Measures for electronic execution of documents extended into 2022

Due to continual work from home arrangements and difficulties posed by travel restrictions, both federal and state governments are extending temporary laws to allow documents to be signed electronically. However, the permanent implementation of these changes are still up in the air.

Federal Amendments

In August, the Federal Parliament passed the Treasury Laws Amendment (2021 Measures No.1) Bill 2021, which has extended the temporary measures for electronic signing until next year.

It amends section 127 of the Corporations Act to allow for signing of a copy or counterpart of a document, meaning that signatories do not need to sign the same document, as long as each copy or counterpart of the document includes the entire contents of the document.

It also means a document does not require a “wet ink” signature, as long as an accepted method is used to identify the person signing electronically and it indicates that person's intention in relation to the contents of the document. If a document is executed by the affixing of a common seal, the witnessing may take place via audio-visual link (e.g. Zoom).

The method used to electronically sign the document must be reliable, taking into account the circumstances and the nature of the document (programs like DocuSign or AdobeSign would likely satisfy this requirement).

These amendments are due to expire on 31 March 2022. There is not permanent legislation to allow electronic signing, however government consultations are ongoing.

Queensland Amendments

Queensland temporary measures for COVID-19 have been further extended to 30 April 2022 with the assent to the Public Health and Other Legislation (Further Extension of Expiring Provisions) Amendment Act 2021.

The State Government is now looking to make certain measures permanent with the Justice Legislation (COVID-19 Emergency Response—Permanency) Amendment Bill 2021. If this bill passes, the changes we have seen over Covid will remain in place permanently.

This amendment extends the temporary Covid measures to allow for more flexibility when signing legal documents. These arrangements allow for electronic signing and audio-visual witnessing for documents such as affidavits, statutory declarations, general powers of attorney for businesses and deeds. As with the Federal laws, the signing will have to be done with an accepted method.

Documents that will not qualify for electronic signing include enduring powers of attorney, wills, general powers of attorney by individuals and sole traders and some Titles Office documents.

The passing of this bill will hopefully provide more clarity on which particular documents can be electronically signed and how they can be authenticated by witnesses.

While it may have taken a global pandemic to see electronic signing laws streamlined, it is a positive to see the law adapting to the times and simplifying the execution processes for businesses around the country.


Director Identification Number applications are open: here’s what you need to know

On 1 November 2021, applications opened for directors to apply for a director identification number (DIN). This is a new regime in Australia and it is vital that all company directors are aware of how to obtain one.

What is a DIN?

A DIN is a unique 15-digit identifier given to a director, or someone who intends to become a director that will be kept by the individual permanently. The introduction of DINs was in response to a government effort to combat illegal phoenix activity. It is hoped that in the event of liquidation or administration, it will be easier to trace a director’s activities over time and prevent fraudulent director identities.

Who must apply?

The requirement to have a DIN extends to all persons appointed as a director, or an alternate director for companies registered under the Corporations Act, this includes foreign corporations trading in Australia. The application can be commenced through the Australian Business Registry Services website. It is free and can be done via the myGovID app.

When to apply?

Applications are open now and there are strict deadlines. For those who became directors before 31 October 2021, the deadline is 30 November 2022. If you become a director between 1 November 2021 and 4 April 2022, it must be done within 28 days of appointment. However, for those who get appointed after 5 April 2022, it will have to be done before your appointment.

Directors who fail to apply for a DIN by the deadline could face criminal or civil penalties of up to 5,000 penalty units (currently $1.1 million dollars).

With an estimated 2.1 million company directors in Australia, this requirement will affect a number of Australians.


International Bar Association releases report showing persistent mental health stigma in the legal profession

The report released last month by the International Bar Association (IBA), shows mental health issues are particularly prevalent in the legal profession and that many employers are not equipped with the skillset to proactively support individuals.

The report titled: Mental Wellbeing in the legal profession: a global study, did over 3200 surveys from around the world in law firms, bar associations and in-house legal departments. The overall findings paint a sobering picture. Despite increased awareness of mental health impacts within the profession, there remains significant work to be done to improve mental wellbeing within the profession.

Researchers used a World Health Organisation index which measured various factors to form a score out of 100 per cent, under which an individual who scores below 52 per cent is likely to need a formal assessment of their wellness concerns.

Demographic Discrepancies

There was an overall average score of 51 per cent, meaning the average individual who was surveyed is likely to need a formal assessment of their wellness. However, there were also noticeable differences in scores depending on certain factors. While men scored on average around 56 per cent, women only scored around 47 per cent. There were also clear discrepancies in age, with those aged 25-29 ranking on average at 43 per cent while those aged 60+ ranked at 64 per cent. Ethnic minorities also scored on average 47 per cent compared to their counterparts at 51 per cent.

The most commonly cited negative factors were stress, intense time demands, poor work life balance and high pressure. The positive factors were cited to be a sense of purpose, interesting work and connecting with others.

Room for improvement for employers

The report has revealed that despite increased awareness of mental health issues, many employees do not feel like they can have these discussions with their employer. When surveyed, 41 per cent cited a fear for potential impact on their career, including 32 per cent who indicated a fear of differential treatment, were they to raise such concerns.

These fears can be viewed in the wake of findings that while three quarters of workplaces had wellbeing initiatives in place, a third were actually providing funding and only 16 per cent said that all senior management had been given specific training on mental wellbeing.

Employers have a significant role to play in this discussion. Those who scored higher than the average for mental wellbeing indicated that their organisation had responded effectively to issues they had raised. However, where individuals indicated their firm or organisation did not respond effectively, levels of individual mental wellbeing were lower than average.

Not addressing mental health concerns can have significant impacts on the employer too as 46 per cent of respondents had considered taking time off, 26 per cent made a mistake and 32 per cent felt unable to perform due to mental health issues.

Reflection/Future Challenges

Covid-19 has increased the levels of awareness of mental wellbeing among firms. When those surveyed were asked what lessons the industry should learn from the pandemic, the top responses were more flexible working practices (more work from home, better work-life balance) and more of a wellbeing focus.

The IBA concluded by stating there is the: “unprecedented opportunity that we have as a profession to focus on mental wellbeing in the post-Covid era, as well as the enormous groundswell of support and interest in this subject that is emerging worldwide. The challenge now is to continue building on this work in order to build the supportive, inclusive, and well-led profession that we all want to be part of.”

The IBA report set out 10 principles for both institutions and individuals to better combat wellness issues in the legal profession, prioritising the need for good policies and training to help combat negative mental health.

On 27 October, our Practice Manager Justice Fletcher attended an ALPMA Seminar titled: Leading Wellbeing in the Legal Profession. This session focused on equipping leaders with the tools to develop a workplace framework to create a mentally healthy team have the skillset to proactively support and assist it.

Justine said she found the session: “very informative ... with shocking statistics on mental wellbeing in the legal industry and how mental illness is now the number one cause of personal leave in Australia”

The key takeaway from this is to ensure all employers are equipped to proactively support those struggling with mental health and for individuals to know how to look after yourself and don’t be afraid to speak up if you need help.


Bankruptcy Notice set aside due to administrative errors

The recent case of Grant v Green & Associates Pty Ltd [2021] FCA 934, shows the importance of checking bankruptcy notices for errors, particularly ones that could invalidate the notice.

Factual Background

A Bankruptcy Notice was served by Green & Associates (Green) on Ms Nerez Grant (Ms Grant) on 13 May 2021 for $27,802.87 for which she had to pay or make arrangements to pay within 21 days. The Bankruptcy Notice contained three errors.

The first error in the Bankruptcy Notice was that it specified that the address to make payment to was Ms Grant’s personal address, rather than the creditor’s address. The second error was that same address issue was repeated in the Bankruptcy Notice for the address where service of documents was to be sent to. The final error was that the wrong debt amount was specified. The Creditor also did not take into account a garnishee order which had been made by the Local Court for $1,113.29 which should have been deducted from the amount in the Bankruptcy Notice.

As a result, Ms Grant filed an application within the 21-day deadline, seeking an order that the Bankruptcy Notice be set aside. Green did not dispute that the errors were present in the Bankruptcy Notice, but contended that there errors were not substantial enough to justify that the Bankruptcy Notice be aside.

Should the errors cause the notice to be set aside?

Relevantly, two provision of the Bankruptcy Act 1966 (Cth) were applicable. The first was s 41(5) which states that a bankruptcy notice is not invalidated by an incorrect sum that exceeds the amount unless the debtor within time fixed for compliance notifies the creditor. The other provision was s 306, which states that a formal defect will not invalidate a bankruptcy notice unless the Court is of the opinion that substantial injustice has been caused by the defect. The address and the incorrect amount were dealt with separately.

When it came to the incorrect amount on the notice, Green relied on s 41(5). The creditor submitted that Ms Grant did not submit the relevant notice disputing the amount within the “time fixed” as required by the Bankruptcy Act, as she did not serve the affidavit to them within the initial 21 days of the bankruptcy notice. It was submitted that the “time fixed” definition does not encompass any court ordered extensions, like the one that Ms Grant received.

Ms Grant contended that the application was sent to Green within the extended timeframe and also Green acknowledged that the debt on the bankruptcy notice was incorrect.

Wigney J agreed with Ms Grant, stating that time fixed would encompass any extensions given by the Court. He concluded that by the operation of s 41(5), the notice was automatically invalid.

It was therefore not necessary to make a conclusion on the address error.  However Widney J did state that the error would be unlikely to cause substantial injustice under s 306. Ms Grant would have noticed that the address to pay on the notice was her personal address and would have been able to easily rectify this error.

However, due to the overstatement of the debt, the notice was set aside. This case highlights the importance of taking into account any other amounts paid including garnishee orders when sending a bankruptcy notice and checking for any administrative errors.


Updated Advice: Can Employers Mandate Vaccines?

Since our last update on mandatory vaccines in the workplace, the Fair Work Ombudsman has provided some further guidance as to what circumstances it considers will give rise to a valid lawful and reasonable direction from an employer in respect of vaccinations.

The FWO considers there are four (4) broad categories of work in respect of risk of exposure:

  • Tier 1 work, where employees are required as part of their duties to interact with people with an increased risk of being infected with coronavirus (for example, employees working in hotel quarantine or border control).
  • Tier 2 work, where employees are required to have close contact with people who are particularly vulnerable to the health impacts of coronavirus (for example, employees working in health care or aged care).
  • Tier 3 work, where there is interaction or likely interaction between employees and other people such as customers, other employees or the public in the normal course of employment (for example, stores providing essential goods and services).
  • Tier 4 work, where employees have minimal face-to-face interaction as part of their normal employment duties (for example, where they are working from home).

The FWO considers that the risk of exposure that an employee faces, as well as other factors such as risk of exposing others could form a basis for a legally valid direction.

Accordingly, workers falling into Tiers 1 and 2 may have the most reasonable prospects of being validly directed to get vaccinated. The position is less clear for Tier 3 and will require a closer consideration of all the factors relating to the worker’s role. For Tier 4 workers it is less likely that a mandatory vaccine direction will be reasonable.

The Tier system is not legally binding, it is simply a general guide to assist employers and employees in determining their particular needs and position in respect of any direction. The FWO encourages all parties to seek advice for their specific situation and not rely on general advice.

Ultimately what is needed is a case-by-case assessment of the circumstances including the work performed, the requirements of the business, and the potential health risks. The factors for consideration are very broad and may not always apply across work forces. We outlined some of these factors in our previous update.

Our firm is able to assist you with advice on the above whether you are an employee or an employer. Please do not hesitate to contact us.


High Court Clarifies Casual Employee Entitlements in Landmark Decision

Yesterday, the High Court handed down its decision in the case of WorkPac v Rossato & Ors [2021] HCA 23 (WorkPac v Rossato). This decision was an appeal from last year’s decision of the FCFCA in Workpac Pty Ltd v Rossato [2020] FCAFC 84 and the precedent set in the 2018 judgment of Skene v WorkPac Pty Ltd (2018) 264 FCR 536 (Skene), where controversially, it concluded that a casual worker was able to claim statutory paid leave entitlements.

These earlier Federal Court decisions led to panic from employers, who believed thousands of employees could potentially ‘double dip’, they could get their 25% casual loading as well as the statutory entitlements reserved for permanent workers.

These decisions were also the catalyst for the Federal Government to amend the Fair Work Act 2009 (Cth) (FW Act) in March of this year to include a statutory definition of a casual worker for the very first time and created a National Employment Standard entitlement for casuals to request conversion to permanent employment.

This article will look at the background of Rossato and then contrast the reasoning from the FCFCA decision and the High Court decision.

Background

Mr Rossato was employed from 2014 - 2018 by Workpac, who are a labour hire company that provides services to clients in the coal industry. During his employment Mr Rossato was employed under six employment contracts as a casual and was categorised as a casual under Workpac’s Coal Industry Enterprise Agreement (Enterprise Agreement). He was also paid as such, with the casual loading added to his pay but he did not have any statutory leave entitlements that a permanent would have.

After ending his employment, Rossato followed the Skene decision and wrote to Workpac claiming that his ongoing employment meant that he was entitled to payments. Workpac rejected his claim and promptly filed an originating application in the FCA.

Workpac sought declarations that pursuant to sections 86, 95 and 106 of the FW Act, Mr Rossato was employed on a casual basis and was therefore not entitled to paid leave. Further, they contended that section 116 of the FW Act prevented Mr Rossato from claiming payment for public holidays. Finally, WorkPac sought declarations that as a ‘Casual Field Member’, Mr Rossato was barred from claiming corresponding entitlements under the Enterprise Agreement. If the Federal Court found against them, they also sought declarations that they were retrospectively entitled to Mr Rossato’s 25% causal loading as restitution.

Federal Court Decision

The Federal Court looked at the substance of Mr Rossato’s work, rather than the form of his employment contracts, to determine whether he was a casual employee for the purposes of the FW Act and the Enterprise Agreement. This required analysis on whether there was a firm advance commitment to employment.

They found that while Rossato was employed and paid as a casual, the way his employment contracts were performed pointed against this characterisation. The factors that contributed to this were:

  • His contact included a pattern of full-time hours.
  • The work roster was supplied sometimes up to a year in advance, with little evidence he could elect not to work.
  • His ‘Drive In – Drive Out’ and accommodation arrangement was inconsistent with intermittent employment.

The Court also rejected WorkPac’s claim for restitution for the causal loading paid to Mr Rossato, contending there was no mistake and no failure of consideration in the employment contract. (You can read the JCL insight written at the time of this decision here).

High Court Appeal

In December 2020, the High Court of Australia granted WorkPac special leave to appeal the Federal Court decision in an attempt to clarify casual employment.

WorkPac submitted that the characterisation of an employee as "casual" depends entirely on the express or implied terms of the employment contract without reference to post-contractual conduct. Workpac clearly communicated to Mr Rossato through his contracts that he was a casual, and Mr Rossato accepted each offer of employment on this basis.

The High Court upheld the test of casual employment advanced by both parties, being employment where the employee has no firm advance commitment. However, the majority rejected the Full Federal Court and the Skene decision’s approach of looking at the conduct of parties, rather than the written contract.

The majority also held that “a court can determine the character of a legal relationship between the parties only by reference to the legal rights and obligations which constitute that relationship” [57].

Therefore, using this reasoning, Mr Rossato was correctly paid as a casual employee under his employment contract and Enterprise Agreement with Workpac, and was therefore not able to access any of the paid statutory entitlements for permanent workers.

Comment

This decision, combined with the passing of the FW Act amendments, gives employers confidence and certainty when it comes to their casual employees. According to a Sydney Morning Herald article, the Federal Government had predicted that if this decision had gone the other way, it could have cost businesses $40 billion dollars in backpay. JCL welcomes this decision.


Statutory Demand Threshold Increases to $4,000

On 27 May, the Corporations Amendment (Statutory Minimum) Regulations 2021 passed Parliament. This permanently increases the statutory demand threshold from $2,000 to $4,000.

A statutory demand is issued under section 459E of the Corporations Act. Most commonly it is used by a creditor to force a company to pay their debts within 21 days. If a company is unable to comply with the demand, they are presumed to be insolvent.

Throughout most of 2020, as part of the Federal Government’s Coronavirus Economic Response package, the threshold was increased to $20,000 and debtors were given six months to pay back debts. This package was subject of a prior post here. However, these measures ended on 31 December 2020.

Now the new changes are part of the government’s longer term insolvency reform plans to better address the needs of smaller businesses and create a more resilient economy post-pandemic.

Proponents of the increase say that a $4,000 threshold better adjusts to inflation and also acknowledges the typical legal fees associated with issuing a statutory demand. On the flip side, some say that a lower debtor company will now be able to slip under the threshold more easily.

Note: These changes will come into effect on 1 July 2021. If you issue a statutory demand prior to this, the $2,000 threshold will still apply.


Can Employers Mandate Vaccines?

The rollout of the COVID vaccinations has raised the question of whether the vaccine will be mandatory. This is particularly important in employment where employers may demand that their employees receive the vaccine or face discipline/termination.

Regulatory Position

The Federal Attorney-General released a media statement outlining the Federal Government position on mandatory vaccines.[1] In summary the Government’s position is that vaccines should be voluntary but notes that the health agencies may mandatorily require workers in certain high-risk industries to receive the vaccine.

The statement otherwise defers to the views of the Fair Work Ombudsman (FWO) and Safe Work Australia (SWA) but makes the following general statements:

  • the overwhelming majority of employers should assume they will not be able to require their employees to be vaccinated;
  • it is unlikely in the majority of circumstances that employees could refuse to come to work because, for instance, a colleague had not been vaccinated.

The FWO notes there are limited circumstances where a vaccine may be mandatory. This is highly dependent upon the particular workplace and each employee’s individual circumstances. Relevant considerations include:[2]

  • whether a specific law (such as a state or territory public health law) requires an employee to be vaccinated;
  • whether an enterprise agreement, other registered agreement or employment contract includes a provision about requiring vaccinations;
  • if no law, agreement or employment contract applies that requires vaccination, whether it would be lawful and reasonable for an employer to give their employees a direction to be vaccinated;
  • whether employees have a legitimate reason for not being vaccinated.

SWA also note that it is unlikely that an employer can impose a mandatory vaccine condition except in particular circumstances.[3] SWA states that employers have a duty to eliminate or minimise the risk of exposure to COVID-19 in the workplace as far as reasonably practicable. What is reasonably practicable will depend on the operative needs of the business. To determine these operative needs the following should be considered:

  • Is there a health agency requirement or recommendation for the industry requiring vaccine;
  • The risk of exposure in the course of work (e.g., whether workers face customers, work in close proximity, etc.);
  • Whether the business serves or works with high risk/vulnerable people;
  • What control measures can be put in place.

Lawful Direction

As noted by the FWO, in certain circumstances an employer may legitimately give employees a direction to obtain the vaccine. The key requirements for a direction to be effective is that it must be reasonable and lawful. A direction by the employer is not necessarily limited to the scope of an employment agreement, rather it may encompass all matters connected with the job performed by an employee and any related.[4]

For a direction to be lawful it must not violate State/Territory or Commonwealth law or require the employee to violate any law. Whether a direction is reasonable will depend on the circumstances of the case such as:

  • The operational requirements of the business;
  • The usual operational practices of the business;
  • The terms of any employment agreement;
  • The nature of the employees work;
  • The relevant qualifications, ability or skillset of the employee;
  • The risks (if any) to the health or safety of the employee or other workers;
  • The relevance of the direction to any of the above.[5]

Where a decision of an employer is based upon medical considerations, it should be shown that relevant medical evidence such as an expert report has been considered.[6] If the employee unreasonably refuses to provide evidence or attend medical examinations, this may be grounds for discipline or termination.[7]

The final consideration before issuing a direction or implementing a policy is employee consultation. Before making any direction or implementing policy, it is vital to properly consult with the employees.[8] A failure to consult may result in an employer becoming liable to various remedies including compensation. Employers should discuss potential alternative arrangements with employees before imposing any new conditions.

Case Law

There have been two decisions in relation to mandatory vaccine policies. Both cases involved workers challenging the policies implemented by their employers. Both cases were unsuccessful.

The first case, Barber v Goodstart Early Learning [2021] FWC 2156 concerned an educator at an early learning centre. Goodstart introduced an immunisation policy, requiring that all staff must receive the influenza vaccination unless they have a medical condition which makes it unsafe for them to do so. The employee claimed that she had a sensitive immune system and objected to the policy, providing a medical certificate in support of her claim. Goodstart determined that the medical certificate was not sufficient to support the objection and the employee was terminated for failing to be vaccinated and meet the inherent requirements of her role.

Deputy President Lake upheld the dismissal considering that Goodstart had given a lawful and reasonable direction to its employees. The basis for this finding was that: health bodies recommended flu vaccinations for people working with children, flu symptoms could be severe especially in children, flu vaccinations are effective at reducing the risk of infection to children and staff, alternative methods of managing risk, like social distancing, are not always available to childcare workers, and unions were supportive of Goodstart implementing the policy.

The Deputy President rejected the employee’s medical exemption argument. In assessing the medical evidence provided, the Deputy President considered that there was not evidence that the vaccine would pose significant health risk to the employee, the only evidence was vague statements relating to the employee having a sensitive gut that could be aggravated by the vaccination.

The second case, Kimber v Sapphire Coast Community Aged Care Ltd [2021] FWC 1818 concerned a receptionist in a residential aged care facility. The employer (Sapphire) introduced a compulsory flu vaccination for all employees in response to a New South Wales Public Health Order which prevented persons from entering aged care facilities without an up-to-date flu vaccination. The employee argued against receiving the vaccine claiming that she had previously had a severe reaction to the vaccine some years earlier. In support of her claim, she produced a letter from a Chinese medical practitioner stating she "would prefer not to have the flu vaccination" and had been prescribed antiviral and immune boosting herbs.

The employee was dismissed with Sapphire acting on government approved advice that the only absolute contraindication to flu vaccination was a history of post-vaccination anaphylaxis, Guillain-Barr syndrome, or use of certain cancer treatment drugs.

Commissioner McKenna upheld the dismissal again finding the employer had issued a legal and reasonable direction against the context of the NSW Health Order. The Commissioner held that the employee was not able to produce evidence that here severe symptoms were a direct result of the vaccine or that the symptoms would be repeated if she received the vaccine. The Commissioner concluded that Sapphire had acted in an "objectively prudent and reasonable way" and that by refusing to receive the vaccine, the employee could not perform the inherent requirements of her job.

Both decisions were noted to be highly specific to the individual facts. Deputy President Lake also noted that his decision should not even be taken to apply to all employees of Goodstart as “…  the role each employee performs in fulfilling [the business’s] undertaking may differ.”

Against this context employers should be cautious in implementing mandatory vaccine policies or dismissing employees for failing to obtain any vaccine.

Discrimination

As noted, a direction will only be lawful to the extent that it does not violate or require a violation of a law. In this respect the primary point of concern is whether the direction would be discriminatory. Discrimination can arise both directly and indirectly.

The Fair Work Act 2009 prohibits discrimination by employers, on 13 different attributes, against employees and potential employees. These are referred to as the ‘protected groups’. Section 351 provides that, subject to exceptions:

  • An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person's race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

This protection is supplemented by the various anti-discrimination legislation at the State/Territory or Commonwealth level.

Some exemptions apply to anti-discrimination law, namely ‘reasonableness’, ‘genuine occupational qualification’ and ‘inherent requirement’. These exceptions do not apply to all anti-discrimination legislation and do not apply in all circumstances.

Summary and Practical Considerations

In summary, at this time there is not any specific law at the State or Federal level that makes vaccination mandatory. Employers may be able to give their employees a direction to be vaccinated, however this will be highly dependent upon a number of factors weighed against each other. These factors will include:

  • The operative needs of the business;
  • What infection control measures can and can’t be put in place;
  • Vulnerability of workers and/or visitors/customers;
  • Practicality of alternative arrangements;
  • Specific medial needs of employees;
  • Overall safety of the workplace and workers;
  • Compliance with relevant laws.

In the case of requiring a vaccine, it will need to be demonstrated that a mandatory vaccine policy/direction is reasonable to protecting the interests of all stakeholders. It will therefore be necessary to show that the vaccine is a necessary control for the purpose of complying with WHS obligations and protecting members of the workplace.

For employees disputing receipt of the vaccine, you must at least be able to produce medical evidence demonstrating that the vaccine will have an appreciable negative impact on your own health. It is not sufficient that the vaccine may cause discomfort or non-detrimental health complications.

[1] https://www.attorneygeneral.gov.au/media/media-releases/guidance-released-vaccine-rollout-australian-workplaces-19-february-2021

[2] https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/health-and-safety-in-the-workplace-during-coronavirus/covid-19-vaccinations-and-the-workplace

[3] https://www.safeworkaustralia.gov.au/covid-19-information-workplaces/industry-information/general-industry-information/vaccination

[4] Woolworths Ltd v Brown (2005) 145 IR 285 at 293–297; Horan v North Coast Tavern Pty Ltd t/as North Shore Tavern [2011] FWA 3035 at [43]

[5] Jeremy Lee v Superior Wood Pty Ltd [2019] FWCFB 2946.

[6] CSL Ltd (t/as CSL Behring) v Papaioannou [2018] FWCFB 1005; Lion Dairy & Drinks Milk Ltd v Norman [2016] FWCFB 4218 at [34].

[7] Hudson v RMIT University [2020] FWC 4289; Burns v Sacred Heart Mission Inc [2014] FWC 3188.

[8] Michelle Sposito v Maori Chief Hotel [2021] FWC 700.


BMW loses Ferrari after invalid PPSR Registration

A recent ruling in the Federal Court of Australia in Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd [2021] FCA 483, reminds us just how important correctly perfecting a security interest can be in the event of liquidation.

Facts

In June 2018, BMW Finance (BMW) entered into an arrangement with a company as trustee for a trust.

The arrangement was a chattel mortgage for a luxury vehicle. This mortgage was to be repaid monthly over a 5 year period. BMW registered this vehicle under the Personal Properties Securities Register (the PPSR), which protects registered interests in goods should a customer become insolvent and can give you priority among other creditors.

In November 2019, the Company was struggling to keep up with the repayments, therefore BMW agreed to vary the agreement to reduce the monthly repayment and extend the agreement by three months. However, on 19 December 2019, the Company was placed into administration and administrators were appointed with the Company subsequently going into liquidation.

On 11 February 2020, BMW received a notice of disclaimer of onerous property from the Liquidators which declared that they disclaimed the vehicle.

The amount owing on the vehicle was over $450 000 and according to the Liquidator’s affidavit, the finance associated with the vehicle was significantly in excess of its value. BMW was instructed by the Liquidators to liaise with the Company directly to repossess the Ferrari.

In May 2020, the Liquidators applied to the Court under section 530C of the Corporations Act to seize all property of the Company and a warrant was granted and the vehicle was seized by the Liquidators despite the Notice. When BMW’s solicitors queried why this occurred, the Liquidators stated that their actions were valid due to BMW’s ineffective PPSR registration.

Was BMW’s PPSR Registration defective?

Under section 164 of the Personal Properties and Securities Act (the PPSA), a security interest is ineffective if there is a seriously misleading defect in the registration and it is not necessary to prove that someone was mislead by it.

Even though the original chattel mortgage agreement with BMW provided that the Company purchased the vehicle as trustee for a trust, there was an issue with registration of the security, as the security was not registered under the ABN for the trust.

The Liquidators relied on the case of in the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] 93 NSWLR 61, where a financing statement should have been registered under the ACN, but the secured party used the ABN instead. This was found to be a defective registration under s 164 of the PPSA.

Was the Notice valid?

BMW by its own submissions conceded that their interest in the vehicle was defective and that they were unsecured creditors but BMW argued that the Liquidator’s notice of disclaimer affected their ability to seize the car.

The Court found that due to BMW’s unperfected security interest, when the Company went into administration, the vehicle automatically vested with the Company under section 267 of the PPSA, and this meant that the Company held the vehicle free from BMW’s security interest.

As the Notice was sent subsequent to the automatic vesting of the vehicle, the power of the liquidators to disclaim under section 568 of the Corporations Act was not enlivened because the Court disagreed with BMW’s submission that the vehicle was an onerous obligation due to its high value and lack of onerous obligations tied to the vehicle.

The Court therefore concluded that the Notice was null and void and this left BMW with a ‘personal claim’ against the Company but no proprietary interest in the vehicle.

Conclusion

This case serves as a timely reminder of the importance of correctly registering a security interest and always being prepared in the event of insolvency. Even large organisations like BMW are not immune from PPSR mishaps, which can be costly.

 


Deliveroo driver ruled to be an employee by the Fair Work Commission

Yesterday, the Fair Work Commission handed down a decision in the matter of Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818, that could have significant ramifications across the Australian gig economy landscape.

Currently, online food delivery giants like Deliveroo and UberEats rely on their drivers being independent contractors, so they can have flexible work arrangements and work for multiple delivery platforms. This therefore means they lack the general protections that employees are entitled to under the Fair Work Act such as unfair dismissal.

Mr Franco launched an unfair dismissal challenge after being dismissed with seven days’ notice for late deliveries. The first determination for the Fair Work Commission was whether he was an employee and therefore prima facie entitled to unfair dismissal protections. Secondly, if he was an employee, they had to determine whether his dismissal was harsh, unjust or unreasonable under section 385 of the Fair Work Act.

Mr Franco submitted that the main factor contributing to him being an employee was that he was not running his own business, rather he was working for Deliveroo and obtaining renumeration from them directly rather than pursuing his own personal profit.

Other factors included the remuneration being non-negotiable, wearing Deliveroo clothing, and that Deliveroo exercised control over Mr Franco through the supplier agreement he signed.

While Deliveroo asserted it had no control over when or where Mr Franco worked which would point to an independent contractor relationship, this was not quite the reality when the working arrangements were examined closer.

Deliveroo utilised a SSB system that required riders to book sessions in advance and preference was given to riders with good performance metrics. This meant that Mr Franco was directed by the SSB system to work particular times, make himself readily available and not to cancel booked engagements. So while superficially it appeared there was an absence of control, Commissioner Cambridge noted that this was camouflaged into a significant capacity for control.

Mr Franco's submission that his termination was harsh, unjust or unreasonable was based on the fact that failing to deliver in a reasonable time was not a valid reason as Mr Franco had never been notified about expected delivery times for drivers.

Deliveroo submitted that Mr Franco was an independent contractor due to him not being required to perform services for the Deliveroo business personally, his ability to accept and refuse work, work whenever he wanted, being able to work for multiple entities at the same time, him signing a supplier contract, supplying his own delivery equipment and being paid on invoices.

However, Commissioner Cambridge said that with “consideration of all the relevant indicia, has, like the colours from the artist’s palette, emerged to form a complete picture… the relationship between Mr Franco and Deliveroo is that of employee and employer”.

Commissioner Cambridge emphasised the fact that Mr Franco was not carrying on a trade or business of his own, but rather working as part of Deliveroo and also took into account how much control Deliveroo exerted over Mr Franco with the SSB system.

When considering how Mr Franco could and did work for other competitors, Commissioner Cambridge contended that this must be assessed in the context of a modern, changing workplace impacted by a digital world and therefore will not always be a determining factor of an independent contractor relationship.

It was then found that there was no valid reason for Mr Franco’s dismissal relating to his capacity or conduct and the substantive reasons were not sound. He was therefore reinstated and will be awarded back pay for lost wages.

Shifting Attitudes

In previous gig work decisions, the Fair Work Commission has typically gone against the workers, finding that their working relationship is more indicative of a contractor relationship. An example from last year was Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698, where the full bench found that Gupta was an independent contractor by focusing on the flexibility of work arrangements and the ability to work for multiple corporations.

However, this is not always the case. A Foodora rider was awarded $15 000 in 2018 for unfair dismissal. In this decision, Commissioner Cambridge focused on the applicant being “integrated into the respondent’s business and not an independent operation”. You can read our article about this case from 2018 here.

This decision also comes after a recent UK Supreme Court decision of Uber BV v Aslam [2021] UKSC 5, where Uber’s appeal was dismissed and Aslam, an Uber driver, was determined to be a worker and entitled to the minimum standards under UK labour law.

The Courts did not determine whether Aslam was an employee however. As the UK labour law framework is quite distinct from the Australian framework the decisions cannot be directly followed, but as Commissioner Cambridge acknowledged in his reasoning, decisions like Aslam confirm the extent to which services on digital platforms are challenging traditional employment concepts.

In a statement to the media, Deliveroo said it planned to appeal the decision.