Commercial Notes
No. 17
5 October 2005
This issue
The extended reach of the Workplace Surveillance Act
Fitout and make-good issues
THE EXTENDED REACH OF THE WORKPLACE SURVEILLANCE ACT
The Workplace Surveillance Act 2005 (NSW) (the
NSW Act), which commences on 7 October 2005, aims to regulate
the
surveillance of employees at work by replacing and extending
the requirements of the Workplace Video Surveillance
Act 1998 (NSW). It covers three broad types of workplace
surveillance:
- camera surveillance
- computer surveillance
- tracking surveillance.
This note describes the purpose
and effect of the NSW Act and considers the extent to which
it will apply to
Australian Government agencies. The note focuses on computer surveillance,
since that is the area likely to be of greatest concern
to the majority of agencies. ‘Computer surveillance’ is
relevantly defined to mean ‘... surveillance
by means of software or other equipment that monitors
or records
the information input or output, or other use, of a
computer’.
It includes, but is not limited to, the sending and
receipt of emails and the accessing of Internet websites.
1
The requirements of the NSW Act
The relevant requirements
of the NSW Act can be summarised as follows.
Any surveillance
that does not comply with Part 2 of the NSW Act is ‘covert
surveillance’ and must be
authorised under Part 4 of the Act. Part 2 is expressed
to apply to the surveillance of employees carried out
or caused to be carried out by their employer while they
are
at work for the employer (s 9). The meaning of ‘at
work’ is broadly defined (s 5), so employees
are deemed to be at work for an employer when they
are:
- at a workplace of the employer, whether or not
they are actually performing work at the time, or
- at
any other place while performing work for the employer.
Part
2 of the NSW Act imposes two major requirements on employers
conducting computer surveillance:
- Employers must provide
prior written notice to employees (s 10(1)) addressing
the matters set out in s 10(4),
including: the type of surveillance, how the surveillance will be
carried out and the likely duration of the proposed
surveillance.
- In addition, computer surveillance may only be carried
out in accordance with an employer policy on the
subject (s 12(a)) and employees must be notified of the
policy
in advance in such a way that it is reasonable
to assume they are aware of, and understand, the policy
(s 12(b)).
If the result of similar wording in other legislation
is anything to go by, the latter part of this requirement
may be the subject of much litigation.
Part 3 of the
NSW Act imposes four further requirements relevant to organisations
planning to supervise or
restrict employee Internet and email use:
- Generally, employers may not conduct surveillance
of employees who are not at work. However, employers
may conduct
computer surveillance ‘... of the use by an employee
of equipment or resources provided by or at the expense
of the employer’ (s
16(1)).
- Employers may only prevent delivery of email,
or block access to an Internet website, in accordance
with a
policy that has been notified to employees in advance in such
a way that it is reasonable to assume they are
aware of, and understand, the policy (s 17(1)(a)).
- If an employer
prevents an employee from receiving an email, they
are generally required to give the employee notice
that delivery of the email was prevented (Prevented
Delivery Notice) (s 17(1)(b)). There are some exceptions – e.g.
an employer is not obliged to give a Prevented
Delivery Notice if a blocked email is a commercial
electronic
message as defined in the Spam Act 2003 (Cth) (s 17(2)(a)).
- Finally, any surveillance record made as a result
of surveillance may only be used for the purposes set
out
in s 18 of
the NSW Act. These purposes include a legitimate purpose related
to the employment of employees, or the legitimate
business activities of the employer (s 18(a)), and disclosure
to a law enforcement agency for use in connection with the
detection, investigation or prosecution of an offence
(s 18(b)).
The application of the NSW Act
The NSW Act expressly binds
the Crown in right of NSW and, consistently with NSW legislative
power, ‘the Crown
in all its other capacities’ (s 6). However,
it does not apply to anything done under a warrant
or other authority
under the Telecommunications Interception Act 1979 (Cth) (TI Act) or any other Commonwealth law (s 39).
Many
large organisations, including Australian Government
agencies, have national IT policies and procedures
that apply to staff in all jurisdictions. Consequently,
it
may be impractical for them to create one set of workplace
surveillance policies and procedures for staff based
in
NSW while retaining a separate set of policies and
procedures for the rest of the country. Accordingly,
the NSW Act
has the very real potential to create a high water
mark for
computer surveillance requirements, resulting in NSW
compliant policies and procedures being applied to
staff in other
jurisdictions.
Does the NSW Act apply to Australian
Government agencies?
Statutory construction
Section 6 of the NSW Act is clearly
intended to apply to all Australian Government agencies,
to the extent
it can
do so validly. As a matter of statutory construction,
both ‘employee’ and ‘employer’ are
capable of applying to Australian Government agencies
as employers, as well as to any staff that they employ.
Constitutional
inconsistency
However, there is a question whether the
NSW Act is inconsistent with Commonwealth legislation in
its application
to Australian
Government agencies. If the NSW Act is inconsistent
with Commonwealth legislation, it will be inoperative
to the
extent of the inconsistency by reason of section 109
of the Constitution. A number of pieces of legislation
are
potentially relevant here, including:
- the TI Act; and
- any Commonwealth Acts that confer power
to employ and manage staff, such as the Public Service
Act 1999 (Cth)
(PS Act).
The TI Act
The TI Act regulates the ‘interception’ of
communications passing over a telecommunications
system and, on decided cases, 2 does so to the exclusion
of state
and territory law. However, the definition of ‘interception’ in
the TI Act is limited to ‘listening to or making
a record of a communication’, which is narrower
than the definition of ‘computer surveillance’ in
the NSW Act. Accordingly, there is an issue regarding
the extent to which the TI Act excludes the operation
of the
NSW Act in relation to computer surveillance.
It should
also be noted that the Commonwealth Attorney-General’s
Department is currently reviewing the telecommunications
interception regime. On 14 September 2005, the Attorney-General
tabled in Parliament the Report of the Review
of the Regulation of Access to Communications (http://www.ag.gov.au/blunnreview).
The Telecommunications (Interception) Amendment (Stored
Communications and Other Measures) Bill 2005 (Cth)
(SCOM
Bill) was introduced on the same day, and it aims
to extend the effect of the Telecommunications
(Interception) Amendment
(Stored Communications) Act 2004 (Cth) by six months.
It
will be interesting to see whether the review results
in changes to the TI Act, or even entirely new legislation
dealing with computer surveillance, including computer
surveillance
in the workplace.
However, if the SCOM Bill is passed, it is unlikely
that any such changes would take effect until some
time in
2006.
The Public Service Act and other employment
related statutes
Many Commonwealth employees are employed
under the PS Act. It authorises agency heads to monitor
the
use of
Internet
and email facilities by agency staff. Accordingly,
there is an issue as to whether the PS Act authorises
agencies
to conduct computer surveillance to the exclusion
of state and territory law, or whether agencies are
only
authorised
to conduct computer surveillance in accordance with
other laws of general application (including, for
these purposes,
the NSW Act).
The position with respect to staff employed
by Australian Government agencies under legislation other
than
the PS Act is also uncertain. Many agencies are provided
with
powers to employ and manage staff pursuant to their
parent legislation. Accordingly, depending on the
wording
of
each relevant statute, there may or may not be an
issue of constitutional
inconsistency vis-à-vis the NSW Act. It is
therefore important that all Australian Government
agencies take
their own advice on whether the NSW Act applies to
them, and if so, how it will affect their workplace
surveillance
activities (including any consequent need to review
IT security and acceptable use policies and procedures).
Geographical
reach of the NSW Act
Finally, there is a separate
issue regarding whether the NSW Act applies to conduct
or persons outside
NSW. This
issue may be of concern to agencies with employees
that:
- are normally based outside NSW but are seconded
to a position in a NSW workplace; or
- are normally based
in NSW but are seconded or directed to work in a workplace
outside NSW.
NSW legislation is usually presumed to apply
only to things and persons in and of NSW. However, Part
1A
of the Crimes
Act 1900 (NSW) provides that NSW offences may sometimes
apply to persons and things outside NSW. A NSW offence
may apply to conduct outside NSW if there is a nexus
between the offence and NSW (for example, if the
offence has an
effect in NSW).
The question of whether the NSW Act
applies to particular surveillance or blocking activities
occurring, or
partly occurring, outside NSW can only be answered
after consideration
of all the relevant circumstances. Accordingly, agencies
should consider the NSW Act’s application to
any specific conduct that is an essential part of
their operations.
Legal advice on these matters could be requested
at the same time as the advice recommended in relation
to the
Act’s statutory application.
A sign of things
to come?
The commencement of the NSW Act raises a
number of complex issues for agencies. However, it may
simply
be a sign
of things to come and, depending on the outcome of
the Attorney-General’s
review of the telecommunications interception regime,
other jurisdictions may soon follow NSW’s lead.
The
commencement of the NSW Act may also focus attention
on the need for the review of the telecommunications
interception regime to include consideration of
the interaction between
state and Commonwealth legislation dealing with
computer surveillance in Australian workplaces.
Of course,
even if the NSW Act does not apply to particular Australian
Government agencies, that
does not prevent
them from choosing to conduct computer surveillance
in a manner
consistent with the Act. In a sense, the Act
simply codifies what many agencies would already regard
as best practice.
Accordingly, the commencement of the NSW Act
presents
an ideal opportunity for all agencies to review
their IT security
and acceptable use policies and procedures regardless
of whether or not they are likely to be directly
affected by the Act.
Andrew Schatz has an extensive knowledge of technology
related legal issues and has worked on a range of IT/IP
legal matters. He regularly presents on information technology
and communications law issues.
Graeme Hill specialises in
constitutional litigation, with a particular expertise
in federal jurisdiction and inter-governmental
immunities.
Notes
1 See paragraph (b) of the definition of ‘surveillance’ in
s 3 of the NSW Act.
2 See, for example, Edelsten v Investigating
Committee of NSW (1986) 7 NSWLR 222 at 230 (per Lee J)
and In the
Marriage of Byrne (2002) 172 FLR 81 at 88 (per Judicial
Registrar Halligan); see also Miller v Miller (1978)
141 CLR 269.
FITOUT AND MAKE-GOOD ISSUES
Simon Konecny Senior Executive Lawyer
T 02 9581 7585 F 02 9581 7445
simon.konecny@ags.gov.au
Every agency property manager will
at some stage be required to oversee fitout of accommodation
and deal with making
good at the end of a lease. Here are some of the issues
that your agency should consider in any fitout or make-good
project.
Regulatory requirements
Early in any proposed accommodation
project, likely regulatory requirements need to be considered.
Financial approvals
that will be required under the Financial Management
and Accountability Act 1997 (FMA Act) are the most obvious
of these for FMA agencies (in particular FMA Regulations
9, 10 and 13).
Aside from financial approvals, the regulatory matters
that agencies may need to consider in any fitout include:
Environmental
matters
An assessment as to whether the fitout is likely
to have a ‘significant impact on the environment’ will
need to be done for the purposes of the Environment
Protection and Biodiversity Conservation Act 1999 (EPBC Act). In the
context of a fitout the most likely situation to trigger
referral under the EPBC Act is if the relevant building
housing the premises is heritage protected.
Public Works
Committee Act/Mandatory Procurement Requirements
If the
value of the fitout will exceed $6m the fitout will need
to be referred to the Public Works Committee for approval.
Additionally, agencies will need to comply with the Mandatory
Procurement Procedures of the Commonwealth Procurement
Guidelines (assuming that the fitout is paid for by the
agency).
State requirements
Whether agencies are required to comply
with state or territory environmental, planning or other
regulatory laws will depend
upon their legal status and what is agreed to under their
lease. (If, for example, an agency agrees to comply with
state laws under the lease, it will be contractually bound
to comply with state laws, regardless of any Commonwealth
immunity.)
The fitout process
Although each agency’s fitout
has its peculiarities, there are four common stages in
any fitout project:
User requirement
This details your agency’s instructions
to its designer of its requirement. It generally is a functional
statement
of what is wanted in terms of budget, program requirements,
space requirements, relationships within and between functional
groups, special technical requirements, security issues,
and environmental issues. It is generally not effective
for agencies to pass this task on to the lessor or a consultant,
as only the agency will know precisely what it wants.
Fitout
brief
This is an architect or designers’ interpretation
of your agency’s user requirement. It usually results
in a detailed specification of the requirement, including
all finishes. This phase of the process is often outsourced
by the agency. The fitout brief is usually prepared in
cooperation with an architect or designer, taking into
account evolving requirements, budgetary constraints and,
often, in preparation for either a precommitment arrangement
or some form of design and construct fitout arrangement.
(Whilst it is possible that the fitout brief process could
be passed to a lessor, in reality this rarely occurs as
agencies will usually require a high degree of control
in the preparation of the brief.)
Design documentation
This is the interpretation of the
fitout brief for fitout construction. It is usually undertaken
by a designer or
architect engaged by the agency. The architect or designer
will also take into account the physical characteristics
of the actual premises.
It is possible that the design
documentation could be prepared by, or on behalf of, the
builder or the lessor (effectively
passing on the design/construction integration risk to
the builder or lessor). If this is done, your agency is
essentially giving up ‘control’ of the design
phase. To avoid quality problems arising you should only
do so where you have a detailed fitout brief.
Construction
Provided the design is right, construction
should not be a significant risk. If there are design issues
these are
likely to be exacerbated if responsibility for construction
has been shifted to the lessor or managed via some sort
of design and construct process.
The typical risks associated
with fitout construction are time, cost, design/construction
integration, and quality.
Time, cost and design/construction integration can be shifted
to the lessor if the lessor agrees to undertake the fitout
via a precommitment lease or some similar arrangement.
The downside of this is that quality potentially suffers
unless the required quality is detailed in the fitout brief
and design documentation.
Alternatively, risk can be managed
by use of appropriate contract strategies and use of consultants
(e.g. project
management and design/construct arrangements).
Incentives
If your agency is an anchor tenant, or has a
significant leasing requirement, it is now common for it
to be offered
incentives by the lessor to secure the agreement. In most
instances the incentives will be in the form of rent holidays,
cash or provision of fitout (provided directly by the lessor
or as reimbursement of costs that your agency incurs).
In relation to cash incentives, if your agency is an FMA
Act regulated body you will need to take account of section
81 of the Constitution, as the incentive is likely to be
regarded as ‘public monies’. Whether or not
your agency can retain any cash incentive received will
depend upon whether you have in place appropriate arrangements
with the Department of Finance and Administration under
section 31 of the FMA Act.
Alternatively, your agency could
obtain an undertaking from the lessor to pay for fitout
costs up to a pre-agreed
amount. The only drawback with this option is the need
to obtain security from the lessor to cover potential liability
for the construction costs.
If you use a fitout cost undertaking
you also need to take into account the impact of GST. The
relevant ATO ruling
is GSTR 2003/16. Generally where a fitout incentive is
paid and the fitout remains your property you will be regarded
as making a taxable supply to the lessor and will be required
to pay GST on the value of the incentive.
Make-good issues
On the expiration of your lease you will
need to consider your obligations to remove the fitout.
The best time to
consider these obligations is when you enter into the lease.
As an anchor tenant in a new development, or as part of
a precommitment arrangement, your agency will be in a good
position to negotiate that there will be no make-good obligation – especially
if the lessor remains the owner of the fitout. (The opening
position in most standard Commonwealth leases, including
those recommended by AGS, is no make-good obligation – rather
a right on the part of the Commonwealth to remove its ‘fixtures
and fittings’ if it elects, making good any damage
in any such removal.)
There is no general legal obligation
to make good. It is a matter of agreement between the parties.
If the lease
is silent on the issue, you have no make-good obligation
and technically your fitout will become the property of
the lessor. However, you might still have a pseudo make-good
obligation if the lease requires you to repair damage caused
during the term of the lease.
If you have a make-good obligation
be clear what you have to make good on. Returning the premises
to the condition
they were in at the time the lease was entered into does
not necessarily require you to take the premises back to
base building, which is often what lessors desire. Good
records are essential to identify the state of the building
at the commencement of the lease. Usually you are not required
to make good on lessor fitout (i.e. fitout existing at
the commencement of the lease or subsequently done by the
lessor).
Beware of requests from the lessor for you to make
a payment in lieu of making good. Even if you have a make-good
obligation
you may be able to avoid liability in certain circumstances,
for example where:
- the lessor proposes
to demolish the building containing the premises
- the lessor proposes to retain the fitout
- the incoming tenant is willing to take over your fitout.
If
you are prepared to make a payment in lieu of making
good, ideally it should be a reimbursement of costs
agreement, and at the very least be on condition
that any payment
will be used in making good.
Simon Konecny has extensive
knowledge and experience in property and contracting
matters including acquisitions
and disposals, leasing and advice on leasing obligations,
fitouts, building and construction matters, tenders
and advice in relation to tender processes and
strategies, outsourcing and consultancy arrangements, indemnities
and
licence arrangements.
AGS contacts
For legal advice on the articles in this issue
please contact the
authors or any of the lawyers listed below:
National
|
John Scala
|
03 9242 1321
|
Canberra
|
Linda Richardson
John Snell
|
02 6253 7207
02 6253 7025
|
Sydney
|
John Berg
Simon Konecny
|
02 9581 7624
02 9581 7585
|
Melbourne
|
Jo Ziino
Paul Lang
|
03 9242 1312
03 9242 1322
|
Brisbane
|
Robert Claybourn
|
07 3360 5767
|
Perth
|
Lee-Sai Choo
|
08 9268 1137
|
Adelaide
|
Mary Hannigan
|
08 8205 4287
|
Hobart
|
Peter Bowen
|
03 6220 5474
|
Darwin
|
Andrew Schatz
|
08 8943 1400
|
For enquiries regarding supply of issues, change of address
details etc.
T 02 6253 7052 F 02 6253 7313 E ags@ags.gov.au
Electronic versions of AGS newsletters are available for
clients who prefer to receive issues in this form. Please
contact 02 6253 7052 or email ags@ags.gov.au to
arrange supply.
The material in these notes is provided
to AGS clients for general information only and should
not be relied upon for the purpose of a particular
matter. Please contact AGS before any action or decision
is taken on the basis of any of the material in these
notes.
© Australian
Government Solicitor
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