A recent Federal Court ruling has shed light on confusion about when employers are required to pay certain entitlements to an employee following their termination, including payment in lieu of notice, accrued but untaken annual leave and redundancy pay. 

The Fair Work Act (FW Act) itself does not prescribe a deadline or express time frame, aside from the general provision governing payments and frequency of salary under section 323(1) of the FW Act that requires all amounts payable to an employee to be paid in full and at least monthly. 

However, the Federal Court has recently examined the section of the FW Act governing the payment of accrued but untaken annual leave and found that it must be paid out on the day the termination took place.

The case concerned an employee who received payment of their accrued but untaken annual leave three months after their termination. The Federal Court held that this payment was three months late and in contravention of section 90(2) of the FW Act. As a result, the Court handed down a penalty of $17,000, which comprised approximately 25 per cent of the maximum applicable penalty.  

In an unusual twist, the Court also awarded $10,000 general damages to the Applicant due to the material effect the delay had on them, which resulted in distress due to the financial strain he experienced. 

Ignorance of the law is “no excuse” 

Whether an employee leaves your organisation voluntarily or if they are fired or dismissed because of redundancy, you must pay their unused annual leave.

In this case, the employer submitted that the delay in payment was due to limited knowledge of Australian employment law, and concerns about the accuracy of the leave records. 

The payment was processed once the employer was made aware that they needed to meet their obligation to pay the accrued annual leave as they had no explicit proof that the annual leave records were incorrect.  

The Court highlighted that to achieve general deterrence, a clear signal needs to be sent to the Australian community that all employers must know and understand their obligations under the FW Act and that lack of care and ignorance of the law is no excuse.  

This decision serves as a reminder to not only fulfil your obligation as an employer to know and understand the law, but, if in doubt as to whether an entitlement is payable or not, take adequate steps to investigate or seek expert advice. 

Following best-practice guidelines may not be enough to ensure compliance if you’re not up to date with case law.

As summarised by the Court, “It is not sufficient that one can have a mistaken belief and then take no steps to verify the circumstances.”  

“Following best-practice guidelines may not be enough to ensure compliance if you’re not up to date with case law.” – Michael Kriewaldt, Associate, Jewell Hancock Employment Lawyers

The legal implications 

Interestingly, this decision follows another Federal Court decision concerning paying notice upon termination. On appeal, the Court held that under section 117(2)(b) of the FW Act, payment in lieu of notice is a mandatory prerequisite to lawful termination and must be paid before the dismissal comes into effect.

It has become common practice for employers to provide payments in lieu of notice to outgoing employees after the termination date of their employment due to conflicting information available online. This decision makes it clear that to be considered a lawful termination, notice payments must not occur after the date the employment has ended.

A legal interpretation of the two Federal Court decisions suggests payment of notice and any accrued unused entitlements must be received by the outgoing employee on the day employment ends – something that’s not widely known by employers.      

These two decisions are particularly significant because they’re likely to be binding authorities for any junior courts, such as the Federal Circuit and Family Court of Australia, where the majority of termination entitlements disputes are ventilated. 

Further, it seems likely that the timing of redundancy payments would follow the same reasoning.

Ensuring compliance  

The decision to terminate an employee is generally demanding and can be challenging to enact.      

Before moving to terminate, it’s imperative to understand your obligations as set out in the FW Act and any applicable award or agreement. Non-compliance with these obligations will contravene the FW Act and may subject your organisation to pecuniary penalties. 

Employers should always practice procedural fairness when determining whether to end an employment relationship. 

The employee should receive written notice of their termination, which states the date that the dismissal will take effect from and ensure payment of any owed entitlements on termination. This includes any outstanding wages owed, notice, accrued annual leave, long service leave, the balance of any time off instead of overtime, and any redundancy pay, as applicable. 

Michael Kriewaldt is an Associate at Jewell Hancock Employment Lawyers.

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Secret recordings are becoming increasingly common in the workplace as smartphones allow employees to easily record interactions. Many employees view these secret recordings as an easy way to safeguard their rights in the workplace, unaware of the complexities involved. 

It’s important for HR professionals to be aware of what employees can and can’t do when it comes to secret recordings in the workplace, including how responses to such materials are treated differently by the Fair Work Commission and other jurisdictions.

Recording telephone conversations

While most emotionally-fraught workplace conversations used to take place face-to-face, the rise in remote working means phone calls between colleagues are more common now.

So if you find out that an employee has recorded a sensitive workplace phone call – say, a heated performance management conversation between themselves and their manager – without letting that manager know, can you reprimand them for it?

Recording telephone conversations is governed across Australia by the Telecommunications (Interception and Access) Act 1979 (Cth) (the TIA) which operates in conjunction with state-based legislation. 

The TIA contains a broad, but technical, prohibition of any recording of telephone conversations without the knowledge of the person making the communication.

This prohibition is limited by what specific apparatus is used to record the conversation. Case law suggests that if the effect of the recording application on a smartphone is to record incoming and outgoing conversations as they are occurring (i.e. intercepting a call with an external bug or wire), it will be unlawful. However, if the application records the conversation after it has been received by the device, such as a recording device sitting next to a call on loudspeaker, this recording may not be unlawful under the TIA. 

It is highly unlikely that an unlawful recording would be accepted by the Fair Work Commission as admissible evidence. 

“By secretly recording a meeting and presenting this evidence to the FWC, employees often create a valid reason for their dismissal which may not have existed earlier.”

Secret recording of in-person meetings

Recording of non-telephone conversations, such as in-person disciplinary meetings, are also governed by state-based legislation which differs depending on the state that the employment is performed. 

In Victoria, for example, employees are covered by the Surveillance Devices Act 1999 (Vic) which permits the use of a recording device to record “private conversations” to which they are a party. The consent of the other parties to the conversations is not required. However, it is the subsequent use of that recording which is subject to prohibitions and limitations. In general, knowingly publishing or communicating a secretly recorded conversation is prohibited. 

This does not apply where an employee secretly records a conversation to which the employee is party, and is reasonably necessary for the protection of their lawful interests, for instance.

Therefore, it is lawful in Victoria for an employee to both secretly record a non-telephone conversation to which they are a party to, and to communicate this recording, if this is reasonably necessary for their own legal protection. Both Queensland and the Northern Territory also have similar provisions in their applicable acts.

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When it can backfire on employees

Despite the fact that secretly recording disciplinary meetings is often lawful in Victoria, Queensland and the Northern Territory, in practice these recordings often do more harm than good for employees in unfair dismissal proceedings before the Fair Work Commission (FWC).  

It’s not uncommon for employees to seek to adduce secret recordings as evidence in an attempt to win relatively minor contests over what exactly took place during a disciplinary meeting. While a secret recording may assist an employee in establishing minor procedural concerns regarding the precise words used, or the sequence of events, it can come at a cost. 

The FWC has consistently viewed, at first instance and on appeal, that the making of these secret recordings constitutes misconduct and a valid reason for dismissal irrespective of whether an employer has policies on the issue or not.

For example, last year in Angele Chandler v Bed Bath N’ Table, Commissioner Lee found that:

“Taking into account all of the circumstances, I am satisfied that the covert recording of the conversations [between the employer and employee] is a valid reason for dismissal. It was not the reason relied on for the dismissal and could not have been as the employer was unaware at the time the recording had taken place until the filing of materials in this matter. 

Whilst the Applicant did not intend to harm the employer by making the recording, she could have achieved the same objective by advising that she was making the recording. I am not satisfied that the Applicant was genuinely fearful of [the employer]. Covert recording of the conversations was inappropriate and damaging of a relationship of trust and confidence with the employer. This is a factor weighing against a finding that the dismissal was unfair.”

For employees, making secret or covert recordings or attempting to adduce them as evidence in an unfair dismissal proceeding is often counterproductive.

By secretly recording a meeting and presenting this evidence to the FWC, employees often create a valid reason for their dismissal which may not have existed earlier. An employer could then rely on this to defend an unfair dismissal claim.

As a result, any advantage an employee may achieve by making a secret recording to establish a sequence of events in the FWC is significantly outweighed by its prejudicial effects. 

Further, the FWC has, on occasion, both prevented the applicant from adducing the contents of a secret recording as evidence and then still found the act of making the secret recording to be a valid reason for dismissal.

Secret recordings and other employment claims

Courts, while governed more strictly by the Evidence Act 1955 (Cth), are generally more accepting of secret recordings. For example, in a general protections claims before the Federal Circuit Court of Australia, the main contest to be decided by a court is the question of what the substantive or operative reasons behind the dismissal was. 

If a secret recording helps establish that the dismissal was taken for an unlawful reason, a court will not prejudice an employee for making the secret recording in the same way we have seen in the FWC.

In the case of Wintle v RUC Cementation Mining Contractors Pty Ltd, an employee brought a recording device into the workplace to secretly record conversations which he alleged were discriminatory against him on the basis of his race or national extraction. The Court admitted the recordings as evidence because they were considered relevant to his claim under section 351 of the Fair Work Act 2009. 

The act of making the secret recordings was found to be lawful under the applicable state legislation and did not prejudice the employee’s claims in any way. Further, even if the recordings were found to be unlawful, Judge Lucev commented that they would have been admitted into evidence anyway (largely due to the fact they were the best available evidence).

Secret recordings are also more readily accepted in other employment claims, such as underpayments and sexual harassment.

In short, whether a secret recording is lawful or not depends on a variety of often complex factors. Further, how secret recordings are treated in employment disputes also varies significantly between different employment proceedings and jurisdictions. 

As a result, we are left in the peculiar position where one secret recording which gave rise to an adverse finding of misconduct in the FWC could easily be accepted by a court without sustaining prejudice of any kind. 

Disclaimer: This article should not be construed as legal advice and is not intended as such. If readers wish to obtain advice about anything contained in this article, they should speak with a lawyer and discuss their individual circumstances. 

Michael Kriewaldt is a lawyer at Jewell Hancock Employment Lawyers.

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