Australia: Case Round-Up

The Workplace
Last Updated: 1 March 2010
Article by John Tuck


Caltex Australia Limited v Australian Institute of Marine and Power Engineers; AWU [2009] FWA 424

Following on from the important decision of the Australian Industrial Relations Commission in Shell Refining v CFMEU [2008] AIRC 510, Fair Work Australia (FWA) has approved the introduction of random drug and alcohol testing, but with crucial limitations. This is FWA's first decision on the principles governing the use of random testing in the employment context, and it will be significant for employers, employees and unions that work in hazardous workplaces.

Caltex Australia (Caltex) and the unions agreed to have FWA determine whether a policy permitting random testing for drugs and alcohol (D&A Policy) should be introduced, as part of its arbitration under section 240(4) of the Fair Work Act 2009 (Cth) (FW Act) of a new enterprise agreement. The union objected to the proposed D&A Policy, stating that the testing should only be carried out on a 'for cause' basis.

Caltex proposed that there be random testing of employees for drugs and alcohol for it to meet its obligations under the Occupational Health and Safety Act 2000 (NSW) (OHS Act). Caltex also proposed that the random drug and alcohol testing be restricted to those employees in safety critical sites, members of the Caltex leadership team and their direct reports, on the basis that these areas posed the greatest risk to health and safety.

FWA Senior Deputy President Hamberger held that it was appropriate for Caltex to implement the D&A Policy on the basis that the duty of Caltex to its employees under the OHS Act is absolute, stating that 'given the hazardous nature of the materials stored there the consequences of an accident could be disastrous'. Hamberger SDP ordered the D&A Policy be subject to a number of safeguards:

  • Where there is a positive test result, the medical review officer must inform and liaise with the employee concerned in relation to the test result and the options for treatment. The medical review officer would then report the result to the company. The employee would receive formal counselling.
  • The company's sick leave policy should apply to employees who needed time off for drug or alcoholrelated problems.
  • The D&A Policy could not be varied unilaterally by Caltex until the expiry of the agreement.


Peter Bates v Commonwealth of Australia (Department of Defence) [2009] AIRC 899

The employee at the centre of this case had an unblemished service record of almost 25 years with the Department of Defence. The employee had his contract of employment terminated after pornographic material was discovered on his computer. The images had been sent to the employee by a former supervisor and had been moved by the employee to his H-drive.

The employee accepted that he had breached the Australian Public Service code but stated in response that he would find it difficult to find other employment due to the economic crisis and his medical condition. The Department concluded that his conduct was serious enough to terminate his employment. His employment was terminated, not only because of the pornography, but also due to the employee having misrepresented the comments of the Department's clinical psychologist. Such behaviour was seen as dishonest.

Commissioner Cargill accepted that the pornographic images found on the employee's computer constituted a valid reason for terminating his employment. However, Commissioner Cargill ruled that the employee's termination was harsh taking into account the following factors:

  • The employee had an unblemished record with the Department for 25 years and that 'such a long period of unspoilt service should be taken into account'.
  • The employee's misconduct occurred a number of years ago and had not been 'compounded by any subsequent transgression'.
  • The termination would have a negative effect on the employee's personal circumstances as his medical condition required ongoing and expensive treatment.
  • The employee had shown remorse for the incident.

Lessons learned

Employers need to consider factors such as an employee's length of service, the impact of the termination on the employee and an employee's prior conduct before deciding whether an employee's conduct is serious enough to result in a termination.

Kolodjashnij v Lion Nathan Pty Ltd [2009] AIRC 893

An employee's contract of employment was terminated after he was charged with drink driving – an action that was in breach of the employer's Responsible Drinking Policy. The employee was a process worker in the packaging department at James Boags Brewery. The company's policy prohibited workers engaging in 'alcohol related behaviour out of work hours' that had the potential to 'adversely affect the company's reputation and credibility as a producer and marketer of alcoholic beverages committed to promoting the responsible use of alcohol'.

Mr Kolodjashnij's driving offence was not within the course of his employment and was out of work hours. He notified his supervisor of the incident and after three meetings, the company terminated Mr Kolodjashnij's employment contract. The company justified the termination by stating that Mr Kolodjashnij's offence was a breach of the Responsible Drinking Policy. Mr Kolodjashnij sought reinstatement arguing that the termination was harsh, unjust or unreasonable.

Commissioner Deegan held that Mr Kolodjashnij's termination was valid. Companies are entitled to have policies that are designed to protect the company's interests. The Commission highlighted that there would be little point in having such policies if they could not be enforced.

Lessons learned

Employers can have policies in place to protect the interests of their business. These policies can seek to restrict the conduct of employees outside the workplace, provided that such conduct has a sufficient connection to the workplace. Employers however, need to be sure that such policies are clearly articulated to all employees and that the consequences of a breach are clearly stated.


Queensland Nickel [2009] FWA 335

In September last year, FWA handed down its first decision on an exemption under the new transfer of business provisions of the FW Act. FWA held that Queensland Nickel, owner of a refinery in Townsville, was able to 'in-source' its maintenance work without the workers' existing enterprise agreement transferring with them. The maintenance work was being carried out by an external provider, Transfield Services, however Queensland Nickel wanted to bring the work 'in house' so the work would be done by its own employees. Queensland Nickel commenced advertising for the positions, and the majority of the Transfield workers applied.

Under section 313 of the FW Act, if a transferable instrument (which includes an enterprise agreement) covered the old employer and transferring employee before the termination of the transferring employee's employment, then the transferrable instrument would cover the new employer and the transferring employee, subject of course to any order made by FWA under section 318 of the FW Act.

As such, Queensland Nickel made an application under section 318, requesting that FWA make an order that the existing agreement that currently covered the workers, and that would subsequently cover Queensland Nickel, would not cover the workers, but instead they would be covered by Queensland Nickel's own non-union agreement.

In making its decision, FWA took into account the following arguments put by Queensland Nickel:

  • The company sought to maintain a 'one staff policy', with most existing employees working for similar pay and conditions.
  • The policy, combined with the salary and incentive arrangements in its non-union agreement, enabled Queensland Nickel to 'unlock the discretionary effort of employees and increase productivity'.
  • The policy was 'critical to capturing productivity, ensuring the performance of the Yabulu Refinery and keeping it operating for the benefit of its owners, employees and the local community'.

FWA also took into account the fact that the majority of possible transferring employees preferred to work under the Queensland Nickel agreement, and that a comparison of the two different agreements illustrated that the Queensland Nickel agreement was considerably more favourable in its terms and conditions of employment.

Based on these factors, the FWA held that the employees would not in any way be disadvantaged by being covered by the Queensland Nickel agreement. Further, none of the three unions involved at the refinery opposed Queensland Nickel's application. Accordingly, FWA granted the exemption.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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