141 fraudulent expense charges don’t justify dismissal
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In this edition:
- 141 fraudulent expense charges don’t justify dismissal;
- WA WHS harmonisation getting (even) closer; and
- principal must pay $1 million damages to contractor’s employee.
141 fraudulent expense charges don’t justify dismissal
In an unexpected decision from the Fair Work Commission, it recently held that an employee was unfairly dismissed from his employment – despite submitting fraudulent claims for 141 expenses.
Mr Camilleri worked for IBM Australia Limited for some 17 years and prior to the termination of his employment he had an unblemished employment history. At the time of his termination, he was a Technical Project Manager/Managing Consultant. Between March 2011 and September 2012, Mr Camilleri was engaged in an IBM project which required him to travel from his home in Adelaide to Melbourne where the project was based, and stay in Melbourne. In May 2013 an IBM Internal Audit function commenced which found that during the period from October 2011 to 26 September 2012, Mr Camilleri made various expense related claims in breach of IBM policies, procedures and code of conduct. The expense claims related to:
- 141 accommodation payments for when he was not in Melbourne for business;
- reimbursement for air travel to the Gold Coast to Melbourne for a personal trip; and
- use of his personal credit card to make payments associated with accommodation payments for his Melbourne trips when he should have used his IBM credit card.
Mr Camilleri’s response
IBM sought a response from Mr Camilleri in January 2014 asking him to show cause as to why his dismissal should not be effected. Mr Camilleri’s response, provided in February 2014 included the following reasons:
- in relation to all the improperly incurred expenses, had IBM identified these matters at an earlier time he would have addressed them;
- the Melbourne accommodation payments were an error on his behalf;
- he thought he had approval for the Gold Coast trip;
- he agreed that he should have used the IBM credit card but IBM did not incur any additional costs;
- he was prepared to repay any amounts to which he wasn’t entitled; and
- IBM’s decision to terminate his employment was inappropriate given the length of time since these events occurred and the process it had followed was unfair.
Mr Camilleri also asserted that it was always his belief that if he had incorrectly incurred an expense, that IBM’s expense claims system would detect it.
The Commission’s finding
Senior Deputy President O’Callaghan found as follows:
- Mr Camilleri breached the IBM Business Conduct Guidelines and IBM policy requirements and these represented valid reasons for termination of employment; but
- the Gold Coast trip and use of personal credit card were not valid reasons for termination of employment;
- IBM had not given enough consideration to Mr Camilleri’s responses to the allegations;
- the long delay in investigating the matter and alerting Mr Camilleri to the allegations against him (3 years) was ‘significant’ in terms of fairness; and
- insignificant weight was given to Mr Camilleri’s ‘long and unblemished’ record of service with IBM as a factor which mitigated against termination of his employment.
Senior Deputy President O’Callaghan found that IBM’s decision to terminate his employment was unfair and he ordered that Mr Camilleri be reinstated.
Lessons from this case
While the decision to reinstate is somewhat surprising, the findings in general do reflect the usual issues that are taken into consideration when determining whether a dismissal has been harsh, unfair or unreasonable. Having policies and procedures in place is critical in establishing standards of acceptable behaviour, and can be used as a reference point if inappropriate behaviour occurs which may lead to disciplinary measures. However, the following should also be taken into account:
- when applying disciplinary measures, consideration should be given to the length of an employee’s employment, and the nature of their employment record;
- give genuine consideration to the validity of any reasons given in the employee’s defence;
- allowing a significant amount of time to lapse between the employee’s actions and instigating proceedings against him (3 years) may be ‘unfair’; and
- avoid bolstering the main reasons for dismissal with additional ‘petty’ factors to support the termination, where the additional factors would not in themselves lead to significant disciplinary action.
Failure to take these factors into account is more likely than not to lead to a finding that a dismissal was harsh, unfair or unreasonable.
WA WHS Harmonisation
In September we wrote about the announcement by the WA government that it would be moving a step closer to the national WHS system by presenting its version of the model legislation for public comment (a ‘Green Bill’). On 23 October the long-awaited Work Health and Safety Bill 2014 (WA) was finally tabled in Parliament by the Attorney-General and Minister for Commerce, the Hon Michael Mischin giving interested parties 3 months to provide feedback. After the 3 month period, the government will presumably then table a modified version of the bill in the WA Parliament. All States and Territories except WA and Victoria have passed essentially the same work health and safety legislation since 2011. If the Bill is passed by Parliament, it will replace the Occupational Safety and Health Act 1984 (WA)(OHS Act) and Occupational Safety and Health Regulations 1996 (WA).
Not quite committed yet
In his speech to the WA Parliament Mr Mischin stated that ‘the purpose of the consultation is to assess the merits or otherwise of moving from the existing laws to this variant of the model WHS laws’. Mr Mischin is ‘confident that this approach will enable the government to determine whether to enhance the existing legislation by adopting some of the provisions of the model WHS laws or move to a variant of the proposed bill, or continue as at present’.
The WA harmonisation
The Bill has been drafted to include the core provisions of the Model Work Health and Safety Laws but, according to Mr Mischin it has been ‘refined to reduce red tape and maintain the compliance burden at an acceptable level’.
The Bill adopts the Model WHS Laws’ approach broadening the concept of an employer’s duty of care towards employees, to that of a ‘person conducting a business or undertaking’ (PCBU) holding a primary duty of care to ensure, as far as is reasonably practicable, the health and safety of ‘workers’.
Under the proposed legislation, ‘workers’ for whom the PCBU would have a duty of care, would include employees as well as others affected by its activities, such as contractors and their employees, and sub-contractors and their employees, and labour hire staff. In those cases there would be a joint duty of care between the various PCBU (think employers), for example, contractors and subcontractors working at a site owned or controlled by another company. The role of directors and ‘officers’ is also significantly expanded in the Bill to include ‘due diligence’.
See the CompliSpace whitepaper for more information on the changes under the harmonised WHS laws.
The WA variations
In keeping with the State’s determination to create WHS legislation ‘to suit the Western Australian working environment’, the Green Bill proposes the following key modifications to the harmonised legislation adopted by the other States and Territories:
- removing the concept of WHS entry permit holders who have right of entry to investigate safety issues (relying instead on the entry permit systems under other industrial relations legislation);
- removing the power of health and safety representatives (HSRs) to direct work to stop where they believe it to be unsafe (retaining the right of individual workers to stop unsafe work);
- ejecting the reverse onus of proof in discrimination proceedings where it is alleged that adverse action was taken against a person because of their actions relating to safety ( the WA government’s view is that the burden of proof should rest with the person making the allegation, as is the usual approach);
- removing volunteers from the scope of the definition of ‘worker’; and
- reducing record-keeping requirement for notifiable incidents.
A full list of all the changes proposed to the model WHS legislation is available here.
In line with the other States and Territories that have adopted the model WHS laws, the Green Bill introduces significantly higher penalties than those under the current WA OHS Act. The WA government had initially baulked at the amounts of penalties in its earlier consideration of the model laws. The maximum penalties for the highest level of offence, where a duty holder, without reasonable excuse, engages in conduct that recklessly exposes a person to risk of death or serious injury or illness:
- body corporate – $3 million;
- individual in a senior decision – making role (‘directors and officers’ of a PCBU): $600,000 or 5 years imprisonment or both; and
- individual as a worker – $300,000 or 5 years imprisonment or both.
The Resources Safety Bill
Our previous blog on the WA WHS laws also referred to the introduction of a Resources Safety Bill which will apply the harmonised WHS laws to mine sites. This Bill has yet to be introduced.
After the public comment period closes, the WA Government will review the comments made and consider the best legislation for Western Australian workplaces.
It will then be another case of playing the waiting game while the public and industry waits to see what the WA Government will do next and if a final, harmonised WHS bill will be introduced.
The WA website section on the Green Bill provides details on how to make a submission.
$1 million in damages awarded to sub-contractor
A recent NSW case Waco Kwikform Ltd v Perigo  NSWCA 140 saw a contractor ordered to pay $1 million to the employee of a sub-contractor following safety breaches. While this was a negligence claim, this should alert employers (PCBUs) in the harmonised work health and safety system on the importance of working out who is responsible for which safety aspects, where there is a joint duty of care for workers.
In 2006 Michael Perigo fell 8 metres while dismantling scaffolding on a building site in Glebe and suffered serious injuries. Mr Perigo was an employee of Bradley Tracey Scaffolding Services Pty Ltd (BTSS), a company hired by Waco Kwikform Ltd (Waco). Waco was responsible for providing the scaffolding to the site and BTSS supplied the workforce to erect and dismantle the scaffolding. Waco was hired by Axis Constructions Pty Ltd (Axis), the principal contractor on the site.
Earlier that year there had been two separate incidents where BTSS workers on different sites had fallen, suffering serious injuries in one case, and in the other, had died. Prior to the second incident, as part of its contract with Waco, BTSS was responsible for controlling the system of work for erecting and dismantling the scaffolding. After the second injury to a BTSS worker, and before Mr Perigo fell, Waco had assumed control on the Glebe site, of the system of work for the scaffolding and for the direct supervision of the workers whose task it was to follow the (revised) system of work prescribed by it.
When Mr Perigo fell from the scaffolding, he sued BTSS (his employer) and Waco (who had contracted BTSS) for negligence.
Duty of care
A key issue in the case was the scope and content of the duty of care owed by Waco to Mr Perigo. The Court of Appeal held that originally, Waco only had a ‘supervisory function at a “high level”‘ of the system of work for the erection and dismantling of the scaffold, and that it was under ‘no continuing duty to prescribe and enforce a system of work for the dismantling of the scaffold’. This had been the responsibility of his employer BTSS, which controlled the system of work and directly supervised its employees.
However, when Waco changed its role and essentially took over the management of safety from BTSS, its duty of care towards BTSS’s (its sub-contractor’s) employees became much more significant, and to some extent reduced the control that BTSS could exercise and hence the extent of its responsibility.
From that date, Waco’s supervision of the BTSS workers included having a Waco employee on site ‘at all times’ to oversee the dismantling of the scaffold. Previously, Waco supervisors had only visited the site ‘from time to time’. In addition, Waco instructed that one of its project managers was to supervise the dismantling of the scaffold, ensure as far as possible that the revised system of work was followed and to look out for any obvious safety concerns’.
Lessons from this case
While this case did not deal with the WHS legislation, the same principles apply: both of these companies owed a duty of care to Mr Perigo, to the extent that they had the ability to control or influence activities. Both parties were held to have failed in that duty to some extent.
This case demonstrates that:
- it is important for a principal to carefully select a competent contractor to ensure that the contractor has the skills required to carry out a job safely;
- while the duty of care owed by a principal to the employees of a contractor is usually much less than the duty of care owed to those employees by their employer, this can change depending upon the circumstances of the particular situation;
- where a principal decides that they need to take a more active role in safety management where they believe the contractor is not living up to their requirements, they should be very alert to the increased risk they are taking on;
- where a contractor has had safety failings, the principal should weigh up whether it is more prudent to terminate the relationship with the contractor because of those safety failings and replace them with a more competent contractor, or take over the safety responsibilities; and
- contractual provisions between contractors and sub-contractors should be reviewed to ensure that safety concerns can lead to a termination of the contract, even if those safety concerns arose from a contractor’s activities on a different job.
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