update by tyndale



                                          ISSUE 01                                           OCTOBER 2005

IN THIS ISSUE                           DEALING WITH DISCIPLINE - LEGAL                    The context was that the employer allegedly
– DEALING WITH DISCIPLINE -             ISSUES IN INVESTIGATIONS                           failed to carry out investigations into allegations
  LEGAL ISSUES IN INVESTIGATIONS                                                           of impropriety against a teacher in a manner
                                        One of the increasingly common issues facing       which was expeditious, or fair and objective,
– DISCRIMINATION AND                    employers in managing workplace performance        and which was defective in a number of other
  REDUNDANCY                            and conduct issues is dealing with employees       ways. One of the allegations of breach of this
– OCCUPATIONAL HEALTH & SAFETY          so as to avoid or reduce the risk of direct and    implied contractual duty was that the employer
  - THE IMPORTANCE OF ADEQUATE          indirect, attacks on the efficacy of performance   had not followed procedures and guidelines
  RESOURCES                             reviews and discipline processes.                  which were in part designed to protect the
                                                                                           interests of a teacher, in respect of complaints
– COMPLYING WITH THE HIGHER             Discipline processes can give rise to some very    by students of inappropriate conduct against
  EDUCATION WORKPLACE                   complex issues, especially where the               the teacher.
  RELATIONS REQUIREMENTS                discipline procedures are being implemented
                                        in connection with allegations of sexual           Hoeben J expressed some doubts that the
                                        harassment (e.g. between adult staff) or           implied duty did form part of Australian Law.
                                        allegations of inappropriate behaviour (e.g.       However the outcome was that the Court held
                                        between a teacher and a student).                  that the existence at law of the alleged implied
                                                                                           duty was arguable and therefore this part of
                                        There is little doubt that these matters are the teacher's action against the Department
                                        stressful and difficult to deal with for all could remain part of the case which would be
                                        concerned - the persons making the allegations, heard and determined later.
                                        witnesses, the alleged wrongdoer and those
                                        investigating the matter. Occasionally - and If this approach is sustained, then employers
                                        perhaps increasingly - the alleged wrongdoer will need to place renewed emphasis on
                                        claims to be suffering from an illness (especially ensuring that investigatory procedures are fair
                                        of a psychiatric kind) as a result of the and reasonable, and that those procedures are
                                        application of the discipline process to him or fully and appropriately implemented. Such an
                                        her and the stress associated with it.             approach is not only necessary as part of good
                                                                                           HR procedures, it will also prevent the discipline
                                        Most workers' compensation legislation process itself becoming the focus of litigation,
                                        endeavours to exclude from compensation rather than the correctness and propriety of the
                                        conditions arising from stress which are linked outcome of the process.
                                        to reasonable investigation of alleged wrongdoing.
                                                                                           Compliance with good policy will also avoid
                                        However, case law developments suggest that an employee gaining compensation through the
                                        some employees are exploring other avenues "back door" of a breach of contract claim what
                                        in an attempt to obtain monetary compensation. cannot be pursued by the "front door" of a
                                                                                           workers' compensation claim.
                                        Two New South Wales cases illustrate the
                                        point.                                             Psychiatric Injury and Discipline
                                        An implied duty of trust and confidence? But the frontal attack, by way of a claim for
                                        In Heptonstall v Gaskin & Ors (No 2) [2005] compensation for psychiatric injury associated
                                        NSWSC 30, the Supreme Court of New South with a failure to implement reasonable discipline
                                        Wales had to consider whether it was open to processes, can still occur. This risk is illustrated
                                        an employee to argue that an implied duty of by the recent proceedings in the NSW
                                        mutual trust of confidence, forming part of the Workers' Compensation Commission, in
                                        contract of employment, was recognised by Department of Education and Training v Jeffrey
                                        law.                                               Sinclair [2004] NSW WCC PD 90.

01 Maddocks Education Update Issue 01
Jeffrey Sinclair (Sinclair was employed as a Head injury caused by reasonable actions with
                  Sinclair                                                                             At first instance the Arbitrator had found that,
Teacher with the New South Wales Department of respect to discipline and some other matters            prior to the investigation being initiated, Sinclair
Education & Training (Department
                         Department                (e.g. redeployment and redundancy). Similar         merely provided guidance to the student.
                                                   but not identical provisions apply in Victoria.     Whilst this was more than what would be
His employment was terminated for improper                                                             expected of a teacher, he did not engage in
conduct with a 16-year old student, Shackle The Workers' Compensation Commission (the           the    serious and wilful misconduct.                 The
 Shackle). Sinclair subsequently sought Commission was willing to accept that the
 Shackle                                           Commission)                                         Commission agreed.
compensation for a psychological illness action associated with the investigation
claimed to be caused by the investigation process was “with respect to” discipline.                    The Commission further determined that the
process leading up to the termination of his                                                           Arbitrator was entitled to come to the view that
employment.                                        Were the Department's actions reasonable?           by seeing Shackle after Sinclair was instructed
                                                   The Commission determined that:                     not to, Sinclair had engaged in wilful
In 2001, an investigation had been commenced – As a serious allegation was made, serious               misconduct. However, the conduct was not
into allegations of a relationship between           action was required. The Department acted         serious in that it did not interfere with the
Sinclair and Shackle in 2001. Sinclair was sent      reasonably in initiating an investigation into    Department's investigation. In any event, on
a letter informing him of the Department's           the allegation.                                   the Department's own evidence, the psychiatric
investigation into allegations of "improper                                                            injury was not wholly caused by his misconduct
conduct", involving a close personal               – Whilst the long duration of the investigation     as the Department had accepted that it was
relationship with a student. At that stage, the      (2.5 years) was unfortunate, in all the           also caused, for example, by the death of his
student was not named. Sinclair was offered          circumstances it was not unreasonable. The        son.
support from the Principal in the                    Commission acknowledged that some of the
correspondence. A week later Sinclair was            delays were attributable to Sinclair.             Application to Victoria?
informed that, during the period of the            – Requiring Sinclair to transfer from the school    The Victorian legislation is in different terms.
investigation, he was to be transferred to           was also reasonable. Although the transfer        For example, the Victorian Act speaks of
alternative duties at the District Office of the     decision was made shortly after Sinclair was      'reasonable action taken in a reasonable
Department. He was directed not to have              told that he could remain at the school, new      manner by the employer to …… discipline
contact with any student or take any action that     evidence made the transfer appropriate in the     (etc)…. the worker'. rather than 'reasonable
would hinder the investigation process.              circumstances. The length of transfer was         action …. by or on behalf of the employer with
                                                     again stated to be unfortunate but                respect to …… discipline …… of workers'. The
Six months after Sinclair was transferred to the     reasonable.                                       additional phrase in the Victorian Act referring
District Office, he commenced a series of – Failure to provide sufficient details, at the              to action 'being taken in a reasonable manner'
counselling sessions. His general practitioner       initial stage, to allow Sinclair to know the      suggests strongly that the investigation process
prescribed him anti-depressants and he began         detail of the allegations against him and the     must be undertaken in a proper manner; if this
having regular psychological treatment. Sinclair     student involved was unreasonable action by       does not occur, then the exclusion of the
was then diagnosed as suffering from clinical        the Department. It was said that lack of detail   obligations to pay workers’ compensation will
depression. Sinclair received no formal              would have "greatly increased the stress          not apply.
correspondence from the Department for               factor" for Sinclair. No one would have been
almost nine months. Later, Sinclair received a       put at risk by the provision of further           Implications for Employers
letter detailing the allegations of a sexual         information. Expecting Sinclair to know the       Employers engaged in the world of education
relationship with Shackle. Sinclair separated        allegations made against him was                  can be confronted with the need to deal fairly
from his wife and was in contact with Shackle        unreasonable.                                     with employees - particularly those against
during this time. He allowed Shackle to use – Prohibiting Sinclair from any contact with any           whom allegations of sexual impropriety with
his home to eat, wash, iron, study and               student at the school was seen to be              students have been made - whilst also being
occasionally sleep.                                  unreasonable, apparently on the basis of his      conscious of their duty of care to students.
                                                     closeness to the students and the
Shortly after receipt of the detailed allegations,   impracticability of adhering to such              It is important to remember that the
Sinclair notified the Department of his              directions. Some of Sinclair's students were      Heptonstall Case was not concerned with
psychological injury. His workers' compensation      his deceased son's friends and he had known       a final determination of the legal issues.
claim was accepted and he started to receive         them for many years. Also, as he lived in the
compensation benefits.                               area and next to a student, it would have been    However, both it and Sinclair's Case
                                                     virtually impossible to have no contact with      emphasise the need for an employer to have
Ultimately, some two and a half years after the      any student.                                      a fair procedure in dealing with discipline
investigation was commenced, Sinclair was                                                              issues. An employer should ensure that the
informed that the charges against him had been     The effect of "serious and wilful" misconduct       investigation of discipline matters should not
established and he was terminated from his Relying on a prior judgment, the Commission                 only be dealt with in accordance with that
employment shortly thereafter.                     found that to defeat a claim for compensation       process but also as expeditiously as
                                                   under this provision, the injury must be solely     circumstances permit, including gathering of
The case dealt with a number of issues, but, in attributable to the employee's serious and wilful      evidence, analysing it, and determining a
terms of how employer's deal with misconduct misconduct.                                               course of action to pursue.
work performance and restructuring issues, the
key question is whether compensation benefits
are payable, given that under NSW law the
Department as employer is not required to
compensate an employee for a psychological

02 Maddocks Education Update Issue 01
DISCRIMINATION AND REDUNDANCY                       SSI argued that Mr Nesci had not been offered      Initial Decision
                                                    retraining or relocation because SSI had           The employer in the case - the NSW Department
The New South Wales Administrative                  already looked into these possibilities with Mr    of Education and Training - was convicted of
Decisions Tribunal has found (Nesci v TAFE          Nesci during the course of his employment.         OHS offences and fined $160,000 in 2003 after
Commission of New South Wales (No. 2)               Given that those efforts had failed to reach a     a teachers' aide was assaulted by a violent
[2005] NSWADT 183) that a former TAFE               suitable outcome, SSI did not consider that it     disabled student.
teacher with Hepatitis C was discriminated          was necessary to repeat the offer of retraining
against when he was denied the options of           or relocation when offering Mr Nesci the         The main incident occurred on the day of a
relocation or retraining when accepting a           voluntary redundancy. As the comparator          teachers' strike, when the students were
voluntary redundancy package.                       teacher had not already been considered for      unsettled by the disruption of their normal
                                                    retraining or relocation, SSI argued that he was routine. The teachers' aide was assaulted while
Mr Nesci was diagnosed as suffering from            not an appropriate comparator in this case.      trying to prevent an attack on one student by
Hepatitis C in 1993. His illness caused him to                                                       another, after another teacher had left the room
be absent for a period of time in 1995, following   The Tribunal disagreed. It found that it would to follow a third student who had absconded.
which he worked on a part-time basis with           be artificial to include consideration of the
various combinations of leave until 2001. On        previous discussions between TAFE and Mr At trial, Justice Michael Walton found the
several occasions during the course of his          Nesci when attempting to find an appropriate Department guilty of charges that included
employment, Ms Nesci's employer, the                comparator. Once SSI had decided to make failing to provide adequate human resources
Southern Sydney Institute (SSI), sought advice      offers of voluntary redundancy, all of those to manage the risk of violence at the special
about his fitness to work. A number of tests        persons, regardless of previous discussions, needs school, and failing to provide staff with
and workplace assessments were conducted            should have been on the same "playing field" adequate information and instruction regarding
in an attempt to identify work options for Mr       as each other. While it was not the sole reason the students, and failing to provide adequate
Nesci. However, SSI did not implement any of        for the decision not to offer retraining and emergency equipment.
their recommendations.                              relocation to Mr Nesci, the Tribunal was
                                                    satisfied that his disability was one of the The Appeal Proceedings
Mr Nesci sought options from SSI in relation        reasons, and therefore found in his favour.      The Department appealed to a Full Bench of
to retraining and redeployment on many                                                               the Court against both the conviction and
occasions throughout the latter stages of his       The Tribunal ordered SSI to pay Mr Nesci sentence. It argued that Justice Walton didn't
employment. These failed attempts and the           $16,075 in damages for economic loss plus sufficiently distinguish between the ever-
circumstances surrounding them culminated in        $3,500 in damages for non-economic loss (for present risk that arose out of the nature of the
Mr Nesci making a complaint to the SSI              depression and unfair treatment).                disability of the students and the risk that arose
Director, which ultimately led to the                                                                from the actions of individual students on the
appointment of Mr Kretchmer to investigate Mr       Implications for Employers                       day of the incident. As well, it claimed it was
Nesci's situation. Mr Kretchmer reviewed Mr         In this instance, given the history of prior not properly established at trial that the
Nesci's file and concluded that all reasonable      consideration of retraining or redeployment, the Department's failures led to the risk of the
steps had been taken to find alternative work       employer may have considered it was acting incident.
for Mr Nesci.                                       reasonably in not offering redeployment options
                                                    but that was not the issue.                      The bench - Justices Wright, Kavanagh and
On 10 January 2001, SSI wrote to Mr Nesci                                                            Boland - found there was a "very fine
and invited him to apply for voluntary              As with other aspects of employment distinction" between the general risk of the
redundancy. Mr Nesci accepted the offer. Two        arrangements, a prudent employer will not students displaying aggressive behaviour, and
days later, a similar letter was issued to all othermake assumptions about an employee which the specific risk of the assault that occurred. It
teachers at SSI inviting them to apply for          could be argued to differentiate the treatment said: "In fact, we question whether any
voluntary redundancy. The letter sent to all        of that employee, compared to others, on distinction should be made. It seems to us that
other teachers differed from the letter sent to     prohibited discrimination grounds.               what occurred... was more in the nature of a
Mr Nesci in that it offered them the option of                                                       materialisation of the general risk and that it
retraining or relocation, as well as voluntary      OCCUPATIONAL HEALTH & SAFETY - only confuses matters to identify a separate,
redundancy. No offer of retraining or relocation    THE IMPORTANCE OF ADEQUATE                       specific risk of assault."
was ever made to Mr Nesci.                           RESOURCES
                                                                                                       The bench also said it was "not to the point" if
Mr Nesci claimed in that in failing to offer him    The NSW Industrial Relations Commission in         a risk was not created by, or under the control
retraining or relocation, it treated him less                       the Commission)
                                                    Court Session (the Commission has sent a           of, a defendant. It rejected the Department's
favourably than it would have treated a person      clear message to employers that they must take     argument that it should not be convicted
without his disability (that is, Hepatitis C). He   necessary steps to ensure safety in                because it did not cause the risk of assault by
chose as his comparator another teacher, who        circumstances in which external factors            students and the risk existed prior to any act or
was provided with the more favourable offer.        increase ever-present risks. (The Crown in the     omission on its part. The bench said the
Mr Nesci noted, however, that any of his former     Right of the State of New South Wales              causation issue couldn't be dispensed with so
colleagues would have made an equally               (Department of Education and Training) v           easily. "It is true that there was an ever-present
appropriate comparator, as each had been            Maurice O'Sullivan [2005] NSWIRComm                risk of assault from intellectually disabled
offered retraining or relocation within SSI.        198).                                              students demonstrating aggressive and/or
                                                                                                       challenging behaviour. But the [Department]

03 Maddocks Education Update Issue 01
cannot escape liability simply by contending         for employers, and staff immediately involved – HEPs must neither encourage nor
that it did not create the risk: "If that were the   in or responsible for areas of a workplace, to    discourage union membership; and
case the objects of the OHS Act ... would be         actively consider OHS issues in making staffing – HEPs must not use Commonwealth Grant
defeated and the plain words of s15 (and             arrangements.                                     Scheme funds to pay union staff salaries or
s16)... would not be given effect."                                                                    to fund union activities and facilities.
                                                     COMPLYING WITH THE HIGHER                       Interpretation of and compliance with the
The bench said it was an untenable proposition       EDUCATION WORKPLACE RELATIONS HEWRRs, including the content of the AWAs
that a defendant should not be held liable in        REQUIREMENTS                                    offered to staff, raises a number of issues for
circumstances where it was aware of a risk to                                                        the consideration of HEPs. Should you have
safety and had taken steps to prevent to             We have recently advised a major Australian any enquiries in this respect, please contact a
employees, but hadn't taken steps                    university on the interpretation and member of our team below.
commensurate with a heightened risk.                 implementation of the federal Government's
                                                     Higher Education Workplace Relations LIKE TO KNOW MORE?
Changes wouldn't have prevented                      Requirements (HEWRRs).
assault: Department                                                                                  Please contact a member of our team below:
The Department argued there was no evidence          In order to qualify for an increase in
that a change in the staff ratio would have          Commonwealth Grant Scheme funding under                     Ross Jackson
decreased the risk of assault.                       proposed changes to the Higher Education                    Partner
                                                                                                                 61 3 9288 0526
                                                     Support Act 2003 (which changes were                        ross.jackson@maddocks.com.au
In particular, it argued that it had no control      passed by the House of Representatives on
over factors that increased the risk: the strike;    11 October 2005), higher education providers                Glenda Beecher
the weather; the fact that students found any        (HEPs) are required, among other things, to                 Partner
                                                                                                                 61 3 9240 0843
change in their routine unsettling; or that          comply with the HEWRRs, which in turn require               glenda.beecher@maddocks.com.au
aggression by one student could trigger the          HEPs to "provide employees with genuine
same response in others. Alternatively, it           choice and flexibility in agreement making by               Darren Gardner
argued that it had a defence under s53 (s28 in       offering AWAs to all new employees employed                 Partner
                                                                                                                 61 2 8223 4103
the OHS Act 2000) because there were no              after 29 April 2005 and to all other employees              darren.gardner@maddocks.com.au
reasonably practicable measures it could have        by 31 August 2006". HEPs are exempt until
taken to avoid the risk.                             30 June 2006 from offering AWAs to casual                   Maria Jockel
                                                                                                                 Partner - Immigration
                                                     employees engaged for a period of less than
                                                                                                                 61 3 9240 0835
The bench said there was no doubt that external      one month.                                                  maria.jockel@maddocks.com.au
factors contributed to the increased risk. But
that did not rule out a finding that the For the purposes of funding for 2006, HEPs'                                    Bruce Moore
Department's acts or omissions had also compliance with the HEWRRs will be assessed                                     Special Counsel
                                                                                                                        61 3 9288 0664
materially contributed to it.                   as at 30 November 2005.                                                 bruce.moore@maddocks.com.au

It found it was "a matter of plain common sense"     The HEWRRs also make a number of                                   Kate O’Connor
that if another teacher had been present in the      provisions in relation to direct relationships                     Senior Associate
                                                                                                                        61 2 8223 4129
classroom on the day of the incident, that           between HEPs and their employees, workplace                        kate.oconnor@maddocks.com.au
presence would have reduced the risk of the          flexibility, productivity and performance and
assault occurring. While the presence of             freedom of association, including provisions to
another teacher might not have entirely              the effect that:
eliminated the risk, it considered that the risk
                                                                                                       The material contained in this Update is of the nature of general
escalated to a more serious level because of         – third party representation must only occur      comment only. No reader should rely on it without seeking legal advice.
the absence of an additional staff member.             at the request of an affected employee;         If you do not wish to receive further Updates from us, please email
As to the defence that it was not reasonably         HEP's workplace agreements, policies
                                                     – the
practicable to comply with the Act - the         and practices must not limit or restrict the          Maddocks
Commission found the Department hadn't           HEP's ability to make decision and implement          Lawyers                           Angel Place
discharged the onus of proving that it could     change in relation to the offering of courses         140 William Street                123 Pitt Street
                                                                                                       Melbourne Victoria 3000           Sydney New South Wales 2000
not have provided additional human resources.    and associated staffing requirements;                 Australia                         Australia
The defence that the commission of the offence – the HEP's workplace agreements must be                Telephone 61 3 9288 0555          Telephone 61 2 8223 4100
was due to causes over which the Department      "simple, flexible and principle-based                 Facsimile 61 3 9288 0666          Facsimile 61 2 9221 0872
had no control and for which it could not make   documents which avoid excessive detail and
                                                                                                       Email info@maddocks.com.au
provision, also failed for similar reasons.      prescription";                                        www.maddocks.com.au
                                               – the HEP's workplace agreements, policies
Implications for Employers                       and practices must include processes to               Affiliated offices
The factual circumstances of this case were      reward high performing individual staff and           Adelaide, Beijing, Brisbane, Columbo,
                                                                                                       Dubai, Hong Kong, Jakarta,
somewhat unusual, and care should be taken       to manage poor performing staff;                      Kuala Lumpur, Manila, Mumbai,
in extrapolating any general conclusions.                                                              New Delhi, Perth, Singapore, Tianjin
However, the decision does illustrate the need

04 Maddocks Education Update Issue 01

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