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Mr Brent Acworth v Boeing Australia Limited

Background

Mr Acworth (the Plaintiff) was employed at Boeing Australia Limited (the Defendant) as a software engineer from May 2004. His employment was terminated in February 2007 by way of Boeing’s acceptance of his resignation. The Defendant claimed that it terminated the Plaintiff’s employment because of genuine operational reasons. They maintained that the Plaintiff had refused a new role/assignment as was proposed and his current role was concluding due to the structure of the business.

There was no other work that he could perform for the Defendant. The Plaintiff held a Bachelor of Engineering (with Honours) in Software Design. He was originally employed as a Process Improvement
Engineer. The parties had a common law contract which stipulated that the company could vary duties or reassign the Plaintiff to an alternative role, as long as it was commensurate with his skill, knowledge and was comparable in nature with his previous roles.

It also stated that this may require the Plaintiff to work in other department/team/project/business unit or at another location to meet the demands of the business. His role in the project he was previously working on was finishing and he would be reassigned to another ‘comparable’ position within the business. He refused to accept the ‘comparable’ role he was offered. He was consulted between September 2006 and January 2007 about the prospective alternative position. He had also rejected two assignments offered to him from project managers.

The Defendant felt that they were best placed to evaluate whether the new position was effective and whether the Plaintiff met the essential criteria required for reassignment. They claimed the position was comparable employment because they had confirmed the Plaintiff’s competencies, in his previous experience with Boeing. The Plaintiff felt he was not sufficiently qualified for the role.

He also held that the position was located in Canberra, not in Brisbane where he was currently based. The Defendant then put forward that the Plaintiff had been assigned duties and roles in the past for which he did not hold the full requirements and had nonetheless completed the assignment.

Case

The Plaintiff made an application under s 643 (1) of the Workplace Relations Act 1996 (Cth) for relief for termination of his employment with Boeing Australia Limited. The full bench in Carter v Village Cinemas Pty Ltd v Carter was cited, which states that the operational reason relied upon by the employer need only be a ground or cause for the termination of employment. It need not be something that demands or brings about an obligation to terminate the employment of a particular employee.

Additionally the termination of employment does not have to be an unavoidable consequence of the operational reason for s 643(8) to apply. Therefore whether the employer could have done something other
than terminating the employee’s employment will generally be irrelevant.

The Commissioner determined from this case that a general operational reason did not have to be the only motivation for the dismissal, but it did have to be a ‘discrete’ reason. In the present case, the Defendant and Plaintiff fell into a dispute about whether the reassignment as offered, constituted comparable employment. The Plaintiff felt it was not.

Whether this constitutes genuine operational reasons so as to attract the exclusion at s 643 (8) of the act is the primary question to be determined. In Village Cinemas, the closing of the cinema complex and there no longer being a position of manager led to the termination of the Plaintiff’s employment. Hence it was the operational reason for the termination of employment.

The Defendant stated that the reason for the Plaintiff’s termination of employment was merely the inevitable consequence of his current project work coming to natural conclusion. They claimed that the cessation of the current project and the refusal to accept the reassignment was taken to be distinguishable circumstances consistent with s 643 (9).

The Commissioner stated that the unavailability of work only arises as an allegedly ‘genuine operational reason’ because the Plaintiff refused to accept the reassignment. The court found that, the reason for termination of the Plaintiff’s employment was his refusal to carry out a reasonable and lawful direction, which was consistent with the terms of his contract of employment. These terms were given by the
Defendant for the specific purpose of a further assignment of duties, and not the operational requirements of the business as such.

The contract of employment stated that the Defendant reserved the right to direct the Plaintiff to perform other duties as required by ‘variation’ or ‘reassignment’ and on terms consistent with their ‘qualifications, capabilities and experience.’ The Court decided that the Plaintiff was employed under a common law contract which contained no dispute resolution machinery and no readily accessible avenue by which a matter of difference ought to be resolved.

The Plaintiff did not believe that his offer of reassignment was comparable employment. On the evidence, the court did not hold this to be correct in terms of the location of the position and the programs that the position required the Plaintiff to use. The Defendant believed that while on paper, in the formal Position Description he may not have met all of the ‘essential criteria for the Reassignment Position, based on his previous experience and aptitude in performing different roles at Boeing, an assessment was made that he would be able to fulfil the requirements of the role.’

The court therefore held that because the reason for the termination of employment was the Plaintiff’s refusal to accept reassignment, it was not a genuine operational reason.

Decision: The Commission found for the Plaintiff.

Operational reasons cases – onus on employer

The Workplace Relations Act 1996 (Cth), contains within it a provision [s 643 (1)] for relief from termination of employment. However, there is an exemption to this sub – section. The exemption is known as the Operational Reasons provision. The relevant provisions are ss 643(8) and 643(9). These provisions essentially say:

643 (8) an unfair termination application cannot be made if the employee’s employment was terminated for “genuine operational reasons or for reasons that include genuine operational reasons”, and
643 (9) “operational reasons” are defined as “reasons of an economic, technological structural or similar nature relating to the employer’s undertaking, establishment, service or business” or reasons including the aforementioned reasons.

Recently, a number of cases have tested the “operational reasons” section of the Workplace Relations Act.
Interestingly, each of these cases cite Carter v Village Cinema’s Australia Pty Ltd (15 January 2007) PR975821, in order to determine the meaning of ‘genuine’ and also to determine that the operational reason need only be a ground or cause for the termination of employment.

Whether the employer could have taken an alternative action to terminating the employee’s employment, will generally be irrelevant. Hence, Village Cinema’s seems to be the authoritative case in this matter.

The three new cases are:

1) Mr Brent Acworth v Boeing Australia Limited (U2007/2946 (25 May 2007)
2) M Sperac v Global Television Services Pty Ltd (U2007/2991) (1 June 2007)
3) A Cruickshank v Priceline Pty Ltd [2007] AIRCFB 513 (27 June 2007)

These cases had with some unexpected results.

In Brent Acworth v Boeing Australia Limited, it was determined that the Plaintiff refusing to accept reassignment, was not sufficient enough for his termination of employment to fall within the genuine operational reasons provision.In Sperac v Global Television Services it was determined that because a restructure was intended to address economic and operational issues, it therefore fell within the operational reasons exemption.

Surprisingly, the result in Cruickshank v Priceline Pty Ltd was a back flip from Sperac. The decision at first instance, that the termination of employment was due to operational reasons resulting from economic difficulties and restructure to reduce costs, was overturned on appeal.

Although these cases assist (somewhat) in further defining the boundaries of the operational reasons provision, it will be interesting to see what this means for the operational reasons provisions in the future. Other Commissioners or Judge’s will be able to take either Sperac’s approach or Cruickshank’s approach when considering matters of termination of employment due to operational reasons of economic
difficulties and restructure to reduce costs and whether these will constitute operational reasons for the purposes of s 643(8) and (9).

Workplace Relations Fact Sheet

In compliance with the amendments to the Government’s fairness test legislation, which has recently passed through parliament, a new fact sheet that covers the new workplace relations system has been made available.

The Fact Sheet.

The contents of the fact sheet summarises:

• The new fairness test;
• The Australian Fair Pay and Conditions Standard;
• Record keeping obligations;
• Unlawful dismissals; and
• Freedom of association provisions.

The fact sheet also states that the fairness test will apply to agreements within industries or occupations where an award usually applies but which has had certain conditions removed or changed. These include:

• Penalty rates for public holidays and weekends;
• Shift and overtime loadings;
• Monetary allowances;
• Annual leave loadings;
• Public holidays;
• Rest breaks; and
• Incentive – based payments and bonuses.

Employers Obligations

It is required that employers provide this fact sheet to all current federal system employees by October 20 2007. There is no requirement that it be explained in any way. From July 20, employers must provide the fact sheet to all new employees within seven days of the employees commencing work.

These details were announced on Wednesday, July 4 by Workplace Relations Minister Joe Hockey at a media launch in Brisbane with the newly appointed Workplace Authority director Barbara Bennett and Workplace Ombudsman Nicholas Wilson.

Consequences of failing to comply

Employers face fines for failing to comply with these requirements. They will be fined $110 for every employee who does not get the fact sheet in time. However, Minister Hockey was keen to stress that the Ombudsman would seek voluntary compliance prior to considering any legal action against employers.

Workplace fairness test

The fairness test – passes through Parliament and a policy guide released.

There have been some new developments in relation to the Federal Government’s fairness test.
1) The fairness test legislation [also known as the Workplace Relations Amendment (A Stronger Safety Net) Bill 2007 (Cth)] passed
though Parliament in late June with some amendments made in the Senate.
2) A Fairness Test Policy Guide has been released.

The fairness test legislation and its amendments.

The test passed through Parliament on 20 June 2007. As stated in our last newsletter, the fairness test involved compensating employees that trade off certain conditions in their employment contracts. It is expected that in most circumstances, fair compensation will be provided in the way of a higher hourly rate of pay.

There are certain minimum standards enforced by this test such as
– Minimum wages;
– The 38 hour week (plus reasonable additional hours);
– 4 weeks annual leave;
– 10 days paid personal leave such as sick leave and carers leave; and
– 52 weeks unpaid parental leave.

These are conditions as set out in the Australian Fair Pay and Conditions standard. They are unable to be traded for compensation. Then there are the protected award conditions, will not be mandated in agreements, however under the new legislation, they will be able to be traded for adequate compensation. They are
– Penalty rates;
– Shift and overtime loadings;
– Monetary allowances;
– Annual leave loadings;
– Public Holidays;
– Rest breaks; and
– Incentive based payments and bonuses.

The legislation also established two new bodies known as the Workplace Authority and the Workplace Ombudsman. These are to replace the Office of the Employment Advocate and the Office of Workplace Services. They are the same bodies, just re – named.

The Senate included a number of amendments when the bill was passed. The amendment provisions include:
• Enabling the Workplace Authority to designate a federal award in order to apply the fairness test to an agreement
where no award applies but where the relevant work or industry was – before Workchoices – usually covered by a state award.
• Extending the period for which any redundancy provisions will apply to the new employer following a transmission of business, from 12 months to 24 months.
• Requiring a previous employer in a transmission of business to take reasonable steps to notify the Workplace Authority that an agreement, which has not yet been assessed under the fairness test is now binding on the ‘new’ employer.
• Requiring employers to provide all new and existing employees with a “Workplace Relations Fact Sheet.” More information on the fact sheet is provided in the next article.
• Specifying the particular information the Workplace Authority must provide to parties when applying the fairness test.

Fairness Test Policy Guide

The Workplace Authority has also published its Fairness Test Policy Guide, along with the first of a set of practical examples to help communicate how the new Fairness Test works in practice.

The policy guide states that the fairness test only applies when:
• An agreement is lodged on or after May 2007. It will not affect agreements lodged before this date. However, where an agreement (including one made before 7 May 2007) is varied, the whole agreement will be subject to the fairness test if the variation excludes or modifies any protected award conditions.
• The Employee works in an industry or occupation where an award applies or would usually apply to the kind of work performed. There may be certain circumstances where if there is no relevant award, the Workplace Authority is able to designate a federal award for the purposes of the fairness test.
• The annual full time or full time equivalent salary is less than $75 000 (this applies to AWA’s only, there is no monetary threshold for collective agreements). This includes – a gross basic salary of $75000 and excludes incentive based payments and bonuses, loadings (other than casual loadings), penalty rates, monetary allowances, employer superannuation contribution or any other distinct entitlement which is similar to an incentive based payment/bonus, loadings, penalty rates or monetary allowances.
• The AWA or collective agreement expressly excludes or modifies one or more protected conditions.
Where the compensation that is provided equals or exceeds the value of the relevant protected conditions that have been modified or excluded, the agreement meets the fairness test. The primary concern when examining an agreement is the level of money and monetary compensation.

Other circumstances such as the employees personal circumstances such as family responsibilities and in exceptional circumstances the industry, location or economic circumstances of the employer and the employment circumstances of the employee, may be taken into consideration.

Should the agreement not meet the fairness test, Workplace Authority will provide advice to the parties as to how the agreement can be altered to meet the requirements of the test. The jury is out as to whether the fairness test is an effective safety net, as the principles are yet to be tested. The legislation seems
to provide employees with protection, in terms of certain conditions in their employment contracts. However, time will tell as to whether these changes are effective. For further information, the Fairness Test Policy Guide can be accessed on the internet at: https://www.fairwork.gov.au/tools-and-resources/best-practice-guides