By Anthony Forsyth, Professor in the Graduate School of Business and Law at RMIT University in Melbourne.
An edited version of this post, including discussion of the “contractor model” of gig platforms, was published in The Sydney Morning Herald on 14 June 2019: ‘Employee or not? What the Uber decision means’
Australia’s workplace enforcement agency, the Fair Work Ombudsman (FWO), today announced the conclusions of its two-year investigation into Uber’s engagement of drivers.
In short, the FWO has determined that Uber drivers in Australia are independent contractors rather than employees.
So far, all that has been made public is a media release by the FWO rather than a full investigation report. The Ombudsman, Sandra Parker, stated as follows:
“The weight of evidence from our investigation establishes that the relationship between Uber Australia and the drivers is not an employment relationship.
For such a relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer.
Our investigation found that Uber Australia drivers are not subject to any formal or operational obligation to perform work.
Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week.
Uber Australia does not require drivers to perform work at particular times and this was a key factor in our assessment that the commercial arrangement between the company and the drivers does not amount to an employment relationship.
As a consequence, the Fair Work Ombudsman will not take compliance action in relation to this matter.
This investigation related solely to Uber Australia and was not an investigation of the gig economy more generally.”
The FWO’s conclusion on the categorisation of Uber drivers is consistent with that reached in two decisions by the Fair Work Commission over the last 18 months (both rejecting unfair dismissal applications brought by drivers: Kaseris v Rasier Pacific V.O.F. [2017] FWC 6610; Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579).
In contrast, the Commission determined in another unfair dismissal case that a delivery rider for Foodora (which has since exited Australia) was an employee: Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 (discussed in this post from November last year).
Unions and others including the Australia Institute’s Centre for Future Work have sharply criticised the FWO’s announcement today (see for example this report in The Australian). The Transport Workers Union national secretary Michael Kaine told the newspaper:
“In jurisdictions around the world from London to New York and Los Angeles, Uber is being held to account and faced down despite its massive lobbying efforts and bullying. Yet in Australia today it has been given the green light to continue ripping riders and drivers off, sacking them without warning or the right to appeal and ignoring their pleas to be able to earn a decent living.”
Valid criticisms about the FWO’s conclusions can indeed be made, including that the agency has focused too much on the ostensible ‘freedom’ of Uber’s drivers to log on and on from the app and provide services when they wish – without enough attention being given to other aspects of the relationship enabling Uber to exercise control over drivers.
But with the writing seemingly on the wall on the categorisation issue, at least for these particular types of platform workers, there should now be more focus on what unions can do to represent Uber drivers outside the framework of protections for employees under the Fair Work Act.
There are overseas models, including the United States Machinists Union offshoot, the Independent Drivers Guild (IDG), which successfully lobbied New York City Council for minimum wage increases for rideshare drivers (see this January 2019 report from Business Insider on a legal challenge to the wage rises by the rideshare platforms Lyft and Juno).
The IDG along with Australian-based online collective group, Ride Share Drivers United (RSDU), and other union organisations around the world took part in a global 24-hour Uber log-off and ‘strike’ on 8 May this year (see this report in Vox).
Whenever we consider the prospect of independent contractors engaging in union-like activity such as this, anti-trust/competition law constraints inevitably arise. In the Australian context, small businesses may seek an authorisation from the Australian Competition and Consumer Commission (ACCC) enabling them to act as a group in negotiations with other commercial parties.
Such an authorisation might not necessarily be granted. However, the ACCC today announced the commencement of consultations on a new class exemption that would allow small businesses (potentially including independent contractors operating in the gig economy) to collectively bargain without breaching competition law (and without needing to seek an ACCC authorisation).
The Victorian Government has introduced legislation (currently before State Parliament) which would extend an information and dispute resolution framework for transport owner-drivers to those involved in food delivery work for platforms like Uber Eats. This is far from the comprehensive suite of rights afforded to employees under the Fair Work Act. On the other hand, it adapts an existing regulatory regime intended for one group of workers (self-employed truck operators) to a new group who may be found to have no rights at all (food delivery workers operating at least three vehicles which may include bicycles).
We need to get imaginative about what is possible in relation to the collective representation of platform workers, in the likely event that court and regulatory agency findings continue to deem them to be independent contractors. 
I’ll discuss this more in an imminent post summarising my recently completed paper comparing Australian and Italian developments, including the inspiring activism of self-organised food delivery rider groups in northern Italian cities. 
This article was originally published on the Labour Law Down Under blog by Anthony Forsyth and has been reproduced with permission.
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By Nicholas Ellery (Partner) and Thalia Botsis (Lawyer) of Corrs Chambers Westgarth (Corrs).
In this age of technological advancement, new, innovative ways of monitoring and identifying employees in the workplace are emerging. Increasingly, employers are using biometric data, such as fingerprint scanning and hand scanning, to identify employees, establish records of working hours, restrict access to specific areas, provide security and enhance workplace health and safety (amongst other things).
Biometric authentication is an attractive system for employers for security, accountability and convenience purposes. Its reliance on unique biological characteristics means it is almost impossible for individuals to hack or exploit the system. Although biometric authentication systems can be implemented for a number of legitimate reasons, employers can face serious legal issues if implementation is not thought through properly. By way of example, biometric authentication systems can infringe upon employees’ right to privacy under the Privacy Act 1988 (Cth) (Privacy Act).
This raises a wide range of issues that employers must consider. For example, what happens when employees do not consent to the use of these mechanisms and refuse to provide their biometric data?
This scenario was recently the subject of a recent decision of the Full Bench of the Fair Work Commission.[1] In Lee v Superior Wood, an employee, Mr Lee, refused to scan his fingerprint as a means of signing in and out for his shifts for privacy concerns. Mr Lee was dismissed and subsequently made an unfair dismissal claim. In coming to a decision, the Full Bench of the Fair Work Commission (Full Bench) was required to consider the intersection of privacy law and employment laws.
This decision raises important issues for employers looking to introduce new biometric data collection technology in the workplace and provides guidance on how to lawfully manage an employee’s refusal to participate in that process.
The facts of the case
In October 2017, Superior Wood Pty Ltd (Superior Wood), introduced fingerprint scanners in the workplace to log employees’ start and finish times. The fingerprint scanners were introduced for safety and payroll efficiency.
After significant consultation with employees and a seven week trial period, the fingerprint scanning was formally implemented in January 2018 and employees were directed to comply with the ‘Site Attendance Policy’ (Policy) and provide a fingerprint scan.
The Policy provided that all employees were required to use the scanners to record their attendance on site, both when arriving and leaving the site. Signing attendance sheets alone was no longer acceptable. Mr Lee, who had been employed by Superior Wood for approximately 3 ¼ years, refused to register his fingerprint and continued to manually sign in and out for his shifts, as he was concerned about the collection and storage of his personal information. He expressed concern about the control of his biometric data and the inability of the employer to guarantee no third party would have access to his personal information.
Mr Lee was assured by the scanner’s supplier that the collected data would only be used for linking payroll numbers to a clock in or clock out time. However, Mr Lee continued to resist the use of the scanners and, after being issued multiple warnings, was dismissed from his employment.
Mr Lee subsequently brought an unfair dismissal claim. At first instance his application was dismissed by Commissioner Hunt. He then appealed against the decision to the Full Bench.
What was decided at first instance?
At first instance, Commissioner Hunt found that Mr Lee had not been unfairly dismissed because, in the circumstances, it was reasonable for Superior Wood to request biometric data from its employees. Commissioner Hunt found that although Superior Wood may have breached its privacy obligations under the Privacy Act, the biometric system provided safety benefits, by providing real-time access to information about which employees were onsite, and also provided payroll efficiencies. Mr Lee’s refusal to provide his biometric data amounted to a breach of the Policy.
What was decided on appeal?
On appeal, Mr Lee raised nine grounds of appeal before the Full Bench. The Full Bench ultimately overturned Commissioner Hunt’s decision, finding there was no valid reason for dismissal.
The Full Bench decided the Policy did not form part of the terms and conditions of Mr Lee’s employment because the way in which his employment contract was drafted meant he was only bound by policies in place at the time his employment contract was signed. Because the Policy was introduced after Mr Lee had entered into his employment contract, it did not form part of the terms and conditions of his employment. Therefore, Mr Lee’s obligation to comply with the Policy depended on whether the direction to use the scanners to sign in and out of work each day was a ‘reasonable and lawful’ direction.[2]
To determine whether the direction was ‘reasonable and lawful’, the Full Bench was required to consider the interaction of the Policy with the Privacy Act, which contains specific requirements in relation to the collection and solicitation of employees’ personal information. Superior Wood was required to comply with the Privacy Act, and was therefore:
required to have a privacy policy;prohibited from collecting sensitive information (including biometric data) without an individual’s consent;[3] andrestricted from collecting information where it was not reasonably necessary to its functions or activities.[4]
Superior Wood did not comply with these obligations which arose from the Australian Privacy Principles, as:
it did not have a privacy policy in placeit did not have Mr Lee’s consent to collect his biometric data; andthe collection of Mr Lee’s fingerprint data was not reasonably necessary for Superior Wood’s functions or activities, as there were other options available to collect this information.
Superior Wood sought to rely on an exception to the obligation for certain entities to comply with the Australian Privacy Principles, contained in s 7B(3) of the Privacy Act. That exception is in relation to ‘employee records’. Superior Wood sought to rely on this exception in relation to the fingerprint scanner, arguing that all records generated by an employer, including those that have not yet been created, are within the scope of that exception. However, the Full Bench found that this exception did not to extend to records not in existence, therefore could not apply to the fingerprint scanners. Consequently, Superior Wood was held to be bound by the Privacy Act requirements regarding the collection and solicitation of its employees’ personal information.[5]
The Full Bench found that the direction to comply with the Policy was not a ‘reasonable and lawful’ direction because the direction itself was not lawful. As Mr Lee did not give his consent (as required by the Australian Privacy Principles), the Full Bench decided that the direction to submit to the collection of his fingerprint data was not a ‘lawful direction’ and could not form the basis of the decision to terminate Mr Lee’s employment.[6] Given this finding, the Full Bench did not consider it necessary to consider whether the direction was reasonable.
Broader implications
As is evident from the above, while there are clearly privacy law implications when introducing and implementing biometric technology in the workplace, there may also be broader implications for employers. By way of example, in some jurisdictions the implementation of biometric technology has given rise to discrimination claims.
In the United States, an employee successfully argued he had been unlawfully discriminated against based on his religion when he refused to give his fingerprints to his employer.[7] In 2011, the Equal Employment Opportunity Commission brought a lawsuit on behalf of Beverly Butcher (Butcher), a coal miner who resigned from his job rather than allowing his fingerprint to be scanned at the beginning of each shift to record his time worked.
Butcher, an Evangelical Christian and an ordained minister, argued that the biometric scan would tag him with the biblical ‘mark of the beast’ and condemn him to eternal punishment. This is a reference to the thirteenth chapter of the Book of Revelation in the New Testament of the Christian Bible, which concerns a ‘beast coming out of the earth’ who causes people ‘to receive a mark in their right hand, or in their foreheads’. This beast is usually identified as the antichrist and its mark believed to be the symbol of opposition to God.
A federal court jury unanimously found that Butcher had been unlawfully discriminated against because of his religion and awarded him $586,860 in lost wages and benefits and compensatory damages. The United States Supreme Court declined to review the case after the employer requested an appeal.
Such a finding is not limited to the United States and could foreseeably arise in Australia. Some anti-discrimination legislation – such as the ‘General Protections’ provisions within the Fair Work Act 2009 (Cth) (FW Act) and some state based anti-discrimination legislation (for example, the Equal Opportunity Act 1984 (WA)) – makes it unlawful to discriminate on the basis of a number of protected attributes, including religion. Discrimination on the basis of religion alone is currently not unlawful under federal anti-discrimination law, however the Coalition Government has committed to new religious anti-discrimination laws, which are (at the time of writing) being prepared.[8]
Corrs have advised a range of clients on similar biometric systems, where employees have raised discrimination complaints on the grounds of religious belief, and have cited a concern over “the mark of the beast”.
What steps can be taken to minimise risk?
With new and emerging forms of technology increasingly being utilised in workplaces, employers need to consider the potential implications and take steps to minimise the risks that can emerge when implementing such technology in the workplace.
To avoid potential legal issues, employers should:
encourage and be willing to facilitate employees raising any concerns;carefully consider any objections, issues or requests made by employees before implementing this type of technology in the workplace;consider including a clause in their employment contracts which requires employees to comply with all current and future workplace policies, as and when they are introduced, not only those that exist at the time the contract is entered into; andconsider accommodating all reasonable requests from employees, particularly those which raise issues based on religious beliefs, disability or other protected attributes. In this regard, employers should not apply a blanket approach to all employees. Put simply, one size does not always fit all and adjustments may need to be made, depending on the particular circumstances. For example, is there an alternative way to provide access to a site or secured area, without requiring the employee to act in a way that offends their religious beliefs?
Employers who are ‘APP entities’ for the purposes of the Privacy Act should also incorporate well-drafted privacy policies that make clear what, how and when employee personal information may be obtained and used.
The implementation and use of biometric technology can raise a number of legal issues, including privacy, discrimination and adverse action issues. Employers need to consider these potential claims when making decisions of this sort. While there may be a practical administrative burden to accommodate employees’ concerns, it is advisable to take extra measures to accommodate employees, where reasonable and possible, to reduce the risk of future claims.

[1] Lee v Superior Wood Pty Ltd [2019] FWCFB 95 at [27].
[2] Ibid at [25].
[3] Privacy Act 1988 (Cth) sch 1 (‘Australian Privacy Principle’) 3.
[4] Australian Privacy Principle 5.
[5] Ibid at [40]-[41].
[6] Lee v Superior Wood Pty Ltd [2019] FWCFB 95 at [58].
[7] Equal Employment Opportunity Commission v CONSOL Energy, Inc, No 16-1230 (4th Cir. June 12, 2017).
[8] Tom McIlroy, ‘Religious freedom laws to fall short of conservative demands’, Financial Review (online), 5 June 2019 . ‘Religious freedom laws to fall short of conservative demands’, Financial Review (online), 5 June 2019 . https://www.afr.com/news/polit…
This article was originally published on the Corrs website on 7 June 2019 and has been reproduced with permission.
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Contributed by Fletch Heinemann, Partner, Sarah Lancaster, Senior Associate and Murray Shume, Senior Associate, Cooper Grace Ward
Determining whether a company is a tax resident of Australia has become more complicated… again. Taxpayers and advisers need to navigate the ATO’s new position on “central management and control”, the potential application of a double tax agreement and now the multilateral instrument (MLI).
The consequences of getting it wrong can be significant and can include additional tax (sometimes without credits), interest and penalties if the error has existed for some time.
So where do we start?
A simple example to work through the provisions
Haibo is the sole director and shareholder of UK Co. UK Co was incorporated in the UK and carries on business in the UK.
Haibo immigrates to Australia with his family in 2019. Haibo now makes high-level decisions in relation to UK Co while in Australia.
The day-to-day running of UK Co continues to be managed in the UK. Haibo is not involved in the management and commercial decisions of UK Co’s business.
Residency under Australian domestic tax law
A company is an Australian tax resident under the domestic law in Australia if it is either:
incorporated in Australia, ornot incorporated in Australia but carries on business in Australia, and has either its central management and control in Australia, or its voting power controlled by shareholders who are residents of Australia.
Following the High Court decision in Bywater Investments 2016 ATC ¶20-589, the ATO released a new public ruling on the central management and control test of residency, Taxation Ruling TR 2018/5. The ATO concludes that the place of “central management and control” is where high-level decisions are made as a matter of fact and substance.
With Haibo, the sole director, making strategic decisions while in Australia, UK Co is now a tax resident of Australia under the second test of the Australian domestic tax law.
The application of a double tax agreement
The domestic law may then be affected by a double tax agreement. This will generally be the case where two countries claim a company as a tax resident under their respective domestic tax laws and there is a double tax agreement between those countries. The residency article in the double tax agreement generally contains a “tie-breaker” provision — which has the effect of deeming the company to be a tax resident of only one country.
For companies, the residency tie-breaker provision is generally where the company’s “place of effective management is situated”.
Unlike “central management and control”, “place of effective management” refers to where “key management and commercial decisions that are necessary for the conduct of the entity’s business as a whole are in substance made”.
In the example, as the management and commercial decisions for conducting UK Co’s business are made in the UK, the “place of effective management” is in the UK.
Minding the MLI
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting(MLI) is a multilateral tax treaty that effectively allows countries to amend their bilateral tax treaties without having to go through the long process of renegotiating the existing treaty. This is done by allowing countries to opt into various provisions.
Australia’s double tax agreements are not automatically affected by the MLI. Both countries have to agree to the MLI applying.
As of 28 May 2019, Australia’s double tax agreements with France, Japan, New Zealand, Poland, Singapore, the Slovak Republic and the United Kingdom have been modified by the MLI with effect from 1 January 2019. Other double tax agreements are due to be modified within the next 12 months.
One effect of the MLI on the Australia-UK double tax agreement is that the “place of effective management” test is replaced with the following test:
Where by reason of the provisions of [the DTA] a person other than an individual is a resident of both [Australia and the UK], the competent authorities… shall endeavour to determine by mutual agreement the [country] of which such person shall be deemed to be a resident… having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors.
Back to the example, UK Co is incorporated in the UK and managed in the UK, so subject to “any other relevant factors”, should be determined by the competent authorities to be a tax resident solely of the UK.
However, to obtain that determination, UK Co will need to submit information to the ATO or UK’s HMRC, which is an unfortunate bureaucratic by-product of the MLI.
The ATO and New Zealand Inland Revenue appear to have recognised this, and have issued a website “determination” that effectively reinstates the “place of effective management” test over the MLI in certain cases. It currently states:
For taxpayers that satisfy all of the eligibility criteria outlined below for the relevant year, the Australian Taxation Office (ATO) and New Zealand Inland Revenue (IR) jointly determine that:
Where an eligible taxpayer reasonably self-determines its place of effective management (PoEM) to be located in Australia, it will be deemed to be a resident of Australia for the purposes of the Convention between Australia and New Zealand for the avoidance of double taxation with respect to taxes on income and fringe benefits and the prevention of fiscal evasion (Australia-New Zealand treaty)Where an eligible taxpayer reasonably self-determines its PoEM to be located in New Zealand, it will be deemed to be a resident of New Zealand for the purposes of the Australia-New Zealand treaty.
In addition to the different layers that now need to be considered, advisers also need to be careful about interpretation — double tax agreements and MLIs have different rules of interpretation to domestic legislation. This is so that the object of the treaty (which may be subject to different translations) is given primary consideration.
The risk of getting the residency status of a company wrong can be significant. It can result in additional tax, together with interest and penalties if the error is not rectified for some time.
[This article was originally published in CCH Tax Week on 7 June 2019. Tax Week is included in various tax subscription services such as The Australian Federal Tax Reporter and CCH iKnow. CCH Tax Week is available for subscription in its own right. This article is an example of many practitioner articles published in Tax Week.]
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By Richard Gardiner (Partner) and Robert Dickfos (Associate) of HopgoodGanim Lawyers.
Key issues:
The Federal Court has concluded that the National Rugby League (NRL) lawfully stood down Jack de Belin under their new “no fault stand down” rule while he awaits a verdict in criminal proceedings.The decision of Perry J concluded that, although the rule constituted a restraint of trade, the restraint was justified because it was reasonably necessary to protect the legitimate interests of the Australian Rugby League Commission (ARLC) and the NRL.The decision highlights that the contractual arrangement surrounding NRL players means that players are “more than just employees” and can be described as “live advertising space”.  Her Honour found that players’ reputations could significantly influence attendance, viewership, and by extension, the attractiveness of the game to sponsors and broadcasters.  The Rugby League Players Association (RLPA) has flagged a possible appeal of the “no fault stand down rule” in a bid to have the “no fault stand down” rule overturned and de Belin reinstated.  
The Federal Court recently handed down its decision in De Belin v Australian Rugby League Commission Limited [2019] FCA 688. The lengthy judgment of Perry J concluded that the ARLC’s and NRL’s controversial “no fault stand down” rule was lawful, and that the decision to sideline Jack de Belin while he awaits a verdict in criminal proceedings was valid pursuant to that rule.
The New Rule
Rule 22A (New Rule) was introduced into the NRL Rules on 11 March 2019 by the ARLC and NRL and provides that:
players charged with a criminal offence carrying a penalty of at least 11 years will be automatically stood down from playing in the NRL competition;the suspension will not require any finding of fault by the player and there is no right of appeal;players are still able to train with their team and are entitled to be paid their full remuneration under their contracts; andthe NRL’s CEO can use his discretion to stand down players charged with less serious criminal offences, particularly where the offence involves women and children.  
The New Rule was given retrospective effect and applied to three current NRL players – Jack de Belin, Dylan Walker and Tyrone May – who were each immediately served with a stand down notice and suspended from playing until the outcome of their proceedings.
Jack de Belin commenced legal proceedings in the Federal Court contesting the validity of the New Rule given its applicability to him in the face of charges against him for aggravated sexual assault.  
Key contract documents
The contractual arrangement surrounding NRL players was a key feature of her Honour’s judgment.
Her Honour set out, in some detail, the terms contained in the NRL Rules. In particular, rule 2 of the NRL Rules provides that the Board of Directors can amend the provisions of the NRL Rules “from time to time in such manner as the Board thinks fit” provided that the precise terms of the amendment are signed by the CEO and set out on the NRL website. Rule 2(3) emphasises that the NRL Rules apply to all Clubs and persons “however substantial”.  
By virtue of entering into his Playing Contract with St George Illawarra (the Club) and registering as an NRL player, her Honour found that de Belin agreed to be bound by the NRL Rules “as amended from time to time”. Further, de Belin acknowledged that he was required at all times to maintain “a reputation for high standards of personal conduct, including a reputation of respect for women and children”.  
Perry J also emphasised that the Playing Contract and Club Licence Agreement (entered into between the NRL and the Club) demonstrated that players were more than just employees. Her Honour stated that “each player’s name, photograph, likeness, image, reputation and identity is licensed intellectual property” and that players might be described as “live advertising space”. A key finding by Perry J was that the contractual arrangement surrounding NRL players meant that players’ reputations could significantly influence attendance, viewership, and by extension, the attractiveness of the game to sponsors and broadcasters. 
The central argument
Several arguments were put forward by de Belin’s legal team in an attempt to have the New Rule set aside.  
The first set of arguments focussed on the New Rule itself and its interaction with de Belin’s NRL Playing Contract. The central argument (which ultimately formed the bulk of Perry J’s decision) was whether or not the New Rule constituted a reasonable restraint of trade.  
Ordinarily, the restraint of an individual’s ability to trade is considered to be contrary to public policy, and therefore void. However, a restraint will be valid if the party enforcing the restraint can show that, when balanced against the interests of the public, it provides no more protection than is reasonably necessary to protect that party’s legitimate interests. Her Honour also referred to s4(1) of the Restraints of Trade Act 1976 (NSW) which states: “A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not”. It was not in dispute that this provision applied to the circumstances of this case. Consequently, provided that the New Rule could be enforced to an extent that was reasonable, it would be valid. 
Mr de Belin argued that, given the limited window of time in which a player may play professionally at an elite national level of the game, a restriction on his ability to play in the NRL would adversely impact his playing career, including an adverse impact upon his earning capabilities for any future contracts entered with his current or another NRL club.
The ARLC and NRL accepted that the New Rule imposed a restraint on de Belin’s ability to pursue a career as a professional rugby league player in Australia. However, it was argued that this restraint was objectively reasonable in the circumstances because it was “necessary to protect their legitimate interests, notwithstanding the seriousness of the restraint imposed” on Jack de Belin. Broadly speaking, the legitimate interests requiring protection were those contained in the “objects” of the NRL Rules: which included promoting and encouraging the playing and reputation of rugby league and the NRL competition, and ensuring an inclusive and respectful game.  
The second set of arguments focussed on the conduct of the NRL and ARLC. The assertion was that the NRL and ARLC’s conduct was “misleading and deceptive” and “unconscionable” under the Australian Consumer Law (ACL argument). The thrust of the ACL argument is that the NRL and ARLC represented to the public that de Belin was guilty and that his suspension was warranted, even before the New Rule was introduced. Unconscionability was said to arise largely from a conversation de Belin had with the NRL’s CEO where he was allegedly asked to “voluntarily stand down”. Given the similarities in the relevant facts between the first and second set of arguments, and some overlap in the matters to be proved by de Belin in support of his various arguments, the arguments were said to rise and fall together.
Decision of the FCA
It was concluded that the New Rule was reasonably necessary (or adequate) for the protection of the legitimate interests of the ARLC and NRL, and that its enforcement was not against public policy. The key findings by her Honour on this issue were as follows:
Although presumed innocent, de Belin is nonetheless clearly associated with an act of serious sexual violence against a woman as a result of the charge, and a reasonable person may think there is a reasonable basis for the charge and a subsequent risk that he is guilty.The extent of negative reporting against de Belin was unprecedented, which amplified the damage to the ARLC’s and NRL’s reputation.NRL players are public figures constantly under media scrutiny and in the public eye. These are important considerations when assessing the potential for damage to the ARLC’s and NRL’s reputation.The New Rule did not prevent Mr de Belin from negotiating with his current or other clubs about a further playing contract if he is acquitted of his criminal charges. Perry J was also of the view that de Belin had not proved, on the balance of probabilities, that the value of any further playing contract entered by de Belin would be significantly impacted by reason of his being stood down. The evidence (including the financial impact already felt by the NRL and some clubs) established that there was an immediate and significant danger to the legitimate interests of the ARLC and NRL. Consequently, the ARLC and NRL needed to take steps and be seen to take steps to repair and prevent further damage to the reputation of the NRL Competition and to public confidence in it. 
Her Honour concluded that “no measure short of a rule precluding Mr de Belin and others charged … with offences of a similar nature and seriousness, from taking the field was likely to address the [ARLC’s and NRL’s] legitimate interests following the widespread dissemination of the detailed allegations against Mr de Belin”.  
The ACL argument was also dismissed. Her Honour concluded that the ARLC and NRL’s conduct was not misleading or deceptive and that even if such a finding could be made, de Belin failed to establish any requisite loss because of the ARLC and NRL’s conduct. Any damage to his reputation was as a result of the inevitable harm caused by the fact that it was widely known and reported that he was charged with aggravated sexual assault.
Summary
The decision highlights that, where an employee’s reputation is tied intrinsically with the reputation of their employer, the employer may be justified in taking steps that may not occur in an “ordinary” employment relationship. This is particularly so where damage to an employer’s reputation will have significant financial ramifications, as was the case in this professional sporting environment. Given that the ARLC and NRL were successful in having the New Rule upheld, other high profile sporting organisations may consider adopting similar rules to protect their financial and reputational interests. 
The RLPA has flagged a possible appeal of the New Rule by way of dispute resolution mechanisms contained within its collective bargaining agreement with the NRL.  
This article was originally published on the HopgoodGanim Lawyers website and has been reproduced with permission.
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Contributed by Rhys Jewel, Head of Tax, Corrs Chambers Westgarth
As the ways we do business continue to evolve, aided by disruptive technologies and globalisation more generally, our tax framework is often slow to respond. This is in large part because it is built upon traditional and well-understood tax principles formed around the way business was conducted in the early part of last century.
Now, however, we find ourselves in the midst of the so-called “sharing economy” and a climate in which perceived disruptive business practices are becoming the new normal. The pace of change is only accelerating, but policymakers are rising to the challenge.
Increasingly, they are introducing measures that signal a shift away from the traditional model of simply taxing the supplier of goods and services towards a framework focused on imposing tax based on where the economic substance is located or the consumption is taking place.
Some recent examples of measures introduced in Australia that are specifically designed to counter disruptive business practices include:
The Multinational Anti-Avoidance Law (MAAL). This is designed to combat arrangements where a foreign entity supplies goods or services to Australian consumers but does not do so through an Australian presence. The MAAL may be applied where:there is a related Australian entity carrying out material functions (eg marketing and negotiating contract terms between consumers and the foreign entity)the foreign entity derives income under the arrangements that is not attributable to an Australian presence, andthere is a principal purpose of reducing Australian tax.The Diverted Profits Tax (DPT). The DPT is a 40% penalty tax rate where Australian tax paid is reduced by diverting profits offshore in contrived arrangements between related parties by reference to where the economic substance resides.GST on inbound digital sales and low value goods. Previously, foreign suppliers of digital products and services (eg movie downloads, e-books) and low value goods (ie less than $1,000) fell outside the Australian GST net, either because no supply was made in Australia or the cost of collection on import of the goods was too high. These measures mean that GST is now payable in respect of such things imported by Australian consumers. Importantly, in dealing with disruption caused by electronic distribution platforms and the difficulty in collecting tax on a myriad of foreign sellers, the legislature simply targeted the operator of an electronic distribution platform (eg App Stores, Amazon), typically large corporates with deep pockets, who are now liable for the GST on deemed taxable supplies instead of the actual foreign seller.
The rise of the sharing economy has also made policymakers pause. One such example of this is the Australian Treasury’s establishment of the Black Economy Taskforce (BET), which was designed to develop an innovative, multi-pronged policy response to combat the black economy in Australia.
From the BET emerged a consultation regarding a “sharing economy reporting regime”. The associated consultation paper identified participants in the sharing economy as including not only those selling their goods and services online, but also the ride sharing or short-term accommodation services facilitators, or application software operated by the platform provider.
According to the consultation paper, a consistent feature of sharing economy platforms is that the supplies and payments are facilitated by the platform.
The lack of transparency for tax authorities of the income being generated through such platforms is flagged as a concern for efficient tax collection, but the centralised nature of the platforms is also viewed as an opportunity to implement a reporting regime that would be focused on the platform providing the data regarding payments to participants. However, one must ask how long it might take for such a regime to morph into withholding obligations imposed on the platforms.
The precedent, though, has been set — when collection of tax on the actual supplier is difficult, target the distribution platform.
As businesses and the technology they employ evolve, it is reasonable to expect that this trend towards developing and administering a tax framework focused on imposing tax based on where the economic substance is located or the consumption is taking place will continue — not just in Australia, but globally.
[This article was originally published in CCH Tax Week on 31 May 2019. Tax Week is included in various tax subscription services such as The Australian Federal Tax Reporter and CCH iKnow. CCH Tax Week is available for subscription in its own right. This article is an example of many practitioner articles published in Tax Week.]
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By Belinda Winter (Partner) of Cooper Grace Ward (CGW).
In the recent decision of Sarah Cruise v Baxter Cassidy Pty Ltd T/A Ray White Langwarrin [2019] FWC 1751, the Commission found that an employer’s failure to consult with an employee caused the dismissal to be unfair and not a genuine redundancy.
The consultation process and termination
The employee had been employed for approximately 3 years as a part-time assistant property manager when the director of the business decided there was a strong business case for the employee’s role to be performed on a full-time basis.
The director consulted with the employee for approximately 2 weeks by:
meeting with the employee on 3 August 2018 to explain why the part-time role was no longer appropriate for the business and advising the employee that she had the option of taking on a full-time role but, the alternative role would pay $5 less an hour and have no commission paymentsemailing the employee on 7 August, confirming his decision and setting out the proposed hours of work and salary for the new full-time role and requesting a response by 10 August.
On 8 August 2018, the employee emailed the director requesting additional information and a seven day extension of time to respond. However, the director did not respond. On 21 August, the employee sent a text message to the director proposing a meeting, however the employee never received a response.
On 24 August 2018, the director met with the employee and advised her that, as she had not accepted the full-time role, the business was making her redundant. He then provided the employee with a termination letter.
The employer did not comply with its consultation obligations
The Commission found that the employer did not comply with its obligations to consult with the employee under the Real Estate Award 2010 because the employer did not provide relevant details to the employee about the change or discuss the effect those changes were likely to have.
The Commission considered that this was particularly important in the present case. The employer clearly knew about the employee’s family circumstances and carer responsibilities. Job sharing with another employee and other similar arrangements might also have been canvassed by way of consultation.
The Commission also noted the significance of the employer’s failure to respond to the employee’s 8 August email or consider redeployment opportunities for the employee, noting that the employer did not realistically engage with the employee again until the brief discussion on 24 August, when the employee was told her employment was terminated with immediate effect.
Was the dismissal harsh, unjust or unreasonable?
The Commission found that the dismissal was harsh, unjust and unreasonable for the following reasons:
While the Commission should not generally be involved in ‘second-guessing’ the decisions made by an employer, the available evidence provided little to substantiate the business case to support the need to restructure the employee’s position.The employee was presented with an alternative the employer was certain she would reject as there was no commission and a $5 an hour pay decrease.There was a failure to consult, including a failure to engage in meaningful discussion of the proposal.
The final amount of compensation awarded was $14,578.11.
CGW disclaimer
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.
This article was originally published on the CGW website and has been reproduced with permission.

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By Sally Moten (Partner) and Justine Krajewski (Lawyer) of Lander & Rogers.
We have all been there; struggling to make it to work following a big night of Netflix – having no choice but to either call in sick or reach for the pain killers to cure the insufferable headache from excess screen time. In fear of getting sacked for “chucking a sickie“, we take the pain killers – but is there a risk that you could get sacked anyway?
A recent appeal decision of the Fair Work Commission confirmed it was not appropriate to reinstate an employee who tested positive for Nurofen Plus after failing to declare he was taking it as required by the applicable Drug and Alcohol policy (D&A Policy).
Mr Guorgi, a Compliance Officer at Transdev (a public transport business), was sacked after he tested positive for Nurofen Plus. Consequently, Mr Guorgi initiated unfair dismissal proceedings, arguing, among other things, that the lower strength pain killer did not impair his ability to perform his job and that was the reason why he didn’t submit the Medical Declaration Form as required by the D&A Policy. Mr Guorgi was of the view that in these circumstances, Transdev’s D&A Policy did not apply to him.
At first instance, Commissioner Booth found that Mr Guorgi breached the D&A Policy because he failed to report that he was taking Nurofen Plus and he failed to submit the required declaration form. This, along with his lack of contrition and insight that led the Commissioner to conclude that there was a valid reason for dismissal.
However, ultimately, Mr Guorgi was awarded $17,795 in compensation, as the Commission found the dismissal was harsh, unjust and unreasonable for a number of reasons, including:
procedural errors by Transdev in considering previous unrelated allegations against Mr Guorgi (most of which were unsubstantiated) that the Commissioner found “troubling”; andthe impact of the dismissal on Mr Guorgi including that he could no longer pay rent and had to relinquish his home, his car was repossessed, he had not worked since his dismissal due to a combination of health reasons and the difficulties of obtaining employment given that his role was a specialist one.
Mr Guorgi appealed the decision because he wanted his job back. He argued, amongst other things, that the Commissioner made an error in finding that the D&A Policy applied to him.
The Full Bench held that the D&A Policy, read as a whole, imposed an obligation on its employees to notify Transdev if they intended on taking non-prescription medication and to submit the Medical Declaration Form whether or not the medication impaired the employee’s ability to safely perform their role. Mr Guorgi did neither. The Full Bench considered that there was no error in the conclusion in the first instance decision that this was a valid reason for dismissal.
The Full Bench agreed with other reasoning in the first instance decision including that Mr Guorgi should be paid compensation instead of being reinstated. It held the evidence as a whole, weighed heavily against reinstatement because Mr Guorgi was in a safety critical role as a Compliance Officer, and Transdev were not confident he would correctly administer the D&A Policy given his attitude towards it.
Non-compliance with a D&A policy can be a valid reason for dismissal. Employers must also closely consider mitigating circumstances prior to making a decision to dismiss an employee.Review your D&A policies to make sure they are up to scratch – it could mean the difference between an employee being reinstated following a purported breach of the policy or not.Check your D&A policies are clear and include the following:the steps required by employees in relation to their obligations;the means by which employees can discharge their duties; andthe stipulated time frames for each step.Avoid diluting workplace investigations with historical and unsubstantiated allegations. Focus on the key issues.
Lander & Rogers disclaimer
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.
This article was originally published on the Lander & Rogers website and has been reproduced with permission.
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By Michael Selinger (Partner) and Georgie Richardson of Holding Redlich.
In an important decision for employers, the Fair Work Commission (FWC) has upheld an employers’ claim for privilege over investigation documents that were sought by an employee during their unfair dismissal proceedings: Petrunic v Q Catering Limited [2019] FWC 1034. 
The facts
The applicant to the unfair dismissal proceedings, Ms Petrunic (Applicant), was dismissed from her employment with Q Catering after engaging in unauthorised industrial action. Q Catering sought external legal advice in conducting an investigation into allegations of misconduct, the nature of the investigation process and any consequential disciplinary action for employees who participated in the industrial action.
The legal representatives met with managers of Q Catering and took statements that were then used to draft letters of allegation that were provided to five employees involved in the industrial action, including the Applicant. Q Catering subsequently engaged one of its own employees to conduct the investigation into the allegations.
Fair Work Commission order requiring production of documents
At the request of the Applicant, the Fair Work Commission (FWC) issued an order to Q Catering requiring the production of all documents relating to the investigation into the unauthorised industrial action. In particular, the Applicant sought the statements of managers employed by Q Catering. The Applicant argued that privilege over statements given by managers to the legal representatives was waived, as the statements would have been used to formulate the letters of allegation issued by Q Catering to the relevant employees. 
Q Catering maintained that the documents were subject to a claim of legal professional privilege, in circumstances where the documents were prepared for the purpose of obtaining legal advice and/or in anticipation of litigation.
Senior Deputy President Hamberger agreed with Q Catering, finding that all documents consisted of confidential communications between Q Catering and its legal representatives for the dominant purpose of the legal representatives providing legal advice.  
Loss of legal professional privilege over statement
During the giving of evidence at the hearing for the unfair dismissal application, counsel for the Applicant requested production of a ‘witness statement’ (which Q Catering asserted was more of a file note in nature rather than a witness statement) in response to evidence given by a witness called by the Applicant. The witness statement had been provided to the legal representatives following the day of the industrial action. During cross-examination, the witness was asked whether he had made any notes of the industrial action, to which he responded that he had not done so, but had given a statement to Q Catering’s legal representatives. When asked what he said to Q Catering’s legal representatives, he replied that it was very similar to the statement that he gave to the investigator.
The Applicant submitted that what the witness described as the ‘initial witness statements’ given by the managers to their legal representatives were not confidential documents and were therefore not subject to privilege. It was further submitted that, in any event, privilege had been waived given that a number of the allegations contained in the letters of allegation given to the five employees came from information provided by witnesses to their legal representatives.
Senior Deputy President Hamberger accepted Q Catering’s objection to the Applicant’s argument and asserted the ‘initial witness statements’ contained very sensitive information that was used (among other things) to make decisions that could lead to disciplinary action against employees of Q Catering. However, the Senior Deputy President found the witness had knowingly and voluntarily disclosed his statement to the legal representatives during cross-examination. In coming to this decision, the case of Divall v Mifsud [2005] NSWCA 447 was relied upon. In that case a witness was cross-examined on a privileged statement and asked to reveal the substance of the privileged statement, which he did, and counsel for the party who called the witness did not object. The Court of Appeal held that privilege had been waived, finding that as counsel for the party calling the witness did not object to the questions, the statement had been “knowingly and voluntarily disclosed to another person”.
It was for these reasons that privilege was waived and Q Catering were ordered to provide a copy of the statement to the Applicant.
Categories of legal professional privilege 
The three separate categories of legal professional privilege were considered:
Advice privilege: attaching to confidential written and oral communications passing between a lawyer and a client, for the dominant purpose of the lawyer providing legal advice to that clientLitigation privilege: attaching to confidential written and oral communications made, or prepared, for the dominant purpose of use in existing or reasonably contemplated judicial or quasi-judicial proceedingsAn extension to litigation privilege: attaching to confidential written and oral communications passing between a lawyer and third parties, or the client and third parties, if made or prepared when litigation was on foot or reasonably contemplated.  The dominant purpose for the existence of the communication must be related to those proceedings.
Senior Deputy President Hamberger was satisfied that, in this case, all documents that were requested by the Applicant fell within the scope of ‘advice privilege’ (albeit privilege was waived in respect to a witness statement). All documents consisted of confidential communications passing between Q Catering and its legal representatives for the dominant purpose of Q Catering receiving legal advice with respect to preparing letters of allegations, the nature of the investigation process, and potential disciplinary action. He was also satisfied that the documents were prepared in circumstances where legal proceedings were anticipated.
It was noted that if privilege attaches to a document, that privilege may be expressly or impliedly waived. Senior Deputy President Hamberger considered the key principle underlying the concept of waiver is that the party asserting privilege has acted inconsistently with the maintenance of confidentiality over the lawyer-client communication.  
The lessons
Legal professional privilege enables the protection and non-disclosure of communications between clients, their legal representatives and certain third parties in specific circumstances. It operates to allow and encourage forthright communications between a client and their legal advisors regarding appropriate legal options. This case highlights the importance of employers: 
establishing legal professional privilege over investigations and investigation material – employers should ensure that there are processes in place for commencing investigations and determine from the outset the basis upon which legal professional privilege is claimed. Establishing legal professional privilege allows for an investigation (and any investigation material) to be conducted on a confidential basis if the communications between a client and their legal advisers (whether in-house or external) are created for the dominant purpose of providing legal advice or use in litigationensuring privilege is not waived – employers are faced with the risk of deliberate or inadvertent partial waiver of privilege at all stages of the investigation process, and even at the conclusion of the investigation process, should proceedings be commenced. 
Legal professional privilege is an important protection and has value in enabling businesses to explore and discuss potential legal risks and mitigation strategies without fear of those communications being used against them in the future. It is important, however, to ensure the privilege is established correctly and maintained.
A copy of the decision referred to in this article can be accessed here.
DisclaimerThe information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. 
This article was originally published on the Holding Redlich website and has been reproduced with permission.
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By Paul Burns (Partner), Sarah Clarke (Senior Associate) & Mairead O’Connor (Paralegal) of Corrs Chambers Westgarth (Corrs)
In Transport Workers’ Union of Australia v Broadspectrum (Australia) Pty Ltd [2019] FWCFB 663, a Full Bench of the Fair Work Commission (Full Bench) confirmed that an order suspending specific protected industrial action will pause the time period within which all industrial action approved by a protected action ballot must commence.
The effect of this decision is that employees can commence any authorised protected industrial action after a suspension order ceases to operate. It is not necessary to obtain a further protected action ballot order.
BACKGROUND
The question in dispute in this case arose in the context of negotiations for an enterprise agreement between Broadspectrum Pty Ltd (Broadspectrum) and the Transport Workers’ Union (TWU).
Broadspectrum Court Security and Custodial Services is contracted by the Western Australian Department of Justice, and is responsible for the delivery of court security in all WA courthouses. Broadspectrum also provides transport services of those in custody between correctional facilities and other locations like courts and hospitals.
The TWU applied for and obtained a protected action ballot order from the Fair Work Commission (FWC)[1] in June 2018. In the subsequent ballot, TWU members approved the taking of the following forms of industrial action:
bans on overtime;bans on the completion of paperwork;bans on wearing uniform shirts;work-to-rule periods;bans on performing higher duties;4-hour, 8-hour, 24-hour and 48-hour bans on performing work.
In August 2018, the TWU gave notice to Broadspectrum of its members’ intention to engage in the following industrial action:
bans on overtime;bans on wearing uniform shirts; andbans on higher duties.
Broadspectrum applied to the FWC for a suspension of this proposed industrial action under s 424 of the FW Act, which provides that the FWC must make an order suspending or terminating protected action if it would threaten to ‘endanger the life, the personal safety or health, or the welfare, of the population or of part of it’. Given the nature of the services provided by Broadspectrum, Deputy President Beaumont concluded that the proposed industrial action met this threshold and suspended the action for a period of two months.[2]
After the suspension order ended in October 2018, the TWU gave notice to Broadspectrum of its intention to engage in two other types of industrial action which had been approved in the earlier ballot: the paperwork ban and a 4-hour stoppage.
Broadspectrum then applied for an order under s 418 of the FW Act that these proposed forms of protected action stop or not occur. Deputy President Beaumont granted the order on the basis that the paperwork ban and 4-hour stoppage were not legally protected forms of industrial action.[3]
THE LEGISLATIVE FRAMEWORK AND THE LEGAL ISSUE
Section 459 of the FW Act sets out the conditions under which industrial action is authorised by a protected action ballot approving such action. Relevantly, the action must commence within 30 days of the results of the ballot being declared, or within an extended period set by the FWC. In this case, the Deputy President had extended the period during which protected action could be taken by a further 30 days. However, as the paperwork ban and 4-hour stoppage were proposed to commence after this extended time limit had ended, Deputy President Beaumont found that these actions were unauthorised.[4]
Section 429 of the FW Act provides that if protected action in the form of employee claim action has been suspended by the FWC (e.g. under s 424), once the suspension period ends the action may be taken without the need for another ballot. In these circumstances, the s 459 time limit for commencing authorised action is calculated by disregarding the duration of the suspension period (s 429(3)). In other words, a suspension order ‘stops the clock’ on the authorised industrial action period under s 459, and the clock starts ‘ticking’ again once the suspension ends.
However, Deputy President Beaumont concluded that the s 429 ‘stop the clock’ mechanism only applied to the industrial action which was the subject of the suspension order (in this case, the proposed overtime, uniform and higher duties bans).[5]
Consequently, the proposed paperwork ban and 4-hour stoppage were outside of the authorised time limit, as neither was included in the TWU’s initial notice of industrial action and hence were not the subject of the suspension order.
THE FULL BENCH’S DECISION
The TWU lodged an appeal against Deputy President Beaumont’s decision and order stopping the paperwork ban and 4-hour stoppage. The union’s argument that the Deputy President incorrectly concluded these forms of industrial action were not protected was based on the following two main grounds:
The suspension order had the effect of suspending allforms of industrial action authorised by the ballot, not just the three types of action of which the TWU first gave notice to Broadspectrum.Alternatively, s 429 permits employees (after a period of suspension has ended) to take all forms of action listed in the protected action ballot regardless of whether or not they were specifically the subject of the suspension order.[6]
The Full Bench rejected the TWU’s first ground of appeal, noting there is clear Full Court of the Federal Court authority that only the form(s) of industrial action found to be threatening endangerment to life, safety, health or welfare, or the economy, could be the subject of a suspension order (under s 424(1)(c) or (d)).[7] However, the same authority confirmed that once a suspension order is made, s 413(7) will have the effect of suspending all other forms of industrial action authorised by a ballot (as well as any protected action of the other party).[8]
On the other hand, the Full Bench upheld the TWU’s second ground of appeal. The Full Bench considered that s 429 should be interpreted in light of the overall context and purpose of the FW Act, which seeks to lay down ‘clear rules’ for the taking of protected industrial action that are ‘fair, simple and democratic’.[9] The purpose of s 429 is therefore to ensure that the capacity to take employee claim action pursuant to a protected action ballot, after a suspension order ends, is not ‘diminished or rendered nugatory by the period of suspension’.[10]
The Full Bench observed that this purpose would be weakened if it were only the industrial action that was suspended under s 424 that could be resumed after a suspension order ended.[11] This could not have been Parliament’s intention as it would result in ‘perverse’ consequences, i.e. employees would have the capacity to resume or commence industrial action that has been determined under s 424 to present a serious threat to the population’s health and safety, while simultaneously being prevented from engaging in industrial action that does not present such a threat.[12]
By requiring that the suspension period be disregarded, s 429(3) ‘effectively ‘stops the clock’ on the running of the 30 or 60 day period operating pursuant to s 459(1)(d) in relation to employee claim action to which the section applies’.[13]
The Full Bench concluded that ‘where there is a suspension of protected industrial action, s 429 allows employee claim action authorised by a protected action ballot to be engaged in after the suspension period without the need for a further protected action ballot, and the suspension period does not count in determining the period in which such action may be taken.’[14]
The effect of s 429(3) here was to extend the period in which employee claim action could be taken pursuant to the TWU’s ballot for a further two months after 18 September 2018. The proposed paperwork ban and 4-hour stoppage notified by the union after the suspension order ended would therefore have been protected industrial action. As Deputy President Beaumont misconstrued s 429, there was no basis for her s 418 order that those forms of industrial action stop or not occur.[15]
IMPLICATIONS FOR EMPLOYERS
The key take-away from this decision is that allapproved forms of industrial action authorised by a protected action ballot will be back on the table once the suspension order ceases to operate.This consideration is not just important for businesses operating in industries where disruption of their activities may be found to endanger the lives, health and safety of the population, or an important part of the economy, as the basis for a s 424 suspension order.The Full Bench made clear that s 429 will also allow all authorised employee claim action to be commenced or resumed at the end of other FW Act suspension orders issued on the basis of significant economic harm to the parties involved (s 423), significant harm to a third party (s 426), or for the purposes of ‘cooling off’ the bargaining process (s 425).[16]Employers should always be aware of and prepared for all the forms of industrial action authorised by a protected action ballot that their employees and representative unions are contemplating, not just those of which formal notice has been given at a particular point in bargaining.Any of those types of proposed action may be taken before the applicable time limit under s 459 ends – factoring in now that a suspension order will ‘stop the clock’ on calculating that time limit.

[1] Under Fair Work Act 2009 (Cth) (FW Act), Part 3-3, Division 8.
[2] Broadspectrum (Australia) Pty Ltd v Transport Workers’ Union of Australia [2018] FWC 4930.
[3] Broadspectrum (Australia) Pty Ltd v Transport Workers’ Union of Australia [2018] FWC 6582.
[4] Ibid.
[5] Broadspectrum (Australia) Pty Ltd v Transport Workers’ Union of Australia [2018] FWC 6582 [67].
[6] Transport Workers’ Union of Australia v Broadspectrum (Australia) Pty Ltd [2019] FWCFB 663 [12].
[7] Australian and International Pilots Association v Fair Work Australia [2012] FCAFC 65.
[8] Section 413(7) relevantly states that for industrial action to be protected, no order can be in place that suspends any industrial action in relation to the proposed enterprise agreement.
[9] Transport Workers’ Union of Australia v Broadspectrum (Australia) Pty Ltd [2019] FWCFB 663.
[10] Ibid [41].
[11] Ibid.
[12] Ibid [42].
[13] Ibid [39].
[14] Ibid [44].
[15] Ibid [51].
[16] Ibid [43].

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.
This article was originally published on the Corrs website on 27 March 2019 and has been reproduced with permission.
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By John Tuck (Partner), Marie Costa (Special Counsel), Professor Anthony Forsyth (Consultant) & Jade Saunders (Associate) of Corrs Chambers Westgarth (Corrs).
On 25 February 2019, the Report of the first national review of Australia’s model Work Health and Safety (WHS) laws was released. The Report (prepared by former Executive Director of SafeWork SA, Marie Boland) notes that the regulatory scheme under the model laws is largely operating as intended. However it identifies areas for improvement and makes 34 recommendations for reform. These include the introduction of an industrial manslaughter offence and some adaptation of the duty-holder principles under the model laws to various modern work arrangements.
BACKGROUND
The model WHS laws aim to provide for a harmonised approach to WHS regulation across Australia. They were developed following the establishment of Safe Work Australia, the statutory body tasked with undertaking a National Review of WHS laws in 2008.
The model WHS laws were implemented by all jurisdictions, except for Victoria and Western Australia, between 2012 and 2013. However, Victoria may soon be the only jurisdiction not to have adopted the model WHS laws, as the Western Australian government has recently engaged in consultation regarding new legislation to be based on the model WHS Act. (See our publication regarding the Western Australian position here.)
In 2018, at the request of the federal and state Ministers responsible for WHS, Ms Boland reviewed the content and operation of the model WHS laws (including the model WHS Act, WHS Regulations and Codes of Practice). Ms Boland’s Report followed extensive consultation with stakeholders, and is the first comprehensive review of the model WHS laws since their implementation (the full Report is available here).
OVERALL ASSESSMENT OF THE MODEL WHS LAWS
The Report notes that the objective of harmonising WHS laws across the country has largely been achieved and remains strongly supported by business groups. However, there are some concerns that uniformity is being eroded by variations in the implementation of the model laws in some jurisdictions. In addition, many of those consulted for the review want Victoria and Western Australia to implement the model laws.
According to the Report, the three-tiered framework of regulation under the model laws (WHS Act, Regulations and Codes) was widely supported by stakeholders. However, small business representatives considered that the regulatory scheme is too complex and does not adequately address their particular circumstances.
The Report found that businesses generally encounter difficulties with confusion and complexity in the model laws, especially the WHS Regulations and Codes. Ms Boland therefore recommended that the model WHS Regulations and Codes ‘be reviewed against clear criteria to determine what risks or activities should be prescribed in a regulation or supported by a model Code’.
A central concept introduced by the model WHS laws is that of imposing a primary duty of care and a range of other obligations upon a ‘person conducting a business or undertaking’ (PCBU). The Report concluded that the new duties framework under the model laws is operating well and that the PCBU concept, along with the related definitions of ‘worker’ and the ‘workplace’, were providing an adaptable scheme of regulation in relation to new forms of work and emerging business models.
However, the gig economy and various types of platform work present new challenges which may require some fine-tuning of the model laws. For example, Ms Boland recommended that the WHS Act clarify that a contractor or subcontractor in a contractual chain can be both a worker (owed duties by a PCBU) and a PCBU (owing duties to others in that supply chain).
OTHER KEY RECOMMENDATIONS
The introduction of new offences of gross negligence and industrial manslaughter
Queensland and the ACT are presently the only jurisdictions with specific industrial manslaughter offences, in addition to the category 1 to 3 offences applicable to contraventions of the model WHS laws[1] (See further discussion of the current penalty regime under the heading ‘Increases in penalties’ below).
Although category 1 to 3 offences are focused on the level of risk to which individuals are exposed, rather than the consequence of any breach of duty, a common view amongst stakeholders was that there should be a specific offence relating to fatalities in the workplace as a result of the gross negligence of another.
Ms Boland noted there have been few successful prosecutions for category 1 offences due to difficulties in proving ‘recklessness’, as it requires proof of a conscious choice to take an unjustified risk. She also identified further difficulties in securing an alternative conviction for criminal manslaughter as against a corporation, linked to having to identify the directing mind and will of the corporation.
As a result, the Report recommended the inclusion of ‘gross negligence’ for category 1 offences, to maintain a risk-focused approach where a duty holder has exposed an individual to a risk of serious harm or death. It is considered that this would add an extra deterrent to the model WHS laws and assist prosecutors to secure convictions without needing to prove an intentional failure on behalf of duty holders.
Ms Boland also recommended the creation of the new consequence-focused offence of industrial manslaughter, where the outcome of gross negligence by duty holders is the death of a person covered by the model WHS laws. The Report recommended a more robust offence than that presently in place in Queensland – for example, by expanding the offence beyond the death of a ‘worker’, to include the death of third parties such as clients, customers, visitors or neighbours of the workplace.
WHS regulation to provide greater guidance on psychological injury
A key concern repeated by those consulted during the review was the inadequacy of the current model WHS laws in addressing and managing risks associated with psychological health. Illustrative of the significance of psychological health is the fact that although workers’ compensation claims relating to mental health conditions currently represent a small proportion of all serious workers’ compensation claims, such claims lead to longer periods of absence from work and higher awards of compensation.
The model WHS Act defines health to include psychological health. Accordingly, the primary duty of a PCBU in ensuring, so far as reasonably practicable, that workers and other persons are not exposed to risks to health and safety arising from the work carried out by the business or undertaking, extends to psychological health. However, psychological health and how to manage psychological risks or hazards remain unaddressed by the current model WHS Regulations or Codes.
A number of psychological risks were identified in the submissions received from stakeholders during the review including those associated with geographically isolated workers, those required to work away from home for extended periods of time, migrant workers and women returning from maternity leave.
Although Safe Work Australia has recently published guidance material on the topic, Ms Boland recommended the development of additional regulations to address how to identify psychological risks and the appropriate control measures to manage those risks, as a matter of priority.
Easier worksite access for union officials assisting health and safety representatives
The model WHS Act provides for the election of health and safety representatives (HSRs) to represent workers who carry on work for the business or undertaking. The legislation also provides for the functions of HSRs, including to investigate complaints from members of the work group relating to work health and safety (sections 50 and 68(c)). In performing their functions, HSRs can request the assistance of any person, whenever necessary (section 68(2)(g)).
The right of a HSR to request assistance is separate and distinct from the scheme for right of entry of union officials onto work sites governed by the Fair Work Act 2009 (Cth) (FW Act). This distinction was highlighted in a 2017 decision of a Full Federal Court in Australian Building and Construction Commission v Powell. (See our publication regarding this decision here.)
The Full Court unanimously held that a union official attending a construction site to assist a HSR was not entitled to enter solely under the Victorian OHS Act, but was also required to have a federal right of entry permit and meet all other entry requirements pursuant to the FW Act.
Returning to the model WHS Act, a key concern of employers articulated during the review was that it is often difficult to determine whether those entering the workplace are genuinely entering to assist a HSR. Others noted that these provisions can be used to circumvent the right of entry provisions and can lead to HSRs being pressured by union officials to arrange for their entry. On the other hand, union submissions to the review supported the right of a HSR to request assistance.
In weighing the competing concerns, Ms Boland considered that the right of the HSR to request assistance should not be restricted if the person they are seeking assistance from is also a union official. The Report recommended that Safe Work Australia and other relevant agencies investigate how to provide a union official access to a workplace to assist a HSR, without the need to hold an entry permit pursuant to the FW Act.
Increases in penalties
The model WHS Act establishes three categories of offences for failure to comply with a health and safety duty.
Category 1 is the most serious, for recklessness in exposing an individual to whom a duty of care is owed to the risk of death, serious illness or injury (section 31).
A category 2 offence occurs when a person fails to comply with their health and safety duty, absent recklessness, and that failure exposes an individual to a risk of death or serious injury or illness (section 32).
The least serious offence, a category 3 offence, occurs when a person has a health and safety duty and fails to comply with that duty (section 33).
The penalties for offences under the model WHS Act are described in monetary amounts. For instance, the model Act states the commission of a category 1 offence by a body corporate can attract a maximum penalty of $3 million (section 31).
Describing penalties in this way, rather than in penalty units, has had the effect that penalties have remained at the same level despite inflation and increases in the value of penalty units across participating jurisdictions. (Queensland is the only model WHS laws jurisdiction to use penalty units rather than a monetary sum.)
For example, a submission was received to the effect that had the maximum penalty for a category 1 offence increased with the value of a Commonwealth penalty unit, the maximum penalty would now be in excess of $5.5 million.
Ms Boland recommended that penalties be increased to reflect increases in the Consumer Price Index and the value of penalty units in the participating jurisdictions, to ensure penalties continue to retain their value as a deterrent.
Creation of an offence to insure against WHS penalties
Presently there is no impediment to a body corporate obtaining insurance to protect itself, its officers and employees against liability to pay penalties arising from breaches of the model WHS laws.
Insurance for this purpose was largely unsupported by the stakeholders consulted during the review and submitted to be against public policy, given the key purpose of a penalty is to promote greater compliance with the model WHS laws. Others submitted that it was imperative to enable companies to insure for these risks and associated legal investigation costs including damages, as this is essential for attracting and retaining quality leadership and management, as well as managing the cost of doing business in Australia.
Drawing upon the New Zealand position, Ms Boland recommended the addition of a statutory offence arising from entering into a contract of insurance which indemnifies against liability for a monetary penalty under the model WHS Act, to provide insurance for such a liability, and to take the benefit of such insurance or indemnity. Importantly, this amendment is not intended to preclude insurance coverage for legal costs incurred in defending a prosecution.
IMPLICATIONS
The recommendations in the Report, if implemented, would result in a number of significant changes to WHS regulation in Australia. Businesses would have to manage these changes – particularly the extension of an industrial manslaughter offence to all Australian jurisdictions (if the Victorian proposal is also implemented), further adaptation of the regulatory scheme to new business models and various forms of psychological harm, and easier access of union officials onto work sites to assist HSRs.
Ms Boland’s Report is presently with the Ministers responsible for WHS for consideration. A regulation impact statement process will be undertaken by Safe Work Australia over coming months, with an opportunity for stakeholders to make further submissions, before the Ministers respond to the Report later this year.

[1] Our publication regarding the relatively new Queensland legislation is available here. The Andrews Government in Victoria is now seeking to implement its 2018 election commitment to introduce an offence of industrial manslaughter under the Occupational Health and Safety Act 2004 (Vic).

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.
This article was originally published on the Corrs website and has been reproduced with permission.
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By Nicholas Ellery (Partner) & Professor Anthony Forsyth (Consultant) of Corrs Chambers Westgarth (Corrs).
Two significant reports have been released recently, further highlighting the extent of worker exploitation in Australia;
the Final Report of the Migrant Workers Taskforce (MWT) chaired by Professor Allan Fels AO; andthe ‘Fairness in Franchising’ Report of the Parliamentary Joint Committee on Corporations and Financial Services.
In this article we explore the key findings of the MWT Report and its reform proposals, which have already been accepted (in principle) by the Federal Government. We also briefly consider the employment-related aspects of the ‘Fairness in Franchising’ Report.
MIGRANT WORKERS TASKFORCE REPORT
The MWT was established by the Coalition Government in the wake of the 7-Eleven underpayments scandal and reports of other instances of worker exploitation in 2016. The Taskforce included representatives from a large number of federal departments and agencies including the Fair Work Ombudsman, Department of Home Affairs, Australian Border Force and Australian Taxation Office.
The Final Report of the MWT was released on 7 March 2019, along with the Government’s response to the MWT’s recommendations.
The MWT found that worker exploitation takes many forms, including wage underpayment and ‘cash-back’ arrangements; pressure on migrant workers to work outside visa restrictions; non-provision of leave and superannuation entitlements; tax avoidance through cash payments; misclassification of employees as contractors; and unsafe working conditions (MWT Report, page 33).
According to the MWT, while most Australian employers comply with workplace laws: ‘the incidences of underpayment of temporary migrant workers indicate that there are unscrupulous employers in some industries who blatantly breach the law’, and there is ‘a culture of underpayment in some areas of the economy’ (page 14). In addition, certain business models (eg franchising) can ‘foster exploitative behaviours and severely hinder the pursuit of the wrong doer’ (page 37).
The MWT noted that the Federal Government had responded to many of these problems through the amendments introduced by the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) (Vulnerable Workers Act). However, it considered that there is a ‘further opportunity to do more to deter unscrupulous businesses that profit by underpaying migrant workers, and to improve avenues for migrant workers to recover underpayments’ (page 83).
Most importantly, the MWT found that Australia’s current regulatory model (primarily based on civil liability for workplace law breaches) ‘is unable to tackle serious and systemic underpayments of workers’. Therefore, criminal sanctions now need to be included as part of the ‘suite of enforcement tools available to address migrant worker exploitation’ (pages 86-87). This proposal and the MWT’s other key recommendations are summarised below alongside the Australian Government’s Response to the MWT Report.
Key MWT RecommendationsGovernment ResponseIntroduction of criminal sanctions for the most serious forms of exploitative conduct (eg clear, deliberate and systemic), through the most appropriate legislative vehicle (Recommendation 6).Adding criminal sanctions will send a strong message to employers who think they can get away with exploitation of vulnerable employees.The Government will consider the circumstances and vehicle for applying criminal penalties to serious and deliberate exploitation.Increase the general level of penalties for underpayment-related provisions of the Fair Work Act 2009 (Cth), more in line with other business laws (especially consumer laws) (Recommendation 5).Give the courts specific powers to make additional enforcement orders, including adverse publicity orders and banning orders (Recommendation 7).The increased penalties in the Vulnerable Workers Act should be reviewed once they have had time to take effect.If they are not deterring exploitation, the Government will consider options for further increasing penalties.Consider additional avenues to hold individuals and businesses to account for involvement in workplace law breaches – including extending accessorial liability provisions to situations where businesses contract out services to other persons (building on the franchisor and holding company liability provisions introduced by the Vulnerable Workers Act) (Recommendation 11).The Government will explore options for ensuring responsible companies cannot contract out of their workplace obligations, eg by further extending accessorial liability.Establish a National Labour Hire Registration Scheme, focused on labour hire operators and host users of their services in four sectors at greatest risk of operations by rogue labour hire operators: horticulture, meat processing, cleaning and security.This mandatory scheme should impose a low regulatory burden for labour hire operators in these four sectors – however registration will be cancelled if operators contravene a relevant law.(Recommendation 14)The Government will consult with stakeholders on introduction of a model for a National Labour Hire Registration Scheme.The scheme will be aimed at reducing worker exploitation, increasing accountability and transparency, and effecting behavioural change among labour hire providers in the high-risk sectors – but without causing major disruption to the wider labour hire sector.Provide the Fair Work Ombudsman (FWO) with the same information gathering powers as other business regulators (eg ACCC) (Recommendation 9).Consider whether the FWO requires further resourcing, tools and powers to undertake its compliance and enforcement functions (Recommendation 10).The Government agrees that the FWO should have equivalent enforcement powers to those of the ACCC. It will also examine options to enhance the role of Proactive Compliance Deeds in promoting compliance with workplace laws.The Government will continue to ensure the FWO has the appropriate resources, powers and tools to effectively counter worker exploitation.Consider legislation making a person guilty of an offence where they knowingly unduly influence, pressure or coerce a temporary migrant worker to breach a visa condition (Recommendation 19).The Government will consider introducing this new offence.Explore mechanisms to exclude employers from employing temporary visa holders for a defined period, where they have been convicted by a court of underpaying migrant workers (Recommendation 20).The Government will commence exploring these mechanisms.
FAIRNESS IN FRANCHISING REPORT
The Report of the Parliamentary Joint Committee on Corporations and Financial Services was released on 14 March 2019, following an extensive inquiry into the operation and effectiveness of the Franchising Code of Conduct.
Much of the Report is devoted to the problems caused by the substantial disparity of power between franchisors and franchisees under the current franchising model, and the use of franchise agreements to protect franchisor interests and place most of the commercial risk on the franchisee.
The Report makes many recommendations to address systematic exploitation of some franchisees by franchisors, including higher penalties for breaches of the Franchising Code and a boost to the ACCC’s enforcement powers.
The Report also notes that ‘wage theft continues to occur in many franchises: partly due to the business model franchisors operate and partly due to a range of socio-cultural problems’.
The Joint Committee indicated some of the Report’s recommendations should help by ‘mitigating incentives to engage in wage theft’. Specific recommendations addressing employment issues included that:
the Australian Government amend the Franchising Code to require guidance on employment matters as part of mandatory disclosure between franchisors and franchisees, eg awards, minimum wages and overseas worker issues to be developed by the FWO (Recommendation 6.16); andthe ACCC develop a FranchiseSmart website (similar to ASIC’s MoneySmart website) to address issues that franchisees may encounter, including Australian Fair Work rights, minimum wages laws, awards and migrant workers’ rights (Recommendation 18.2).
The Government has not yet responded to the Fairness in Franchising Report.
LOOKING AHEAD
It is highly unlikely that the Government will introduce legislation implementing the recommendations of the MWT Report before the upcoming Federal election.
The ALP’s 2018 Policy Platform includes the following measures to address worker exploitation:
‘Labor will extend, where appropriate, responsibility for compliance with workplace laws to corporations who are the economic decision makers, including franchisors and along the supply chain.
Labor will increase penalties for employers and related entities who systematically underpay and exploit workers. Labor will provide the resources necessary to focus on detection and prosecution of serious contraventions of the Fair Work Act by employers.
Labor will act to eradicate the exploitation and wage theft experienced by temporary migrant workers – working closely with trade unions – by introducing a range of measures that deliver increased protections.’
 The Labor Opposition has not announced any policy commitment to introduce criminal penalties for wage theft (State laws to that effect are now being developed in Queensland and Victoria). Federal Labor could be expected to use the MWT Report as a basis for criminalising serious and systemic underpayments,

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.
This article was originally published on the Corrs website and has been reproduced with permission.
The post MIGRANT WORKERS TASKFORCE AND FRANCHISE SECTOR REPORTS: FURTHER CRACKDOWN ON WORKER EXPLOITATION IMMINENT appeared first on Wolters Kluwer | Central.

Contributed by Aldrin De Zilva, Director, Nicholas Rouse, Special Counsel, Naison Seery, Associate, Daniel Paolini, Senior Associate and Ryan Leslie, Senior Associate, Greenwoods & Herbert Smith Freehills
On 7 February 2019, Moshinsky J handed down his judgment in the Federal Court decision of Victoria Power Networks Pty Ltd v FC of T 2019 ATC ¶20-682 (the VPN decision). The case concerned the assessability of customer contributions “received” in cash or “gifted” assets by electricity distributors in the VPN group for “uneconomic” connections — being connections where the distributor’s “incremental revenue” would not exceed its “incremental cost” from the connection in present value terms. The “non-cash business benefit” rules in s 21A of the ITAA 1936 considered in this case are relevant in a broader range of scenarios.
This issue has vexed the electricity industry for some time, and there is no settled view between industry participants. The decision reinforces the ATO’s position as set out in its Infrastructure Framework document.
The VPN decision considered two alternatives for funding new “uneconomic” connections:
the distributor carries out the construction works required to make the connection and the customer is required to make a cash contribution equal to the excess of the incremental costs (including estimated construction costs) over incremental revenue from the connection (net incremental costs) (Scenario 1), orthe customer carries out the construction, the constructed asset is transferred to the distributor and the distributor pays the customer a rebate equal to the estimated costs of construction less the net incremental costs (ie estimated costs of construction less than what would have been the customer cash contribution in Scenario 1) (Scenario 2).
In both cases, the economic contribution from the customer is equal to the net incremental costs such that the pre-tax net cash position of each of the parties would be the same, assuming the actual construction costs equalled the estimate.
In summary, Moshinsky J found the distributor to be taxable on the customer contribution, whether paid in cash (Scenario 1) or provided in the form of a transferred asset (Scenario 2), and found that the same amount was taxable in each scenario.
Scenario 1
Moshinsky J found that the cash contributions were ordinary income assessable under s 6-5 of the ITAA 1997, and not an assessable recoupment as claimed by the taxpayer, because they were gains (ie amounts derived) from a significant and ordinary part of the business of the distributor.
The recurrence and regularity of the new connections were an important factor in Moshinsky J’s consideration — VPN employed almost 100 staff to manage new connections.
Scenario 2
Although the customer contribution component was calculated in the same way in both Scenarios, Moshinsky J acknowledged that the rights and obligations associated with Scenario 2 were quite different to Scenario 1 such that the customer contribution component was not ordinary income in Scenario 2.
The key issue then became the application of the non-cash business benefit rules in s 21A. Here, the parties accepted that the transferred asset was a “non-cash business benefit” that was “received on revenue account”. This seemingly was considered sufficient to satisfy the precondition to application of s 21A that the “non-cash business benefit” must be “income derived by the taxpayer” — a key issue in many circumstances in which s 21A arises.
The s 21A dispute therefore focused on the “arm’s length value” of the customer contribution; it was accepted that the rebate paid by VPN was a “recipient’s contribution” which would reduce the assessable amount under s 21A. Expert evidence calculating the net present value of cash flows from the transferred asset was ultimately held not to be relevant, with Moshinsky J ultimately deciding that the estimated cost of construction used to calculate the rebate in Scenario 2 (which would also be used to calculate the customer cash contribution in Scenario 1) was the “arm’s length value” of the transferred asset. The reasoning for this conclusion is not entirely clear, but the conclusion seems to be based on the use of estimated construction cost in the formula for calculating the customer cash contribution in Scenario 1 and rebate in Scenario 2 where those calculations were between parties acting at arm’s length, ie VPN and the customer.
The result means that in both Scenario 1 and Scenario 2, VPN is taxed upfront on the net customer contribution (whether or not paid in cash) while the constructed asset is depreciated over a longer term.
The purported acceptance by the parties that the transferred asset was a “non-cash business benefit” that was “received on revenue account” and the lack of commentary in the judgment as to why the transferred asset gives rise to “income derived by a taxpayer” (being a threshold requirement for s 21A to apply) is not helpful in considering the potential application of the case to other fact patterns. If the case is appealed it is hoped that the appeal may provide further clarity on these issues.
CCH note: The taxpayer in Victoria Power Networks Pty Ltd v FC of T 2019 ATC ¶20-682 has since appealed against the first instance decision to the Full Federal Court.
[This article was originally published in CCH Tax Week on 22 March 2019. Tax Week is included in various tax subscription services such as The Australian Federal Tax Reporter and CCH iKnow. CCH Tax Week is available for subscription in its own right. This article is an example of many practitioner articles published in Tax Week.]
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By Ben Motro (Special Counsel) and Gemma Twemlow (Senior Associate) of Piper Alderman.
In the appeal of Urso v QF Cabin Crew Australia Pty Limited t/as QCCA [2019] FWCFB 1322, the Full Bench of the Fair Work Commission has confirmed that employees bear the responsibility of ensuring that their conduct remains appropriate and compliant with company policy, and that even unintentional misconduct can form the basis of disciplinary action. 
In July 2018 the Fair Work Commission held that a flight attendant was not unfairly dismissed for his conduct outside of work hours after he failed to attend to work following a night out in New York. 
The member of cabin crew, Mr Urso, appealed that finding.  On 7 March 2019, the Commission handed down its decision in relation to that appeal, upholding the finding that he was not unfairly dismissed. 
Background
Mr Urso was employed as an international flight attendant with QF Cabin Crew Australia Pty Ltd (QCCA), a subsidiary of Qantas Airways Limited.  On 20 July 2017 Mr Urso commenced a 7 day Brisbane – Los Angeles – New York – Los Angeles – Brisbane flight schedule. 
Whilst on the layover in New York, Mr Urso and a colleague attended a local bar.  Mr Urso’s colleague found him collapsed on the floor of the toilets with a blood alcohol reading of 0.205%.  Upon being discharged from hospital the following morning, Mr Urso advised his manager that he was unwell and unable to attend work for the return flight to Los Angeles that afternoon. 
QCCA paid $20,000 in relation to Mr Urso’s hospitalisation costs and Mr Urso flew home on a commercial flight two days later.  Upon returning to Brisbane, an investigation into the incident took place resulting in Mr Urso being dismissed for misconduct in circumstances where he had consumed in excess of five standard drinks resulting in the following breaches of QCCA’s policies and procedures:
Failing to ensure he was adequately rested whilst off duty and able to perform his next operational duty;Failing to be ready, willing and able to perform operational duties the next day;Failing to abstain from activity that would increase the risk of illness which would prevent performance of his duties at work; andConsumption of excessive alcohol whilst “on slip”.
The appeal
Mr Urso commenced an appeal on one fundamental issue – that he did not intend to consume excessive amounts of alcohol and become intoxicated.  In considering the appeal, the Commission found that Mr Urso’s ‘’innocent explanation’’, namely that he had only consumed 5 drinks, was unsupported and ‘’inherently implausible and unbelievable’’, particularly in circumstances where Mr Urso’s accounts of the incident were ambiguous. 
Whilst Mr Urso may not have positively intended to become intoxicated to the degree that he could not attend for work the following day, the Commission ”did “not accept that intention is a necessary element of misconduct which might constitute a valid reasons for dismissal’’.  The Commission held that other forms of misconduct, such as breaches of safety policies and procedures, ‘’may be the result of recklessness, negligence or misjudgement’’.  In these circumstances, Mr Urso failed in his responsibility to limit his consumption of alcohol to a degree which would have enabled him to attend for work the following day.
The Full Bench therefore found that Mr Urso’s failure to attend for his scheduled flight was as a result of excessive alcohol consumption, and consequently held that this was sufficiently serious to constitute a valid reason for dismissal. 
This decision reinforces the notion that employees can be validly dismissed where their conduct is inconsistent with work policies that concern their ability to properly conduct themselves at work, particularly those employees where safety is a critical component of their employment.  Additionally, this decision makes it clear that depending on the misconduct that an employee is said to have engaged in, whether they intended to engage in some form of misconduct may be irrelevant.  
This article was originally published on the Piper Alderman website and has been reproduced with permission.
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By Erin Kidd, Special Counsel and Nicola Martin, Principal of McCabe Curwood.
McCabe Curwood’s Employment Team has published a three-part article series on unpaid internships. The article series explains the relevant law (Part 1), outlines how to set up a proper intern arrangement (Part 2) and highlights the importance of getting the arrangement right (Part 3).
The backlash over comments made by the General Manager of Muffin Break and a penalty of nearly $330,000 being ordered against a former Shark Tank contestant has thrust unpaid internships into the spotlight once again. The Employment Team is here to assist your business to get it right from the start, or assist in the clean-up operation!
Muffin Break’s GM criticises Millennials for attitude towards unpaid work
Muffin Break’s General Manager, Natalie Brennan hit the headlines when she criticised Millennials for having “an inflated view of their self-importance” and being “unwilling to perform unpaid work to get ahead”. News watchers from all over the world took to social media to express their disapproval of the comments.
Ms Brennan later sought to clarify her previous comments stating “I don’t expect anyone to work unpaid… The unpaid work I referred to was supervised programs run through schools, TAFEs or universities, which provide valuable gained experience to people before they enter the workforce full-time”.  It seems that Ms Brennan was suggesting that her previous comments were in relation to “vocational placements”, which offer genuine experience and are permitted under the Fair Work Act 2009 (Cth).  As this, and much of the commentary shows, there is still a lot of confusion around what constitutes a legitimate internship.
Former Shark Tank contestant fined nearly $330,000 for “internships”
On 28 February 2019, Her Fashion Box Pty Ltd (HFB) and its sole director and majority shareholder Kathleen Purkis were ordered to pay penalties of $329,133 for underpaying employees, one of which had been engaged under the guise of being an “intern”.
One of the employees, a graphic designer, was engaged on the basis of an “unpaid internship” despite the fact that she had completed her university studies and worked 2 days per week for almost 6 months. This was not a legitimate internship (as outlined further in Part 1 of our article series on unpaid internships) and, as such, the young worker was actually an employee who should have been paid for the work she performed.
Another two employees were also underpaid $15,511 and $18,119. Judge Manousaridis of the Federal Circuit Court found that Ms Purkis knew HFB was not paying the workers their entitlements and imposed the penalties to deter others from similar conduct.
FWO currently prosecuting Sydney childcare operator
At present, the FWO is also prosecuting a Sydney childcare operator that allegedly failed to pay two workers under the pretence that they were completing “unpaid work experience”.
Although the workers were undertaking a Diploma of Early Childhood Education, which requires participants to complete work experience and would, therefore, meet one of the vocational placement requirements of a legitimate internship, the FWO is alleging that the work performed went “well beyond” the requirements of the vocational placement and, as a result, the workers were entitled to be paid $54,752 for that work.
The matter is currently before the Federal Circuit Court, with a mediation scheduled to take place on 5 March 2019. The FWO is seeking orders that the childcare operator back pay the workers, complete an education course and pay penalties.
Three-part series on unpaid internships
Our unpaid internship series covers the following topics, of which all businesses who engage interns should be aware:
Part 1 – We examine the relevant law to help you understand the legal requirements for an internship (click here to read Part 1).
Part 2 – We outline the clauses that you should include in an internship agreement to protect your business from the risks associated with engaging an intern (click here to read Part 2).
Part 3 – We explore what can happen if you fail to engage an intern correctly, including the personal and corporate ramifications such as the imposition of serious penalties (click here to read Part 3).
This article was originally published on the McCabe Curwood website and has been reproduced with permission.
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By Ashleigh Mills (Associate) of Holding Redlich.
Managers who are aware of breaches of workplace laws in their business may be personally liable for those contraventions, even if they did all they reasonably could to try to fix the breach, according to a recent decision of the Federal Circuit Court of Australia. 
In the decision of Fair Work Ombudsman v Priority Matters Pty Ltd & Ors (No 4) [2019] FCCA 56, the Court found that two directors were liable for breaches of the Fair Work Act 2009 (Cth) (FW Act) by being “involved” in underpaying 43 employees more than $1 million between the months of February 2013 and December 2013. 
The finding of liability was made despite the Court acknowledging that the directors were ‘hardworking and honest people caught up in adverse events beyond their control’ and that the directors had taken all ‘reasonable steps’ to try to make payment of the employee entitlements. In this article we detail, by reference to relevant legal principles, why the Court made this finding and the lessons this provides for managers. 
The facts  
History of the case 
The case centred upon the fact that – for varying periods of time – multiple employees of five respondent entities did not receive any wages or entitlements despite being at work. Civil proceedings were brought against each of those entities, as well as two of their directors, by the Fair Work Ombudsman (FWO) in 2016, and at first instance Judge Street held that: 
the five employer entities had indeed contravened the FW Act as a consequence of their non-payment to employees, butthe two directors were not ‘knowingly involved’ in those contraventions and, as such, were not liable in their personal capacity for the same. 
That decision, as it related to the personal liability of the directors, was appealed by the FWO in 2017 and the case was remitted to Judge Driver in order to determine that question on appeal.
Applicable legal principles 
Judge Driver considered the key legal principles as they relate to accessorial liability and section 550 of the FW Act. Those key legal principles are summarised below: 
a person will only be held to be accessorily liable for a contravention of the FW Act if they are ‘involved in a contravention’a person will only be ‘involved in a contravention’ if they have intentionally participated in the contraventionintentional participation requires actual, not constructive knowledge of the essential matters that make up the contravention – and that knowledge must exist as at the time of the contravention. 
Separately – and importantly – it is unnecessary to prove that a person knew that their conduct was a breach of the FW Act in order for them to be involved in any particular breach, or for them to have knowledge of every individual incident of that breach or contravention. Rather it will be enough that – in the face of suspicious circumstances – a person fails to make sufficient enquiries and/or was aware of an over-arching ‘system’ of non-compliance.  
Application of the law to the facts  
In this case, multiple employees were simply not paid their wages or entitlements for a period of time due to the fact that the respondent companies had run out of money to pay their staff. 
At all relevant times, the directors believed that they could (in part) pay the staff entitlements out of their own pockets, and that otherwise funds would be imminently received from other sources in particular the Australian Tax Office. Indeed, one of the directors, Mr Silverbrook, was at pains to stress that he did ‘everything humanely possible under the most extenuating of circumstances to ensure all employees received their lawful entitlements’.  
In making his findings – and while expressly accepting that the directors had taken ‘all reasonable steps’ to try and effect payment of the employee’s entitlements during the relevant period – Judge Driver held that this fact was not relevant to the question of whether or not the directors were liable for the purposes of section 550 of the FW Act. Instead, and in applying the legal principles set out above, Judge Driver held that the directors were knowingly involved in the contraventions as they were demonstrably aware of the essential matters that made up the contraventions being that: 
wages and entitlements were payable to the employeesthe employees, for varying periods, did not receive any such wages or entitlements. 
On that basis, it did not matter that there may have been a plausible reason for the non-payment, nor that the directors were honest about discussing those facts with their employees. It was also not held to be relevant, for example, that: 
the employees had previously received payments well in excess of their entitlementsthe employees were ultimately repaid all monies they otherwise would have been entitled to receivea reason for the non-payment of monies was an unforeseeable ‘hold up’ of monies payable to the companies from the Australian Tax Office. 
Rather, what mattered was the fact of the non-payment, and the director’s knowledge of and participation in that conduct. 
While the above matters were not relevant to the question of liability, they are relevant mitigating matters for the assessment of a penalty. The matter of penalty is now to be separately determined.
The lessons 
In light of what is set out above, and noting that the number of accessorial liability proceedings pursued by the FWO continues to increase, managers in an organisation should be aware that:
Scope of ‘Persons’ – A director is not the only person who can be ‘relevantly involved’ in a contravention of the FW Act. ‘Persons’ for the purposes of s550 of the FW Act can include (without limitation) accountants, HR Managers, payroll officers and other managersGood intentions are not relevant – While it may impact upon the penalty ultimately imposed by a Court, the fact that a person may genuinely and reasonably be taking steps to rectify the contravention and/or that the person has rectified the contravention, will not affect an assessment of liability – that is, whether the person is ‘knowingly involved’ in that contraventionIgnorance of the law is no excuse – It is no excuse for a person to say that they were not aware that particular conduct or actions breached the FW Act. As such, all managers must ensure that they are aware of and keep up to date with employment law obligations. 
A copy of the decision referred to in this article can be accessed here. 
Holding Redlich disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. 

This article was originally published on the Holding Redlich website and has been reproduced with permission.
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Contributed by Cameron Blackwood, Director, Toby Eggleston, Director and Ryan Leslie, Senior Associate, Greenwoods & Herbert Smith Freehills
After much delay, the Australian Government has finally passed the changes to the company loss rules which were originally announced as part of the National Innovation and Science Agenda (NISA) as part of the “Ideas Boom” in 2015. At the time, these measures were intended to overcome the restrictions which “discourages companies which have made losses from seeking new investors or exploring new profit-making activities because they may lose access to these valuable past year losses”. Although an announcement from the NISA measures, these changes are applicable to all companies. However, for the reasons explained below it is unlikely to be of much assistance to start-ups which undertake a major pivot where the business model fundamentally changes regardless of continuation of the underlying technology.
A tax loss for an income year (the loss year) can be carried forward and deducted from assessable income in future income years if the company passes either:
the continuity of ownership test (COT), which is failed if the company has undergone a change of more than 50% in ownership or control, orif it fails the COT, the same business test.
Generally, a company satisfies the same business test if it carries on the same business in the income year when it wants to use the loss (the same business test period) as it carried on immediately before the change of ownership or control that caused the company to fail the COT (the test time). In addition, a company does not satisfy the same business test if the company:
derives assessable income from a business of a kind that it did not carry on before the test time (the new business test), orderives assessable income from a transaction of a kind that it had not entered into in the course of its business operations before the test time (the new transaction test).
The ATO has in the past sought a generally restrictive reading to these provisions, allowing for both organic growth of a business via compatible operations while retaining its identity or discontinuation of certain activities provided the scale of changes do not cause the essential identity of the business to cease.
The amendments have now supplemented the “same business test” with a “similar business test”. In essence, the company can carry forward and utilise its prior year losses if it carries on a business which is “similar” to the business carried on immediately before the failure of the COT. In working out whether a business is “similar”, regard must be had to the following factors:
the extent to which the assets (including goodwill) that are used in the current business to generate assessable income were also used in the company’s former business to generate assessable incomethe extent to which the activities and operations from which the current business generates assessable income were also the activities and operations from which the former business generated assessable incomethe identity of the current business and the identity of the former business, andthe extent to which any changes to the former business resulted from the development or commercialisation of assets, products, processes, services, or marketing or organisational methods, of the former business.
This is a non-exhaustive list of matters to be considered.
The examples in the explanatory memorandum and Draft Law Companion Guide LCG 2017/D6 of when a company may satisfy this new test are somewhat unrealistic, particularly for the start-up sector. What is perhaps more concerning is that the ATO considers that the similar business test in essence is the same business test without the new business or new transaction tests. Accordingly, it may allow the ATO to further restrict the application of the same business test. However, if it were the intention of Parliament to effectively replicate the “positive” part of the same business test, then it begs the question why it didn’t just delete the new business and new transaction tests rather than inserting an alternative test.
Given the genesis of the similar business test was from NISA which was primarily aimed at start-ups, it is interesting to consider whether some of the greatest start-up pivots of all time would have passed the similar business test. Some illustrations are provided below.
Instagram: Originally started life as a location-based check-in app called Burbn. Users didn’t utilise most of the features but embraced the relatively unique photo-sharing aspect. Shortly after raising venture funding but still pre-revenue the founders pivoted to re-build the photo-sharing tech adding the ability to overlay a filter into a new app called Instagram. Verdict: Fail — it is not clear how the first two factors would be applied in a pre-revenue environment. In any event given the name Burbn was ditched and a completely new app launched (although based on the same underlying tech) it would definitely fail the third factor.
Slack: Started life as a gaming company which built its own communication platform to maintain contact with its geographically distributed team while working on its game Glitch. While the game developed a small cult following, it was not enough to keep the company afloat. They closed down the game and with a last ditch roll of the dice with the remaining funds they focused on the messaging platform which became better known as Slack. Verdict: Fail — the complete shutdown of Glitch before launching Slack would be enough to fail the test.
Uber: Started out as a way of app-based on-demand booking of “black cars” with licensed chauffeur drivers before expanding into allowing anyone with a car to be a driver on the Uber platform. Later Uber expanded into delivery of food and other “atoms”, electric scooters and bikes, transforming into a mobility/transportation platform. Verdict: Potentially — at least while it related to providing drivers to passengers, as it maintained its original black car concept while adding UberX and Uber Pool. However, it is doubtful that the ATO would accept that the further expansion into food and other deliveries and e-scooter and bikes would be considered similar to the original business.
Twitter: The company originally began in 2005 as a podcasting platform company named Odeo. However, when Apple launched iTunes podcasting it made Odeo’s podcasting platform irrelevant. As a last ditch effort after asking all employees for ideas the company landed on the idea of sharing status updates ditching the Odeo software and building the Twitter tech from scratch. Verdict: Fail — completely different name, technology, effective closure of the podcasting business.
[This article was originally published in CCH Tax Week on 15 March 2019. Tax Week is included in various tax subscription services such as The Australian Federal Tax Reporter and CCH iKnow. CCH Tax Week is available for subscription in its own right. This article is an example of many practitioner articles published in Tax Week.]
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