Email offended freedom of association provisions by altering employment of award employees

Cases

Email offended freedom of association provisions by altering employment of award employees

An email instruction, (which was not acted upon) to discriminate against employees whose employment was covered by awards or certified agreements, has been 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.

WantToReadMore

Get unlimited access to all of our content.

An email instruction, (which was not acted upon) to discriminate against employees whose employment was covered by awards or certified agreements, has been 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 Community & Public Sector Union & Anor v Telstra Corporation Ltd, [2001] FCA 267(21 March 2001), held that while the Judge at first instance was correct in concluding that, as the e-mail had not been acted upon, it did not injure any employee, his Honour erred in concluding that the e-mail did not alter the position of any employees to their prejudice. According to the Full Bench 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

By way of background it is important to note that any one of 10 awards and 20 agreements govern the conditions of employment of most Telstra employees, while a further 7500 employees are engaged under AWAs. 

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.

Proceedings before Finkelstein J

At first instance four unions made an application to the Federal Court, claiming that Telstra had breached the provisions of s298K(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 s298L(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.

At first instance, his Honour examined the question of whether the email instruction, which at the time of the proceedings, had not been acted upon, constituted an injury, or an alteration in the employment of award-based and certified agreement-based employees. His Honour was of the view that a distinction could be drawn between causing injury or altering the employment of an employee and '...an inchoate intention to do so'. The email was held to be 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 email 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.

Grounds of appeal

The union appeal was based upon two grounds. The first was related to the finding that for an employee to be injured or prejudicially affected it was necessary for the employee to be in fact treated differently. In relation to this claim, the unions contended that injury could occur whenever an employee was treated substantially different to the manner in which they are normally treated. The second ground upon which the appeal was based that his Honour at first instance adopted a narrow approach in determining what conduct constituted a threat for the purposes of s298K(1). In this regard, the unions argued that the declaration of intent to engage in proscribed conduct was capable of constituting a threat.

Selection process for redundancies

Given that staff reductions were at the centre of this matter, the Full Court considered it appropriate to outline the process used by Telstra in determining which employees ought to be made redundant. The process, which is claimed to be based on merit, is known as 'resource rebalancing'. Telstra's resource rebalancing required that the relevant manager assessed and rated each employee according to five principal criteria, namely: (1) customer focus; (2) effectiveness; (3) team work; (4) skills and knowledge; and (5) safety. 

Once rated, the individual employees were afforded an opportunity to comment on their ratings. Based upon the ratings, the employees were then ranked. At this stage of the process, the employees could elect to either stay in employment or leave under a voluntary redundancy scheme. In the case of employees who elected to remain in Telstra's employ, if they were not redeployed within three months then the employees were retrenched without the benefit of a voluntary redundancy scheme.

In light of Telstra's selection process for redundancies, the question remained as to whether the instruction in the e-mail changed the criteria for selection for redundancy to the detriment of those employees entitled to the benefit of a certified agreement or an award, and thereby altered their position to their prejudice. In this regard the Full Court 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 five criteria involved in the resource rebalancing process by requiring that preference be given in the process to employees who had signed AWAs.

Was the employment of award- and agreement- based employees altered?

Prior to the sending of the email, 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 five principal 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. In this instance the Full Court found that the position of employees covered by an award or a certified agreement had been altered to their prejudice with the meaning of s298K(1)(c). Thus, while Finkelstein J was correct in concluding that, as the email had not been acted upon, it did not injure any employee, the Full Court did not agree with his Honour's conclusion that the email did not alter the position of any employees to their prejudice. Having so found the Full Court considered it unnecessary to consider whether the conduct also constituted a threat to alter the position of those employees.

Conclusion

His Honour, at first instance, erred in concluding that the position of the relevant Telstra employees had not been altered to their prejudice within the meaning of s298K(1)(c). The appeal was upheld and the Full Court ordered the Finkelstein J's orders be set aside and the matter remitted to him for determination in accordance with the appeal judgement.

 
Post details