Express law No. 51

7 February 2007

The downside of including misconduct procedures in a
certified agreement

A poorly-run misconduct process has resulted in the
Federal Court of Australia ordering an employer to pay
an employee $20,000 for breaching its certified agreement.

McAleer v The University of Western Australia

Federal Court of Australia [2007] FCA 52 (2 February
2007), Siopsis J

Professor McAleer was the subject of serious allegations
involving breaches of the university's sexual harassment
policy. The university's misconduct process was annexed
to its certified agreement (CA) as part of a termination
policy.

Professor McAleer complained that the university had failed
to properly apply the termination policy – in particular,
that he hadn't been given sufficient detail of the
allegations made against him, as the policy required. Professor
McAleer also complained that the Misconduct Investigation
Committee established under the termination policy had
not properly conducted its hearings. Professor McAleer
asserted that the university had therefore breached the
CA.

Professor McAleer sought, and was granted, an interim
injunction to prevent this Committee from progressing its
investigation. He sought the following substantial relief:

  • a declaration on the proper interpretation of the
    termination policy
  • a declaration that the university had breached the
    termination policy and therefore breached the CA
  • a penalty order against the university, under s 178
    (post Work Choices, now s 719) of the Workplace
    Relations Act 1996, for breach of the CA
  • a permanent injunction restraining the Committee from
    progressing the misconduct investigation.

The university conceded that it had breached the CA by
failing to give Professor McAleer proper details of the
allegations against him, but denied the other alleged shortcomings.

Decision

The court considered the terms of the CA, which made it
clear that any termination of employment by the university
was 'exhaustively governed' by the CA, and
that all disciplinary decisions or decisions to terminate
employment for misconduct were to be carried out in accordance
with the termination policy.

The court declared that the university had breached the
CA by failing to provide adequate particulars of the allegations
made against Professor McAleer. The court granted an injunction
to prevent the Committee from taking the existing misconduct
investigation any further.

On the question of penalty, the university argued (among
other things) that the failure to properly apply the policy
was inadvertent and without malice. Justice Siopsis considered
that a more important consideration was deterrence (at
paras 66 and 67):

It is a fundamental element of procedural fairness that
a party should know the case which has been made against
him or her, so that the person may have a fair opportunity
to defend himself or herself. The failure by the University
to provide the applicant with adequate particulars of
the allegations was a serious breach. There are other
facts which add to the gravity of the breach. The allegations
made against the applicant were allegations of serious
misconduct. The applicant holds a senior position in
the academic staff at the University and has an international
reputation in his field. The allegations are of such
a nature they have the potential to damage the reputation
of the applicant. The University did not after having
initially failed to provide particulars in its letter
of 6 January 2006, thereafter provide adequate particulars.

In imposing a penalty of $20,000 on the university (payable
to Professor McAleer), Justice Siopsis noted:

The University employs a large number of academic staff.
Reputation is particularly cherished in the academic
world. The importance of the need for the University
to act in accordance with the agreed disciplinary procedure,
so as to minimise the risk of unwarranted damage to the
reputation of its academic staff, should, in my view,
be reflected by the imposition of, and, in the quantum
of, a penalty.

Implications for Australian Government agencies

This decision has valuable lessons for all Australian
Government employers:

  • Failure to properly apply your misconduct policy can
    result in misconduct action being overturned.
  • If your misconduct policy is embedded in an industrial
    agreement (a certified agreement, collective agreement
    or Australian workplace agreement), then failure to comply
    with your policy can result in a finding that your agency
    has breached the Workplace Relations Act.
  • A breach of the Workplace Relations Act could result
    in a monetary penalty being imposed on your agency.

Implications for Public Service Act agencies

For Public Service Act 1999 agencies, misconduct
should be dealt with in accordance with procedures established
under s 15(3) of that Act. Because of the existence of
this statutory arrangement for handling misconduct, there
is simply no need to refer in industrial agreements to
the way that suspected misconduct will be dealt with.

If you are in the course of preparing a draft collective
agreement, or a template AWA, we recommend that you omit
any reference to the approach that will be taken to suspected
misconduct. If your agreement is silent on the subject,
then an employee cannot seek a penalty on the ground that
you have not complied with your agreement. Also, there
will be no basis for the employee to access grievance or
dispute avoidance mechanisms under your agreement in relation
to the handling of misconduct matters.

This does not mean that employees will be deprived of
a remedy in this situation. They will usually be entitled
to bring internal grievance actions about failure to comply
with agency procedures, and will typically have access
to the Federal Court if there has been a breach of the
rules of natural justice, under the Administrative Decisions
(Judicial Review) Act. In these circumstances there is
little value for the employer in giving employees an additional
remedy, under the Workplace Relations Act, for breach of
process.

If your agreement does incorporate misconduct procedures
or other procedures, you will need to ensure that they
are adhered to, or risk an action for breach of your agreement.

Text of the decision is available at:
http://www.austlii.edu.au/au/cases/cth/federal_ct/2007/52.html

For further information please contact:

Virginia Masters
Senior Executive Lawyer
T 02 6253 7470 F 02 6253 7381
virginia.masters@ags.gov.au

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