Australia: Misconduct: Investigate before you terminate weekly payments

Jarvis v The Salvation Army Southern Territory [2016] VSCA 175

In Jarvis v The Salvation Army Southern Territory, the Court of Appeal has clarified, the nature of a self-insurer's discretion under not to make weekly payments in circumstances where his or her employment has been terminated because of misconduct as well as the role of the Magistrates' Court.

The effect of the decision is that self-insurers will be required to undertake an assessment of the merits of the decision to terminate employment and exercise their discretion based on that assessment. Courts will be required to assess whether the decision to terminate for misconduct was proportionate when deciding whether the discretion not to make payments is exercised.

Background

Mr Brett Jarvis, a truck driver employed by the Salvation Army, lodged a compensation claim for a left knee injury suffered on 19 April 2011. Liability for the claim was accepted by the WorkCover Agent (the insurer).

Having initially received weekly payments for incapacity, Mr Jarvis returned to work with the Salvation Army on full-time modified duties. However, his employment was later terminated on grounds of "serious misconduct" when he was found to have taken items, intended for donation to the Salvation Army, for himself. A letter of termination dated 22 May 2012 stated that, "during (an) interview...you admitted that you had indeed taken the refused stock (two punching bags and a punching bag stand) and delivered these items to your home, in the company truck".

Following the termination of his employment, Mr Jarvis made a claim for the reinstatement of weekly payments on the basis of a residual incapacity. The insurer decided that it would not resume weekly payments in accordance with s 114(2A) of the Accident Compensation Act 1985, which provides that the Authority or a self-insurer may reduce or not pay compensation (in the form of weekly payments) where a worker's current weekly earnings are reduced because his or her employment was terminated because of misconduct.

Magistrates' Court decision

Mr Jarvis issued proceedings in the Magistrates' Court in relation to the rejection of his claim for the reinstatement of weekly payments. Following a two-day hearing, the Magistrate determined that the notice from the insurer should be set aside because the discretion under s 114(2A) had been miscarried, as the insurer had wrongly taken into consideration an allegation of theft against Mr Jarvis that had not been established.

Supreme Court appeal

The Salvation Army appealed the decision of the Magistrates' Court to the Supreme Court. The appeal was heard by His Honour Judge Riordan on 12 November 2015.

His Honour found that, once the preconditions to s 114(2A) of the Act are established, an insurer has discretion whether or not to pay weekly payments. His Honour held that the discretion was not intended to be exercised by reference to the "public interest" or by balancing the interests of the worker and the insurer—the Authority or a self-insurer is essentially entitled to exercise the discretion in its own interests. As such, His Honour held that, provided the preconditions to s 114(2A) are met and the insurer makes the decision not to resume payments, "usually the Court...would only be able to properly exercise its discretion in the same manner as the Authority or a self-insurer".

His Honour found that, in the case of Mr Jarvis, the relevant pre-conditions were met—there was misconduct by Mr Jarvis, which was the cause of his termination. Accordingly, His Honour allowed the appeal, finding that there could be "no basis for the court coming to any other conclusion, but that the insurer was entitled not (to) resume weekly payments".

Court of Appeal decision

Mr Jarvis made an application for leave to appeal the order of His Honour Judge Riordan in the Court of Appeal. The main issue on appeal was the proper interpretation of s 114(2A) of the Act and the extent of the Magistrates' Court's jurisdiction to "enquire into, hear and determine any question or matter under (the) Act".

In a unanimous judgment by Whelan, Beach and Fergusson JJA, it was held that the "the relevance of the misconduct (referred to in section 114(2A)), and the weight to be attached to it, falls to be considered when the Authority (or a court) comes to 'determine' whether or not to pay (or alter the amount of) compensation in the form of weekly payments, as referred to in...paragraphs (f) and (g) of s 114(2A)...".

The Court of Appeal also held that, while the Act does not specify any factors to be considered or balanced when exercising the discretion, the discretion must be exercised in reference to the object and purpose of the Act. Therefore, His Honour Judge Riordan's reading of s 114(2A) was incorrect—the discretion is not an "entitlement" of the Authority or self-insurer to be exercised in its own interests.

The Court of Appeal held that the task of the Magistrate was to hear all relevant evidence and determine the application afresh for the reinstatement of weekly payments. In doing so, the Magistrate was required to determine whether or not a relevant precondition was established and, if so, whether or not weekly payments should be paid having regard to the object and purpose of the Act.

The Court of Appeal allowed the appeal, with it finding that the interests of justice required the whole of the proceeding to be reheard by the Magistrates' Court.

Implications

The effect of the decision is that self-insurers will be required to undertake an assessment of the merits of the decision to terminate employment and exercise their discretion based on that assessment. If a self-insurer's exercise of discretion is disputed, the Magistrates' Court will be obliged to consider whether the decision to terminate employment was proportionate to the conduct engaged in.

As stated by the Court of Appeal, the weight attached to the misconduct must be considered when determining whether or not to pay weekly payments.

There are significant implications for decisions made by employers regarding unfair or unlawful dismissal and general protection actions that might be commenced by employees terminated for misconduct. For example, an agreement to accept a resignation by way of compromise at the Fair Work Commission, or other relevant jurisdiction, may be seen as a concession by a self-insurer that the decision to terminate was unreasonable or disproportionate. That is likely to prevent a self-insurer from reducing or terminating weekly payments under s 114(2A).

In order to reach a conclusion about whether the decision to terminate employment for misconduct was proportionate, it will be necessary for self-insurers' claim teams to have access to investigation material including statements and reports and to consider evidence provided by those who made the decision to terminate employment. To establish the defence in Court it is likely that self-insurers will have to call complainants and decision makers to give evidence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.