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Business news, business advice and information for Australian SMEs | SmartCompany

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    The Fair Work Ombudsman has launched proceedings in the Federal Circuit Court against the former owner of a Sydney childcare centre, who it says paid employees as little as $2.15 an hour.

    The employment watchdog this week filed a statement of claim against Mark Edward Myles, the former owner and operator of Bollygum Childcare Centre in Western Sydney, claiming Myles was responsible for underpaying 16 childcare workers almost $362,000 over a five year period.

    Seven of the former employees were aged under 21 at the time of the alleged underpayments and some were trainees.

    The ombudsman said in a statement the underpayments appear to be primarily the result of the employees receiving flat hourly pay rates, which differed greatly between staff and did not cover entitlements such as minimum hourly rates, casual loadings, overtime rates, annual leave entitlements or a laundry allowance.

    Fair Work alleges one Bollygum employee was paid just $2.15 an hour, while others received $3.31, $3.37 and $3.98 an hour.

    However, the ombudsman said it acknowledges some of the centre’s employees were paid rates much higher than their minimum entitlements for some work.

    The ombudsman also alleges Myles contravened the adverse action provision of the Fair Work Act when he allegedly reduced the rostered hours of an employee after she complained about her pay to the Fair Work Ombudsman.

    Bollygum Childcare Centre collapsed into liquidation last year, preventing legal action against the company, but Myles faces maximum penalties of between $3300 and $10,200 per breach of the Fair Work Act.

    The ombudsman will ask the court to order any penalty be paid to the employees to go towards rectifying the alleged underpayments.

    Employment lawyer Peter Vitale told SmartCompany the rates of pay quoted by the ombudsman are “extraordinarily low”.

    “But given the obvious disregard for the employer’s legal obligations, it does seem odd they differentiated so carefully between different employees,” says Vitale.

    Vitale says, assuming the ombudman’s allegations in relation to the adverse action claim are proven in court, the case “is a pretty straight-out and serious breach of the general protection provisions of the Fair Work Act”.

    “An employee who has complained to the ombudsman about their wages had their working hours reduced as a result,” he says.

    “It’s about as straightforward breach as you will find.”

    Vitale says the case highlights the dangers for employers who try to implement a single flat rate of pay to cover all employee entitlements.

    “That’s not to say that sort of arrangement can’t work, but given the range of award entitlements and different methods of calculation, it is a difficult exercise to come up with a flat rate of pay, especially when employees are undertaking large amounts of overtime or weekend work,” says Vitale.

    “For employers considering that approach, they must exercise extreme care.”

    SmartCompany was unable to contact Myles.

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    The Queensland Supreme Court has ruled that an employer is not liable for an employee injured by a king hit during a Christmas party.

    Jay Packer was hospitalised and had to have two plates inserted and nine screws to reconstruct his facial bones after being hit from behind on the cruiser operated by Tall Ships Sailing Cruises Australia.

    Packer was attending the Christmas party along with his children for his employer Commercial Waterproofing Services.

    CWS had 90 people on board the cruise, which went from the Gold Coast to South Stradbroke Island. 

    But the business shared the cruise with a group of 20 from Marine Malouf.

    Alcohol was served on the cruise and some of the Marine Malouf party became rowdy and were swearing within earshot of the children with the CWS party.

    Packer twice asked the Marine Malouf group to tone it down, and on the second occasion was hit from behind by an unidentified member of the Marine Malouf group.

    He then sued TSSCA and CWS, alleging both had breached their duty of care to him.

    But Justice David Jackson found while both companies had a duty of care, neither had breached it.

    He rejected Packer’s argument that TSSCA should have engaged additional security personnel for the trip.

    Justice Jackson said CWS, as an employer, owed its employees a duty of care in contract and in tort, which encompassed an obligation to take reasonable steps for their safety.

    But he said it was unrealistic to require to CWS to audit conditions at McLarens Landing and on the ship for the return journey as Packer had argued.

    "There was no evidence that [CWS's director], or anyone else on behalf of CWS, was aware of any risk of the kind which eventuated when [Packer] was assaulted," he found.

    Alison Barrett, principal at law firm Maurice Blackburn, told SmartCompany the decision reinforces an employer’s duty of care to employees even when attending a work function or social event.

    Barrett says the reason Packer was unsuccessful in this case was that CWS had no control over the other passengers on the ship.

    “For employers when they are arranging work social events such as this one it is important to understand they still owe a duty of care to their employees but the nature and extent of the duty of care is going to depend on the level of control the employer has over the venue and risk of an injury,” Barrett says.   

    “The level of control is the key factor.” 

    SmartCompany was unable to contact Commercial Waterproofing Servicing and Tall Ships Sailing Cruises Australia failed to respond prior to publication.

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    The former manager of a street furniture manufacturer has been ordered to repay more than $1 million after fraud of “a most egregious kind”. 

    Benjamin Dickson was the production and manufacturing manager of the Adelaide branch of Artcraft.

    Over a four-year period he allegedly took large quantities of Artcraft’s metal and had it delivered to a scrap metal recycler pocketing $500,000 in cash in the process.

    Dickson delivered ute loads of metal himself and also co-opted other workers to unwittingly assist him by cutting and delivering the metal to the scrap metal recycler.

    He spent the money on a lavish lifestyle including holidays to Sydney, Melbourne, New Zealand and Bali which were all paid for in cash. 

    Eventually Dickson’s manager, Donald Wild, cottoned on to the fraud after noticing the amount of aluminium purchases was much higher than at other branches.

    Wild told the court he had failed to notice the fraud as Dickson was a trusted senior manager.

    “I guess some failings on my behalf for not being on the factory floor enough to see that sort of thing happening, but also it seems that my employees didn’t feel empowered enough to put their hand up and say “hey something strange is going on here”,” Wild said. 

    The South Australian Supreme Court found as Dickson was in a senior position he was familiar with the strengths and weaknesses of Artcraft’s inventory system.

    Justice Kelly found Dickson had perpetrated fraud on Artcraft over a four-year period. 

    Justice Kelly awarded an award of exemplary damages of $50,000 and also ordered Dickson’s wife to pay Artcraft $59,800, as the court found she was aware her husband was bringing unexplained cash into the household.

    Artcraft also settled its case against a receiver of the misappropriated materials for a payment of $253,000.

    SmartCompany contacted Artcraft for comment but did not receive a response prior to publication.

    Gary Gill, KPMG's national head of forensic, told SmartCompany the more senior the person, the bigger the fraud typically is and the longer it takes to uncover.

    Gill says particularly where coworkers or direct reports have got involved, albeit unwittingly, that’s quite a common scenario.

    “Awareness amongst staff is usually your best defence against fraud,” he says.

    “People know when something doesn’t look right, the trick is getting them to speak up.”

    Gill says the problem for many small businesses is that there is no mechanism for getting whistleblowers to speak up.

    “In situations like that when a person is asked to do something by their boss, who do they speak to?” Gill says.

    “Is there a clearly articulated procedure for people to whistleblow?”

    Gill says it is increasingly common for businesses to have an external whistleblowing facility and analytics is also useful as a means of fraud detection.

    “If there is a large fraud I have no doubt if you looked through the underlying information you probably would have noticed,” Gill says.

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    The Full Federal Court has handed down its decision in the Task Technology case. In dismissing the appeal, the court confirmed the computer software payments in dispute were subject to royalty withholding tax (RWT).

    The decision was handed down last Friday, September 5.

    Craig Cooper, director of tax services, RSM Bird Cameron, says, “The contractual analysis adopted by the Full  Federal Court confirms that software distributors must ensure their Distribution Agreements are appropriately drafted so they accurately characterise the arrangement, and therefore the nature of the software payments made, in order to avoid the imposition of RWT.”

    “The decision reflects the judicial difficulty in dealing with the concepts of computer software, source code, object code and the related rights for which computer software payments are made,” he says.

    Cooper believes that Australian jurisprudence seems to struggle to articulate a clear approach to interpreting domestic tax law where it is affected by international tax obligations to which Australia is subject.

    “Irrespective of whether one believes the correct result was reached on the RWT point, the Full Federal Court’s reasoning, with respect, leaves a sense of discomfort,” he says.

    “The relevant law was found in the Canadian Double Tax Agreement (DTA), but in analysing that provision, the Full Court adopted what was inherently a domestic tax law approach to interpretation.

    “Australian taxpayers, the ATO, and ultimately Australian courts will increasingly be called upon to analyse Australian domestic tax law provisions in light of international tax obligations. Greater clarity around the approach to this interaction is required.”

    This article first appeared on StartupSmart.

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    The co-founder of mining company Central Petroleum has been awarded almost $1.6 million in damages for unfair dismissal.

    John Heugh started the business with Richard Faull and didn’t draw a salary in the nine years before the company listed in 2006.

    The chief executive was ousted after mining billionaire Clive Palmer made a bid to control Central Petroleum’s board.

    Justice Rene Lucien Le Miere found Heugh was wrongfully terminated by Central Petroleum.

    “Central was not entitled to terminate Mr Heugh's employment for the reasons stated in the termination letter because Mr Heugh remedied the serious breach of contract relied upon and further Central's decision to terminate Mr Heugh's employment for that reason was not a reasonable exercise of its discretion to terminate the employment,” he found.

    SmartCompany contacted Heugh through his lawyers but did not receive a response prior to publication.

    Central Petroleum said in a statement to the Australian Securities Exchange it was in consultation with its insurers and would consider its options for an appeal.

    Emma Starkey, senior associate at law firm Maurice Blackburn, told SmartCompany the payout is one of the biggest in an employment dispute.

    “It’s important to note that the size of the payout arose from the terms of [Heugh’s] contract so it is a unique situation to him and his scenario,” she says.

    “The court took the view that [Central Petroleum] wrongfully terminated his contract and in order to remedy that he should receive his remuneration for the balance of his contract and in addition compensation for loss of opportunity for a pay increase, loss of opportunity to accrue long service leave and renew his contract in the future.”   

    Starkey says the critical issue is the way Central Petroleum terminated Heugh’s employment as it had an obligation to terminate at reasonable discretion and the court took the view the decision to terminate was not reasonable discretion.

    She says the court found Heugh had taken certain steps in breach of his contract but he had fixed it up at the request of the employer, once he had done that the court said he had no basis to terminate the employment contract. 

    “This case really demonstrates the importance of looking at your employment contract before you start and having protections against an employer unilaterally terminating your employment,” he says.

    “It’s also important for employers to remember to exercise their reasonable discretion.”

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    In an eagerly anticipated judgment this morning the High Court held a term of mutual trust and confidence should not be implied by law in employment contracts.

    The court unanimously allowed an appeal from a decision of the Full Court of the Federal Court of Australia.

    The decision concerned Stephen Barker, a Commonwealth Bank employee who was made redundant and claimed the bank failed to conduct his termination process in a bona fide manner.

    The issue was that the CBA did not follow its policy of attempting to redeploy employees rather than make them redundant and Barker claimed this seriously damaged the relationship of mutual trust and confidence between them.

    The Federal Court agreed with Barker and held an implied term of trust had been breached and awarded Barker $335,000 in damages.

    But the High Court found there is no implied duty of mutual trust and confidence in employment contracts in Australia.

    The High Court held the proposed term was not necessary in the sense that would justify implying it by law into all employment contracts.

    Saul Harben, head of the national workplace relations practice at law firm Clayton Utz, told SmartCompany the decision distinguishes Australia from the United Kingdom where there is an implied duty of mutual trust and confidence.

    “Whilst the common law hasn’t accepted the implied duty of mutual trust and confidence, there is nothing to stop the federal government reforming the legislation to include the duty,” Harben says.

    However, Harben says this is unlikely and is not on the government’s reform agenda.

    He says the issue has been “bubbling away” for 10 years now and the High Court judgment provides certainty for employers.

    “It reduces the level of uncertainty for Australian employers,” Harben says.

    “It’s a timely reminder for employers to review their employment contracts and work out which terms they do imply into their employment contracts.” 

    The Commonwealth Bank says it is considering the judgment and will respond in due course.

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    Thermomix customers hand over almost $2000 for the high-tech appliance, but a lack of warning over the introduction of a new model could end up being an expensive mistake for the brand.

    Thermomix Australia, the local distributor of the cult kitchen appliance, has been forced to publicly apologise for not letting customers know a new model, the TM5, was coming before its launch last weekend.

    Angry customers have flocked to social media to express their outrage, with those who recently purchased the older TM31 model dismayed they were not told by Thermomix consultants a new model was soon to be available.

    The TM5, which is being offered at an introductory price of $1989, is billed as being “newer, bigger, better and more digitally advanced” than the TM31, with a touchscreen instead of buttons and a function that remembers your recipes.

    The TM31, which has been available for a number of years, also retails for close to $2000, although some users are now offering secondhand TM31 models for a fraction of the retail price via online sites such as eBay.

    Close to 2500 people have liked a new Facebook page, Thermomix unhappy customers, which was established in opposition to the company’s actions, while 1900 people have signed a petition calling for Thermomix to “address the issues surrounding the misleading way Thermomix AU have handled their customers and provide a fair and satisfactory resolution”.

    Angry customers have also flooded the official Thermomix in Australia Facebook page, with many posting about their personal stories of having purchased a TM31 within days of the new model being unveiled without knowing a new model was on the way.

    In a statement issued to SmartCompany, Thermomix Australia said it is “deeply sorry that this has resulted in some of our very valuable customers feeling disappointed”.

    “The Australian launch of the Thermomix Model 5 on Saturday 6 September was conducted in line with global brand compliance, in accordance with our distribution arrangements which did not allow for any pre-promotion of the new product,” said Thermomix Australia.

    “We value every one of our customers and recognise that this is not an ideal situation for everyone involved. We understand the position of our customers that recently purchased a TM31 and are taking this issue very seriously.”

    Thermomix Australia said it is working to “address the concerns of those customers that recently purchased a TM31”.

    But some Facebook commenters have said they have taken their concerns to the Australian Consumer and Competition Commission, alleging Thermomix Australia mislead consumers.

    Hall & Wilcox partner Sally Scott told SmartCompany the test will be whether not telling consumers about a new product constitutes misleading conduct by omission or silence.

    “The test is whether in the particular circumstances, the consumer would reasonably expect to be told something,” says Scott.

    “If the answer is yes, then the failure to say something could constitute misleading conduct.”

    Scott says in the case of Thermomix Australia, the question will be whether consumers would have reasonably expected to have been told about the new model, but the answer to this could go either way.

    “If we were talking about the latest iPhone or particular car model, then because of conduct with previous new releases, it would be reasonable for consumers to expect that they would be told before the release,” says Scott.

    “Thermomix is a unique product … [and] a premium product I understand it is never discounted. It is also sold by a less common practice.”

    “For these reasons, the answer to whether the expectation would be reasonable is far less certain.”

    Scott says all businesses must be mindful that misleading conduct can include the failure to say something.

    “They need to turn their mind to whether in the particular circumstances, the consumer would reasonably expect to be told something,” she says.

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    Former MasterChef Australia contestant Aaron Thomas has settled a proceeding which claimed he embezzled more than $US7 million ($7.6 million) from the company he founded.

    Thomas, 26, appeared in the first season of MasterChef with his occupation listed as “student”.

    After being eliminated from the reality television show Thomas went on to found mining company, Oakmont, in 2010 in the United Kingdom.

    The company has mining interests in Brazil.

    But Thomas was sacked from his role as chief executive of Oakmont earlier this year.

    Oakmont launched legal proceedings in the New York Supreme Court claiming Thomas embezzled money to fund an extravagant lifestyle for himself and his fiancée, Thaiana Rodrigues.

    Oakmont claimed Thomas spent company money on a Caribbean holiday, Greek holiday, luxury yacht and private jet charters, a $US171,000 Tiffany’s engagement ring for Rodrigues, luxury New York apartment and a $US53,000 holiday to Australia including first class airfares.

    “Thomas used the company bank accounts as a personal piggy bank, withdrawing substantial sums of money and transferring them to his personal accounts and to family and friends,” the complaint filed with the court stated.

    Oakmont also claimed Thomas “engaged in a campaign of deception” of Oakmont’s shareholders, directors, and employees to cover-up his wrong-doing.

    This alleged campaign included filing inaccurate financial statements, creating false documents which purported to give board approval for spending and fabricating a backdated services contract that purported to award Thomas a “substantial salary”. 

    But the complaint was “discontinued with prejudice” in July.

    This means the claims against Thomas have been withdrawn and cannot be resurrected again.

    Thomas’ lawyer, Rob Garson of GS2Law, told SmartCompany a confidential settlement has been reached and as part of this settlement Thomas no longer has his 25% shareholding in Oakmont.

    Garson says at times the proceedings “read a bit like a Monty Python script” but he was pleased with the outcome.

    “It’s a great move forward for a young man who is obviously deeply talented and knowledgeable in his area and hopefully he can move forward,” Garson says.

    “It’s a clean break and hopefully the company can move on its direction and Aaron Thomas can move on as well. As my great grandmother used to say, let me remain in my house, you remain in yours and let God look over everyone.”

    Garson says it is now “onwards and upwards” for Thomas who will look to build a new business within the mining and minerals arena.

    He says it is unlikely Thomas will draw on his MasterChef expertise for his new business, “but you never know”.

    Thomas was eliminated after losing a test to fellow contestants Sandra Morena and Julie Goodwin, who went on the win the show.

    At the time, Thomas’s overconfidence was said to be his downfall, as he failed to taste the paella he was cooking and did not achieve the right balance of spices.

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    A Tasmanian business has back-paid staff almost $80,000 after a Fair Work investigation found it had failed to pay its employees the correct rates.

    Daci & Daci Bakers, a bakery and restaurant in Hobart, was found to have underpaid 94 employees $77,921 between December 2011 and May 2013. The amounts ranged from less than $10 to $19,000.

    According to Fair Work, the employees were underpaid their minimum hourly rate of pay, casual loadings and penalty and overtime rates. The business has entered into an enforceable undertaking with the Fair Work Ombudsman to avoid litigation.

    Rachel Drew, partner at TressCox Lawyers, told SmartCompany enforceable undertakings can be accepted by the Fair Work Ombudsman as an alternative to commencing a court claim against a person who has contravened the Fair Work Act

    “For employers, an enforceable undertaking can mean they avoid the cost and delay of a court battle,” says Drew.

    “Possibly more importantly, it also means they can avoid being ordered to pay a fine. The Fair Work Ombudsman will generally consider accepting an enforceable undertaking where the employer readily admits the contravention, and it appears the contravention was inadvertent.” 

    Drew says because the Fair Work Ombudsman must consider the “public interest” in each case, it would be difficult for an employer to avoid prosecution if the Fair Work Ombudsman believed the employer had deliberately or recklessly underpaid employees.

    “In this case, the employer relied on an external administrative advisor to assist with their payroll functions and the underpayments were inadvertent,” she says. “The employer voluntarily rectified the underpayments.”  

    Enforceable undertakings were introduced in 2009. Fair Work Ombudsman Natalie James said in a statement the employment watchdog has since been using them to achieve positive outcomes when a business has accepted responsibility for its actions and agrees to fix the problem.

    “Many of the initiatives included in enforceable undertakings help to build a greater understanding of workplace responsibilities, motivate the company to do the right thing and help them avoid the same mistakes again,” said James.

    “It also means we can resolve matters more speedily than if we proceed down a path towards litigation, often achieving outcomes, such as training sessions for senior managers, which are not possible through the courts.”

    James also pointed out it can be difficult for small businesses to comply with regulations due to fewer staff who are generally more time-poor and juggle more roles than larger businesses. 

    “Small businesses often don’t have the benefit of in-house human resources and payroll staff, so we place a high priority on assisting them,” she said.

    “Equipping people with the information they need helps to create fair and productive workplaces, as well as ensuring a level playing field for all.”

    In a statement, Daci & Daci Bakers said it accepts the Fair Work Ombudsman’s ruling and have paid the staff who were underpaid their outstanding entitlements.

    “This was not a deliberate attempt to not pay employees what they were entitled,” said the company.

    “It was based on a misunderstanding of what was required to be paid. This was apparent by the fact that a number of employees were paid above award rates. We would never deliberately do the wrong thing by our staff, and we were shocked and disappointed when we found out what had gone wrong.”

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    The Federal Court has ruled it is not a workplace right for employees to talk to the media, after a prison guard allowed a union to include her comments about the conditions of her workplace in a media release picked up by major news outlets.

    United Voice, the union representing employee Kylie Muscat, lost an injunction to have Muscat’s employment reinstated by GEO Group in late August.

    Justice Collier dismissed the claim for an adverse action and accepted an undertaking by GEO to continue paying Muscat until her case is heard in full in the Federal Court next year.

    Muscat, who was a union delegate, had told United Voice that safety had been jeopardised in the Wacol correctional facility in south-east Queensland, where she had been employed since 2006, because of a smoking ban imposed on prisoners.

    Muscat was quoted in the media release, issued in August, as saying: “On top of the resourcing issues we already had, conditions at the prison have become a perfect storm and it's workers who are suffering … prisoners at the Centre could take advantage of security gaps identified in unguarded media commentary by members of staff at the Centre, is a real risk."

    Two metropolitan daily publications, the Sydney Morning Herald and the Brisbane Times, picked the story and published Muscat’s comments.

    Believing Muscat had breached its code of conduct, GEO suspended her with full pay and required her to show cause as to why her employment should not be terminated.

    United Voice argued Muscat had merely exercised her workplace rights within the Fair Work Act and was entitled to speak to the media in her capacity as a union delegate.

    Justice Collier said the prison officer had clearly breached the applicable enterprise agreement that required employees to adhere to a code of conduct that stated employees were not to deal with the media on company-related matters under any circumstances.

    He was not persuaded there was a workplace right for employees to comment to the media under the Fair Work Act and dismissed the claim.

    United Voice prisons co-ordinator Michael Clifford told SmartCompany the full outcome of the case would not be decided until it was heard in court next year.

    “The court is still yet to decide who’s right and who’s wrong in the case,” says Clifford, who points to the need for the court to look at what the union said versus what Muscat herself said.

    “We believe Kylie hasn’t said anything detrimental about the company. Union delegates should have the right to advocate on issues, particularly on safety.”

    United Voice and Muscat last week rallied against concerns over safety in the prison system outside the State Law Building in Brisbane's CBD. Muscat appeared with a gag over her mouth.

    Finlaysons partner and workplace law specialist Guy Biddle told SmartCompany an employee has the responsibility of fidelity to their employer, which meant they had to act within their best interests.

    Biddle says employees must seek internal resolution through the company’s dispute resolution mechanisms before externally seeking to resolve issues.

    “Before you bad mouth your employer, in the first place, you have to go to them,” says Biddle, who points out employees may also face issues of defamation if they speak out about their employer.

    “To go externally is very risky,” he says.

    Biddle says it is a very good idea for employers to have codes of conduct and policies on such issues.

    “Whether they are talking to the media or talking through social media, there are so many easy ways to communicate concerns,” says Biddle.

    “Employers need to make it clear if you have got a problem, you’ve got to start with us.”

    United Voice and GEO Group were contacted for comment but SmartCompany did not receive a response prior to publication.

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    A Melbourne company that previously found itself at the centre of a workplace bullying controversy has been forced to back-pay staff almost $20,000 by the Fair Work Ombudsman.

    Kanodia Nominees, which manufactures gourmet food for companies including IKEA and Costco, was the target of an investigation and audit by the ombudsman after receiving a series of complaints about its workplace practices.

    The company came under fire from the watchdog in 2012 over allegations managers at its Glendal Foods plant in Brunswick had regularly screamed orders at staff and made sexual comments towards them.

    It was also alleged employees were told they must give 48 hours' notice if they wanted to take sick leave and told casual staff they must buy lunch for the whole workplace when they become full-time employees.

    In October 2012, the Fair Work Ombudsman revealed that prior to the bullying claims, an employee had complained about excessive working hours for process workers, underpayment of overtime penalty rates and loss of hours.

    A subsequent investigation revealed process workers had in fact been underpaid a total of $19,731 between January 2010 and August 2012, with amounts ranging from $106 to $4896 each.

    They were underpaid base minimum rates, overtime rates and annual leave loading, and some did not receive paid rest breaks.

    The company was also found to have made and kept false employee records in relation to four employees.

    The ombudsman today announced the company had completed the back payments to all 17 affected staff after Kanodia agreed to enter an enforceable undertaking with the watchdog.

    The terms of the undertaking required the food manufacturer to apologise to each of the affected staff and give an unqualified commitment to comply with workplace laws in future.

    Kanodia also advised the ombudsman it had referred and addressed bullying matters on to WorkSafe Victoria and matters of leave and discrimination on to the Fair Work Commission.

    SmartCompany contacted Kanodia for comment, but did not receive a response prior to publication.

    The ombudsman said the company had co-operated with the investigation.

    Employment lawyer Peter Vitale told SmartCompany one breach of workplace law can often expose other contraventions to the Fair Work Ombudsman.

    “Any time somebody breaches the law, they invite themselves to come under the scrutiny of the relative authority,” says Vitale.

    “Once the ombudsman has a reason to investigate one aspect or one complaint, it might be that other employees feel comfortable to come forward or the ombudsman might discover other things they’ve done through an investigation.”

    Vitale says agreeing to an enforceable undertaking is often the smart decision for a business found to be in breach of the law.

    “It is typically a more palatable alternative to litigation,” says Vitale.

    “Avoiding litigation at any time is sensible. If the law has been breached, there is little point to subject yourself to litigation and potential fines.”

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    A Sydney ferry driver, who had won his job back after getting the sack for crashing his boat into a wharf and then failing a drug test, has had his reinstatement overturned by the full bench of the Fair Work Commission.

    Harbour City Ferries successful appealed an earlier decision by the commission to give ship master Chris Toms back his job after he was found to have smoked marijuana before being involved in a ferry collision with the Cabarita Wharf in July 2013.

    In July of this year, Deputy President Lawrence found the dismissal was harsh given Toms’ personal circumstances and determined the sacking was disproportionate to the misconduct of the employer.

    Toms had worked on Sydney ferries since 1996 and admitted to smoking marijuana to relieve shoulder pain with his son the night before the accident.

    He had not been scheduled to work, but was called in at lunchtime to replace another ferry master who was sick.

    When approaching the wharf on July 25, the ferry being driven by Toms veered to the side and hit a metal pile. Upon disembarking at Rydalmere, all passengers appeared unaffected and Toms reported the incident to controlling officers.

    Toms completed a drug test later that evening, following which he was suspended.

    In July, he argued to the Fair Work Commission the dismissal was unfair because there was “no evidence of impairment” in his performance and given his 17-year history on the job, a one-off incident did not justify dismissal.

    An expert witness also said urine drug tests are not the most accurate way to detect cannabis and the amount in his system was unlikely to impact him.

    It was also said the ferry master’s specialised skills and experience would make it very difficult to find comparable alternative employment and a lesser disciplinary action should have been taken instead.

    Harbour City Ferries argued it had acted appropriately in its action, given its commitment to the safety of the public and other employees.

    The company was vindicated on Friday, when Commissioner Johns and senior deputy presidents Drake and Hamberger decided Toms had been in breach of Harbour City’s required drug and alcohol policy.

    The court found: “The core issue, the valid reason for termination of Mr Toms’ employment was his deliberate disobedience, as a senior employee, of a significant policy.”

    “The only mitigating factor relevant to this issue was the use of marijuana as pain relief. Consequent upon that explanation is the decision to accept a shift while aware of the likelihood of being in breach of the policy,” said the judges.

    Employment lawyer Peter Vitale, who called the ruling an “unfortunate decision” at the time, told SmartCompany the full bench saw there were not sufficient mitigating circumstances to reinstate Toms.

    “The full bench has decided public safety is a substantial and important matter,” says Vitale.

    “Any employee in breach of policies directed to occupational health and safety or public safety matters could only avoid termination for serious misconduct in very exceptional circumstances.”

    “It seems the full bench has got to the right outcome. That is why we’ve got appeal rights.”

    Steffen Faurby, CEO of Harbour City Ferries, said in a statement the decision by the commission had vindicated his company’s strict policies around drug and alcohol use.

    “We are in the business of safety,” said Faurby.

    “Tens of thousands of commuters trust us every day to transport them safely around the harbour. It is absolutely imperative that our employees abide by our zero tolerance policy when it comes to drugs and alcohol.”

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    The Fair Work Commission has ordered a male employee to stop exercising on a balcony in front of one of his female colleagues, in an example of just how wide-reaching the commission’s powers are under the anti-bullying provisions of the Fair Work Act.

    The unnamed employee was ordered by Fair Work senior deputy president Drake on July 31 to refrain from exercising on the balcony between 8.15am and 4.15pm.

    He was also ordered not to speak to his colleague, who has also not been named by the commission, in situations where no one else is in listening range; not to comment on his colleague’s attire or appearance; not to send emails to his colleague unless the content is work-related and another colleague is copied in; not to text or call his colleague on her personal phone unless there is an immediate work-related emergency; and not to raise any issues relating to his colleague’s job performance unless he has notified others in the company first.

    The commission ordered that the female employee not arrive for work before 8.15am.

    Andrew Douglas, partner at M+K Lawyers, told SmartCompany the order shows “just how broad the powers of the Fair Work Commission are to make orders directing a business or people in a business to behave in a certain way”.

    While Douglas says these particular directions appear “fairly innocuous”, they show the breadth of the commission’s powers under the anti-bullying provisions of the Fair Work Act, which came into effect on January 1 this year.

    Under the provisions, workers who believe they have been bullied at work have the ability to lodge applications for relief from repeated, unreasonable behaviour that presents a risk to health and safety.

    The commission must act within 14 days of the application being lodged and has the power to make any order it deems appropriate.

    “Just imagine how they could interfere with a business,” says Douglas.

    “A person could be not allowed to speak to their employee or a boss could be told they cannot walk through their factory.”

    “They seem innocuous but they could change the entire way the company is run, especially for a small business.”

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    A Perth breast screening clinic and its sole director have been ordered to pay $250,000 in penalties for breaching Australian Consumer Law.

    The Federal Court delivered its verdict in the long-running case against Safe Breast Imaging and its director Joanne Firth on Tuesday, ordering the company to pay $200,000 and Firth to pay $50,000.

    Firth was also disqualified from managing corporations for four years.

    The judgment follows a court finding in March that Safe Breast Imaging represented to its clients that its breast screening service using a multi-frequency electrical impedance mammography (MEM) device was able to assess whether an individual was at risk of developing breast cancer and the level of that risk, as well as providing an assurance to individuals that they did not currently have breast cancer.

    However, following an investigation by the Australian Consumer and Competition Commission, the court found there was no scientific basis for the clinic’s claims that the device can be a substitute for mammography.

    Justice Baker ruled at the time the conduct of the company and Firth “had the potential to pose a grave risk of serious harm to the health of consumers, who were or were likely to be misled into believing the MEM device could be used for the purposes represented”.

    Baker also took issue with Safe Breast Imaging’s claims that Australian registered doctors were involved in evaluating clients’ images and writing their reports, which he said were “entirely misplaced”.

    Safe Breast Imaging and Firth have been ordered to post the court’s findings on their Facebook pages and the court has granted the ACCC permission to send notices to the clinic’s customers to inform them of the outcome.

    This is not the first time the ACCC has taken action against a breast screening clinic for misleading conduct, with the Federal Court ruling in March breast imaging provider Breast Check engaged in misleading or deceptive conduct and made false representations in relation to MEM devices.

    “Consumers are entitled to expect that breast imaging services would be provided with medical oversight and promoted in a way that is consistent with credible scientific knowledge,” said ACCC commissioner Sarah Court in a statement this week.

    The ACCC said Safe Breast Imaging is no longer offering breast screening services and the phone number listed for the company is disconnected.

    SmartCompany attempted to contact Joanne Firth but did not receive a response prior to publication.

    Michael Terceiro, of Terceiro Legal Consulting, told SmartCompany the big factor in this case was the risk that consumers were receiving incorrect medical advice.

    Terceiro says the ACCC has been “very keen” to pursue cases in which it believes consumers have been misled about their health although this is not listed as a specific priority area for the ACCC.

    He says the maximum fine for a corporation found to have misled consumers is $1.1 million so the $200,000 penalty imposed by the court is “probably a little on the low side”.

    The ACCC originally sought a $550,000 fine for Safe Breast Imaging and $110,000 penalty for Firth.

    While Terceiro says Firth’s fine of $50,000 is “quite a lot”, it’s likely the fine for Safe Breast Imaging was reduced because of the size of the corporation and its clean record in relation to previous contraventions of Australian Consumer Law.

    However, he says the ACCC does not shy away from imposing fines on companies that cease trading.

    “If a company has gone out of business it is usually hit harder,” he says.

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    A Sydney businesswoman has escaped a jail sentence despite being convicted of a $3.6 million home loan fraud.

    Following an investigation by the Australian Securities and Investments Commission, Shashi Kanta Prasad was convicted in the New South Wales District Court of creating false loan documents in an attempt to secure home loans totalling more than $3.6 million.

    According to ASIC, the fraud resulted in Prasad receiving upfront and ongoing commission payments for her employer of more than $11,000 between February 2008 and March 2011.

    Prasad was employed by Raj Prasad & Co, which trades as Premium Financial and Retirement Solutions.

    Prasad pleaded guilty in July to making seven false statements as well as 41 fake documents and instruments, and then using those documents and instruments with the intention to obtain a financial advantage for her employer in the form of commissions.

    She faced up to 10 years in prison for two charges relating to using false documents or instruments, and up to five years in prison for offences relating to obtaining a financial advantage by false or misleading statements and having an intention to defraud by false or misleading statement.

    However, the court only handed Prasad an 18-month good behaviour bond, noting her full cooperation with ASIC as a significant factor in the judgement.

    “This case illustrates the potential benefits available to those who provide full and timely cooperation to ASIC and plead guilty to their offending at the earliest opportunity,” said ASIC deputy chairman Peter Kell in a statement.

    “ASIC will continue to pursue those who engage in this type of conduct, but it is also our policy to encourage and recognise cooperation from those we investigate.”

    Brett Warfield chief executive of forensic accounting firm Warfield & Associates, told SmartCompany the court would have considered how much financial gain Prasad actually received from the transactions when determining her sentencing.

    “Cooperating with the investigation is another thing the court will take into account when looking at sentencing,” says Warfield, who says it is important for businesses and employees to cooperate with investigations by the corporate regular as early on in the process as possible.

    “It will take less time and not as many resources will be used in the case,” he says.

    SmartCompany contacted Premium Financial and Retirement Solutions but did not receive a response prior to publication.

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    Australia’s consumer watchdog is taking supermarket giant Woolworths to court over several unsafe products, including a deep fryer that allegedly burnt customers and a folding stool that could not withstand the weight it was meant to. 

    The Australian Competition and Consumer Commission alleges Woolworths made false or misleading representations about the products by offering them for sale when they were not safe and then by continuing to sell the products once they were aware they could have caused serious injuries.

    It is not the first time this year the supermarket has found itself facing legal action from the watchdog, after the company was found guilty of breaching an undertaking on its shopper dockets in April.

    The products in question include a Woolworths home brand Abode Stainless Steel Deep Fryer, which the ACCC alleges seriously burnt two customers on separate occasions after the handle of the product snapped off and splashed them with hot oil.

    Another of the products under the spotlight is Woolworths Select Drain Cleaner, which allegedly caused one customer to have a nose bleed and burns to her eyelid, forehead and nose, and a separate customer to have burns to her foot after she dropped the product in store.

    The ACCC also alleges Woolies made false or misleading representations about the weight capacity of its Home Collection Padded Flop Chair and Masters Home Improvement Folding Stepping Stool.

    Court documents allege one customer fractured her spine after a folding stool collapsed, despite claiming she weighed 25 kilograms less than the maximum weight labelled on the product.

    These products have all subsequently been recalled by Woolworths, but the watchdog says the products were not recalled quickly enough after Woolworths became aware of such incidents.

    “Companies should ensure that they have effective quality assurance processes in place to prevent unsafe products from reaching their shelves,” said ACCC chairman Rod Sims in a statement.

    “All suppliers have an obligation to ensure that any product defects identified are dealt with swiftly to prevent harm to consumers. This includes ensuring that any serious injury or illness associated with a product is reported promptly and that recall action is taken where appropriate.”

    Woolworths issued a statement saying the company puts customer safety first and has a strong record of compliance.

    “These are serious matters and we will evaluate each claim carefully and respond as appropriate on merit,” said the supermarket.

    Woolworths said it has committed additional resources to its quality assurance team in the last few years and has significant capacity to take feedback from customers.

    Matthew Hall, partner at Swaab Lawyers, told SmartCompany this morning small businesses may be in a better position to deal with unsafe products than the big end of town.

    “They are much closer to the action,” says Hall.

    “I suspect a large part of the problem with these products was the breakdown in the process of communicating information from store managers up. It’s like Chinese whispers by the time it gets there.”

    “If I was the Woolworths CEO, I’d be asking, ‘how could this happen?’”

    Hall says this case should be a reminder to small businesses to have policies in place to deal with complaints about the safety of their products.

    “The lesson is to ensure there are processes by which they can become aware very quickly that there is a problem,” he says.

    If a business receives a complaint about the safety of a product, Hall says they should firstly find out as much information as possible and determine what kind of issue they are dealing with.

    He says not all complaints should lead to an immediate product recall and business should seek legal advice before they get to that point.

    When dealing with products sourced from manufactures, Hall says small business owners are not responsible for product recalls but should be aware of whom to refer complaints to if they receive any grievances from customers.

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    The Fair Work Commission has ruled an employer was within its rights to dismiss an employee who told his colleagues to “get f-cked”, in a case that gives new meaning to the adage ‘swearing like a wharfie’.

    Grant Rikihana was dismissed from his job as a dockhand for Mermaid Marine Vessel Operations in September 2013 after claims he swore and engaged in “abusive, harassing and threatening behaviour” towards his colleagues and supervisors on multiple occasions in 2012 and 2013.

    Rikihana brought an unfair dismissal case against Mermaid, arguing the language he used was “not out of the ordinary” at Mermaid, but the Fair Work Commission this week sided with Mermaid and ruled the company had valid reasons to terminate Rikihana’s employment.

    The commission heard on one occasion Rikihana told his supervisor “loudly and aggressively” to “get f-cked” and “get the lazy c—t to do it” when asked to help another worker.

    During a separate safety meeting, Rikihana allegedly called another worker a “dickhead” and a “cock”, saying “you’re supposed to be a leader of this group”.

    On other occasions, Mermaid Marine Vessel Operations said Rikihana told another supervisor to “f-ck off” and “get f-cked twice” and told a security guard to “f-ck off”.

    While Commissioner Bruce Williams said swearing is a regular aspect of the “everyday descriptive language” used at the dock, he said Rikihana’s malicious comments and aggressive behaviour directed towards his colleagues were “totally unjustified and inexcusable”.

    “There is a generally appreciated distinction between regularly using swear words as part of everyday descriptive language and swearing aggressively and maliciously at another person,” he said.

    Mermaid had introduced a new code of employee conduct in July 2013, designed to clean up the workplace’s culture, and Rikihana gave evidence that he was aware of the new code.

    Rikihana had also previously received a written warning about his conduct in December 2012, after entering the site of a workplace accident without a permit, informing him “any further indiscretions … will likely result in the termination of your employment”.

    “Mr Rikihana had been put on notice by his employer on a number of occasions that [his behaviour] was not acceptable,” said Williams.

    “He was aware his actions were contrary to the behavioural expectations of his employer as detailed in its code of conduct and when asked to account for his actions he was not honest in his responses to his employer. Mr Rikihana’s dismissal in all the circumstances was not surprising and certainly was not unfair.”

    Andrew Douglas, partner at M+K Lawyers, told SmartCompany this case highlights the importance of context when considering misconduct and language use in the workplace.

    “What’s acceptable on a worksite won’t be accepted in a professional services environment,” says Douglas.

    But Douglas says irrespective of what kind of language is commonly used in a workplace, it is never acceptable for language to be directed at individuals in a nasty or malicious way.

    Douglas says Mermaid had attempted to change its workplace culture by introducing a new code of conduct and training its employees under the new code, which sets a new benchmark for how employees in that organisation should behave.

    “This is an example of an organisation that wanted to change how it behaves and create a more respectful culture, but the employee didn’t change his behaviour,” says Douglas.

    “It was not only the bad manner and style of language used, but the fact that it was directed towards others.”

    Rikihana has until October 3 to appeal the Fair Work Commission’s decision.

    SmartCompany contacted Mermaid Marine Vessel Operations but did not receive a response prior to publication.

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    A Melbourne radio station has been ordered to back-pay two former staff members more than $60,000 in outstanding wages and entitlements after it paid them just $20 for each program they produced and presented.

    The radio station, 3CW Chinese Radio, initially claimed the former presenters were volunteers.

    However, a Fair Work Ombudsman investigation  determined the pair were in fact employees and deserved to be paid their full entitlements under the Broadcasting and Recorded Entertainment Award 2010.

    The employees were underpaid $45,839 and $14,287 respectively for work performed between January 2010 and June 2013. According to Fair Work, the employees had to wait more than three months for their wages on several occasions.

    In order to avoid litigation, 3CW’s sole director and secretary, Zhao Qing Jiang, has entered an enforceable undertaking with the Fair Work Ombudsman. The terms of the undertaking required a full reimbursement to both former staff and a written apology.

    3CW managers must undertake specialist workplace relations training to avoid a similar situation happening in the future. The enforceable undertaking also requires independent auditors to review and report on the company’s compliance with workplace laws for the next three years.

    Swaab Attorneys partner and workplace relations experts Warwick Ryan told SmartCompany the issues around whether someone is a volunteer, intern or on work experience are very topical at the moment and tend to “hover around” when the job market is tight.

    “There’s two basic frameworks to look at it from,” says Ryan.  

    “First, look at the nature of the business – is it a commercial enterprise? If it’s a non-commercial entity – such as a charity – then obviously there are lots of people who volunteer their time and it’s clearly a volunteer arrangement.”

    Ryan says most of the cases that have dealt with these issues have had to do with commercial operations. He points out that all businesses should be aware of the law when it comes to unpaid trials, working for free and internships.

    “Unpaid trials can only be for a very short space of time – less than a shift or perhaps a shift,” he says.

    “They’re undertaking a situation where there is someone observing them for that period and it is predominately for their assessment. If it extends beyond that shift, you’ve got a problem. If they’re left unsupervised, you’ve got a problem.”

    Ryan says the important thing is for the Fair Work Ombudsman is to continue the conversation with SMEs.

    “Where employers can be unstuck is sometimes people come in as part of a vocational educational placement, and the people who are placing them are so impressed by what they do they actually want to give them something but can’t,” he says. “So businesses have gotten into trouble when they’re actually trying to be generous.”

    Ryan says internships have been by far the most controversial aspect of unpaid work.

    “The key to work experience is they’re not stepping into a role that would be normally carried out by an employee,” he says.

    “While they might be doing work that is similar to other employees that work there, it is not an actual role.”

    Fair Work Ombudsman Natalie James said in a statement enforceable undertakings are used when the watchdog forms the view that a breach of the law has occurred, but the business has accepted responsibility and has agreed to co-operate and fix the problem.

    “Many of the initiatives included in enforceable undertakings help to build a greater understanding of workplace responsibilities, motivate the company to do the right thing and help them avoid the same mistakes again,” she said.

    “It also means we can resolve matters more speedily than if we proceed down a path towards litigation, often achieving outcomes, such as training sessions for senior managers, which are not possible through the courts.”

    James also pointed out that small businesses are at a disadvantage when it comes to compliance issues because they often lack the benefits of in-house human resources or payroll staff.

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    A Canberra public servant has lost their bid for workplace compensation, with the Administrative Appeals Tribunal ruling the employee’s supervisor acted reasonably in response to suggestions she deserved longer breaks to find a café that served organic coffee and soy milk.

    Pardeep Sidhu applied for compensation from government workplace insurer Comcare in January 2013 after suffering from a stress-related “adjustment disorder”, which she said was the result of a number of administrative actions by her supervisor Sky May.

    Along with her searches to find the right coffee, Sidhu had told May discrepancies in her time sheets could be explained by using the stairs for exercise, comforting a friend, having an inter-state login to the time management system which caused delays in her office hours being recorded and studying for her MBA in the ATO foyer.

    May met with Sidhu on multiple occasions and was given permission by the ATO human resources division to provide Sidhu with a formal warning about her inability to meet the organisation’s time management requirements.

    But Sidhu claimed May used her position to “intimidate and scrutinise her work and career” and as a result of the issues relating to time management, unsuccessful requests for study leave and a dispute over the feedback provided through Sidhu’s performance review, May was responsible for her developing an adjustment disorder.

    Comcare dismissed the claims in January 2013 and upheld the decision on appeal in April 2013.

    Sidhu took her appeal to the tribunal in June 2013 but in July this year the tribunal ruled the ATO and May acted reasonably.

    “The tribunal accepts this was a case in which there was a breakdown of the relationship between a supervisor and an employee and that this adversely affected the level of trust between the two and led to a considerable amount of hostile action by both parties,” said tribunal member Robin Creyke.

    “Nevertheless, the evidence does not support the multiple claims that the administrative actions as a result of which Ms Sidhu suffered an adjustment disorder, were unreasonable or taken in a reasonable manner.”

    “The actions were minuted extensively, they were taken following appropriate advice, and only in the face of continuing conduct by Ms Sidhu which did not accord with ATO policies.”

    Sidhu is currently working in another division of the ATO and an ATO spokesperson told SmartCompany the Tax Office does not have anything further to add to the tribunal’s findings.

    Andrew Douglas, partner at M+K Lawyers, told SmartCompany the test applied in stress-related claims for workplace compensation is the same as the test applied in bullying cases: whether the organisation acted reasonably in the way it managed the claim and whether its actions were themselves reasonable.

    “What this court held, and what other courts have held, is that if you are treated reasonably and the decisions taken by the organisation is reasonable in themselves, it wouldn’t matter if you had a psychotic breakdown,” says Douglas.

    “The lessons for business are, when you are dealing with a challenging person, step away from the conflict, treat them the best you can, and ensure you objectively follow your processes on all occasions.”

    “If you do that, three things will happen. One, the likelihood of the issue escalating to a compensation claim is reduced. Two, if it is elevated to a compensation claim it will be rejected. And three, if they make a bullying claim, you have a complete defence.”

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    A 65-year-old employee who was sacked for sending an email about Muslim radicals with the subject line, ‘World War 3 – PASS IT ON’ from his work email account has been awarded $29,000 due to his poor prospects of finding another job.

    Engineering company Thiess was found to have a valid reason for sacking the employee by the Fair Work Commission last week, but was made to compensate the employee who has been unable to find new work since his termination.

    The employee, Ronald Anderson, sent the email to 43 people, including 27 employees within the company, in June last year.

    FWC Deputy President Ashbury found the email, which included “highly offensive” picture attachments that referenced beheadings, vilified persons of the Muslim faith.

    Thiess argued the email was a serious breach of company procedures around the acceptable use of email to broadcast an email that was “offensive, inappropriate, and potentially discriminatory and vilifying”.

    The company also said Anderson had previously been warned about his unacceptable use of the company email systems to broadcast non-work emails and, by sending the email, he had destroyed the relationship of trust and confidence that must exist between an employer and an employee.

    Anderson argued he was unaware that forwarding the email would be grounds for his dismissal and had he been made aware of this, he would not have sent it.

    Ashbury found the dismissal was not harsh and not disproportionate to the “gravity of the misconduct”.

    “The misconduct was extremely serious and had significant potential to damage Thiess’ reputation,” said Ashbury.

    “Mr Anderson’s misconduct did provide a valid reason for his dismissal and I do not find that the dismissal was unjust.”

    However, he did find the dismissal was unfair on the grounds that it was harsh because of the consequences for Anderson and because he had not previously been warned he could be fired for it.

    Ashbury therefore found the payment of compensation was appropriate, but discounted the amount he would have earned with the company by 50%, to $28,578.68.

    M+K Lawyers partner Andrew Douglas told SmartCompany in the last six months, the Fair Work Commission had moved away from finding employers can necessarily terminate an employee that breaches email or internet policies.

    “The commission always focuses on the knowledge of the person and how reasonably, given the person’s circumstances, they could find alternative work,” says Douglas.

    Douglas says at the time Anderson sent the email, he was clearly not aware he could lose his job.

    “He was a 65-year-old man who was otherwise unemployable… It was the ultimate punishment for him.”

    Douglas says there are two obvious lessons employers can learn from this case.

    Firstly, he says employers must “bring home” to employees the consequences of a breach of policy that could cause reputational damage to the business.

    “People must know the consequences of their actions,” says Douglas.

    “People must know when they press that button they’ll be fired.”

    Secondly, he says employers must reflect on the personal circumstances of an employee they are to terminate and moderate their decision-making with the question, ‘what will happen to this person if I terminate them?’

    “If this was a 25-year-old with a trade, they would have had the opportunity to find alternative work.”

    SmartCompany contacted Thiess, but the company declined to comment.

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