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Privacy Law and Policy Reporter (PLPR)
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Nolan, Jim --- "Privacy in the workplace - Part 2: Industrial and unfair dismissals" [1995] PrivLawPRpr 17; (1995) 2(2) Privacy Law & Policy Reporter 27

Privacy in the workplace - Part 2: industrial and unfair dismissals

Jim Nolan

The first of Jim Nolan's articles on employment privacy discussed the national and international context of workplace privacy. The second article discusses the current legal environment governing privacy issues in the workplace and examines the issue of unfair dismissals.

Privacy and fair employment practices

Despite the patchwork quilt of legislative protection for aspects of privacy or for privacy interests as they are affected by certain potential privacy invaders (for example, the Commonwealth Credit Bureau), it is still the case that private sector employers are relatively free of regulation protecting employees' privacy.

The absence of positive statutory protection of employee privacy cannot be taken to mean that there is, as a result, a vacuum, leaving privacy to be treated entirely at the employer's discretion. To the contrary the present industrial law provides extensive protections for employees and will, in appropriate cases, apply standards of fairness which may implicate fair privacy practices in at least two important respects:

  1. The regulation, by award provision, of the manner in which privacy intrusions may be introduced and implemented at the workplace.
  2. The protection against unfair dismissal will apply standards of fairness which may pick up privacy principles.

While most privacy advocates would maintain that the existence of a set of positive statutory principles would be desirable, our industrial system may offer the best of both worlds if the national standards spoken of by the Privacy Commissioner are to be achieved. In appropriate settings these standards may be made into legally-binding industrial awards. In others, departures from the standards where justified may require careful and special award prescription.

Industrial Relations Commission

In a series of landmark decisions in the last decade, the High Court of Australia has opened the way for the Industrial Relations Commission to intervene in the relations of employers and employees to an unprecedented degree. This is an important development for Australian employees because a common complaint about other systems of labour arbitration is that they lack the jurisdiction to deal with 'management prerogatives' which often raise privacy issues.

The Australian Industrial Relations Commission has the power to reinstate unfairly dismissed employees, provided that an appropriate interstate dispute is implicated in the dismissal. Prior to this the Commission was restricted to adjudicating dismissal disputes only with the consent of the parties (Re Ranger Uranium Mines Pty Ltd; ex parte Federated Miscellaneous Workers' Union of Australia [1987] HCA 63; (1987) 163 CLR 656). Following this decision some members of the High Court have indicated that the threat of an interstate dispute following a dismissal is sufficient to establish jurisdiction (Re Federated Storemen and Packers Union of Australia; ex parte Wooldumpers (Vic) Ltd [1989] HCA 10; (1988-1989) 166 CLR 311, Boyne Smelters; ex parte FIMEE [1993] HCA 75; (1993) 67 ALJR 449, Vista Paper Products; ex parte PKIU [1993] HCA 81; (1993) 67 ALJR 604).

Employers may be required by an industrial tribunal to consult with their employees and the employees' unions on the prospect and impact of the introduction of technological change. (Federated Clerks Union of Australia v Victorian Employers Federation [1984] HCA 53; (1984) 58 ALJR 475; see Stewart, The Federated Clerks Case: Managerial Prerogative in Retreat? (1985) 59 ALJ 717).

Employers may be required by an industrial tribunal to adopt hiring, recruitment and staffing policies which may be contrary to the exercise of 'managerial rights' or preferences (Re Cram; ex parte NSW Colliery Proprietors Association Ltd (1987) (61 ALJR 401 at 405).

Relying on the external affairs power, the Commonwealth Government could no doubt legislate directly to implement the OECD guidelines and thereby regulate employment record-keeping practices.[1] Alternatively, as occurred with the topics of termination, technological change and redundancy -the Industrial Relations Commission will be asked to make awards to regulate employment record-keeping practices in relation to award-covered employees. If this occurs, the High Court may be called on again to determine whether such matters are within the jurisdiction of the AIRC.

It can hardly be said that a concern about the use, disclosure of, and access to employment records does not 'touch and concern employment' in the sense required by High Court authority on the subject matter of industrial awards. In principle, issues raised by the Council of Europe guidelines would all appear to be within the jurisdiction of the AIRC and many of them already subject to recent High Court dicta on similar topics. For example:

  1. Consultation with employees in relation to data policies and implementation may be compared with the duty on employers to consult with employees in relation to the introduction of technological change - the FCU case.
  2. Communication of personal data to employee representatives, externally, including transborder data flows may likewise be compared with the requirement for the communication of business information regarding technological change to employee representatives - the FCU case.

While the above issues have been the subject of direct consideration in recent decisions, the issues of collection, use and storage, security and retention of personal data also find echoes in the FCU case:

  1. Data handling of sensitive categories of personal data, for example, health records.
  2. Rights of employee access and correction. The employees' access to information about their job security may be compared with information privacy rights.

Indeed it now appears that any matter which has an impact on the 'quality, content, importance, profitability and preservation of an employee's work' (per Deane J, FCU case at 488) is a matter of legitimate industrial concern both to the employee and the industrial organisation which represents him or her. On this basis, employee information and other privacy rights will be well within the purview of industrial tribunals.

Industrial Relations Reform Act (1994)

The Industrial Relations Reform Act (1994) has now enshrined the law of unfair dismissal in Federal law. In doing so the Commonwealth has relied on the International Labour Organisation. The main features of the new law creates a right to challenge an unfair dismissal:[2]

170DE(1) Termination must be for valid reason. An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service.

170DE(2) Termination harsh unjust or unreasonable if reasons not valid. A reason is not valid if, having regard to the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable. This subsection does not limit the cases where a reason may be taken not to be valid.

Although there are limits to the jurisdiction (an annual salary over $60,000), employees do not have to be covered by a Federal award to invoke the unfair dismissal terms of the Act. The maximum compensation which may be awarded is $30,000 although reinstatement and back pay may be awarded. The emphasis under the Act is on conciliation and most cases under the new Act have been resolved by conciliation or await a hearing. At this stage the Australian Industrial Relations Court has decided relatively few unfair dismissal cases.

Information privacy and 'unfair dismissal' - a case study

These wide-ranging legal developments mean that employment privacy issues can no longer be taken lightly. Although the decisions referred to immediately above are brand new in legal terms, already an important 'information privacy' issue has been implicated centrally in one of them. This is the decision of Gray J on 23 June 1989, in Wheeler v Philip Morris.[3]

Wheeler's case

Wheeler was a dissident electrician involved in an inter-union dispute at the Philip Morris plant. As a result of the union altercation, Wheeler and another of the dissidents, Barratt, were transferred from the electronics workshop to the general workshop. Wheeler and Barratt apparently performed general maintenance, installation and repair jobs often together since they were shunned by their former ETU colleagues.

In what takes up the bulk of a lengthy judgment, Gray J chronicles the employment history of Wheeler from December 1986 when Wheeler's employment was restored after the industrial dispute between the unions until 4 June 1987 when he was dismissed. In substance the company's case was that Wheeler was dismissed because he had failed to perform his duties adequately from December to June, that he had been given a warning about his attitude and therefore put on notice in March 1987 that his employment was at risk, that he had not improved since the warning and that on 4 June his failure to perform maintenance tasks in an adequate and safe manner had resulted in the decision to terminate his services.

Not surprisingly, Wheeler disputed the criticisms and contested the propriety of the dismissal. His case in substance was that since the December events the company had been looking for an excuse to dispense with his services. To this end it had been unfairly critical of him and had ultimately exaggerated the effect of an incident on 4 June to create an excuse to dismiss him.

In the event Gray J, while not completely happy with the evidence from Wheeler, concluded that he had nevertheless been unfairly dismissed. The case reads as an object lesson in how not to conduct personnel/industrial relations and a number of lessons of general application can be learned from Gray J's findings.

Employment records

The employers in this case (and no doubt many others) appear to have believed that a chronicle of employee failings recorded at the time when the incident complained of occurred, is sufficient in itself to establish a bad employment record before a court. Wheeler demonstrates that this is far from a safe assumption. In the case the foreman concerned had made a number of entries in his diary adverse to Wheeler.

Gray J refused to accept these at face value and made a thorough examination of the purposes for and practices associated with the keeping of the diary and the entry of adverse references to Wheeler therein. He made a number of criticisms of the diary.

  1. It was not company practice for supervisors to keep such diaries.
  2. The period between Wheeler's reinstatement in late 1986 and his dismissal appeared to be the only time during which the supervisor concerned had made such diary entries.

While commenting that the practice was not surprising in the light of the then recent circumstances and the requirement to re-integrate Wheeler and others into the plant following the disputation, his Honour found that it was surprising that the diary entries related almost entirely to the three persons concerned and that they were in the terms that they were. He concluded that:

  1. The supervisor was concerned to record every event to ensure that Wheeler (and the two others) could be viewed in as an unsympathetic manner as possible.
  2. Wheeler and his two colleagues were not aware of the entries and were never given an opportunity to see them and comment on their accuracy.
  3. Separate serious incidents involving other employees about which the supervisor complained in oral evidence were not recorded in the diary.
The warning

The respondent argued that it had put Wheeler on notice as to his future employment by warning him in a special interview of the purpose in March 1987. Allegations were apparently made about his tardy performance of jobs, failure to exercise initiative, abuse of other electricians and one case of assault of another electrician. Wheeler claimed that no specific examples of lack of performance or misbehaviour or, in the case of the alleged assault, the identity of the victim had not been put to him and that he disputed the generalised criticisms in any event.

Gray J was critical of the adequacy of the 'warning' given to Wheeler. To the extent that the dismissal was dependent on the earlier March warning, his Honour held that the warning was itself 'flawed' in that:

It was inadequate procedurally, in that the applicant was not given sufficient detail of the allegations against him, or sufficient opportunity to refute them if he could or to comment upon their severity.

The warning was also 'infected' as part of the process of special attention extended to the applicants and his small group of colleagues which was itself unfair. Criticism of Wheeler's conduct after the March warning were also infected by that special attention.

In the special circumstances which existed at the Philip Morris plant it was not surprising that electricians and the fitters and their few electrician allies had remained in their respective 'camps' and the bitterness of the late 1986 dispute remained. In Gray J's view, the company appeared to blame Wheeler for the continued poor relations with electricians and this affected the company's attitude to him. Such an approach was, however, an abrogation of the positive duty upon management to do its part to assist in mending fences.

At no stage did the respondent's management offer counselling, advice or assistance to the applicant to help him come to terms with the electricians. At all times the onus was placed upon him.

Proper investigations of facts

Gray J found that the incident complained of on 4 June which led to Wheeler's dismissal was not properly investigated. The evidence in the court proceedings revealed the thinking of the management at the time but none of the matters were discussed amongst management at the time nor put to Wheeler.

Fairness of the dismissal

Gray J concluded that Wheeler had been singled out for special treatment by the employer. His immediate supervisor, Gray J observed, had '[seen] himself as a supervisor who had been given special responsibility to watch carefully the performance of the three employees, including the applicant, who were regarded as malcontents by the respondent's management. [His] concern was to record everything he could to the applicant's detriment, in the belief that one day that material might be used to safeguard the respondent's interests in some proceeding which may have resulted [from his dismissal]'.

Despite evidence of a management belief that Wheeler and the fitters had instigated a campaign to give the supervisors the 'run around', Gray J held that this was neither put plainly to Wheeler at the time of his dismissal and only faintly put to him at the trial (at 61), although there was a high probability that this belief was a substantial underlying factor contributing to the dismissal. Gray J found that the dismissal had been unfair.

Remedy/penalty

Gray J imposed a penalty of $900 on the company, but refused to order specific performance of the contract since in his view the contract had come to an end. He awarded damages in the excess of $36,000.

Wheeler's case provides a useful case study of 'information privacy' issues at the workplace. Although the terms 'information privacy' and 'fair information practices' are absent from the decision, the issues raised are central to information privacy concerns in the employment context. Considered from the perspective of the Information Privacy Principles or the Council of Europe guidelines, Wheeler's case provides a case study in what ought not be done in the collection and use of personal information in the course of employment.

Jim Nolan, Barrister practising in Industrial Law, formerly Lecturer in Labour Law (part-time) at Sydney University Law School, formerly Executive Member NSW Privacy Committee (1984-1987).

Next issue:

In the final part of this series, Jim Nolan examines cases in industrial law including such issues as video surveillance, information privacy and victimisation, drug testing, bag searches, and email privacy.


[1] Commonwealth v Tasmania [1983] HCA 21; (1983) 158 CLR 1 (Tasmanian Dams Case).

[2] Part VIA Div 3 Industrial Relations Act 1988 as amended; see Aust JLL (1994) Vol 7 No 2 for a detailed analysis of the Reform Act.

[3] [1989] FCA 230; (1989) 97 ALR 282.


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