What are “Employment benefits” in the context of Section 11A?

Ceccato v Australian Steel Mill Services Pty Ltd [2020] NSWWCC 131.

The Commission has considered the meanings of transfer and discipline in detail. A category that rarely comes up is “the provision of employment benefits to workers”.

Section 11A of the Workers Compensation Act 1987 provides that no compensation is payable for a psychological injury that is wholly or predominantly caused by the reasonable actions taken or proposed to be taken by on or behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers. Most of those categories are self-explanatory. The Commission has considered the meanings of transfer and discipline in detail. A category that rarely comes up is “the provision of employment benefits to workers”.

The Commission recently considered that category in the case of Ceccato v Australian Steel Mill Services Pty Ltd [2020] NSWWCC 131.

Background

Mr Ceccato (the worker) was employed by Australian Steel Mill Services Pty Ltd (the employer) as its Environment and Quality Manager. He had worked for the employer since 1991 and had been employed under the same contract since 2002.

In 2015 the employer introduced new employment contracts which removed the right to unlimited sick leave and company cars as part of salary packages and reduced redundancy entitlements. Employees were permitted to keep the car if they agreed to relinquish a pay rise and were asked to sign a letter indicating their choice.

The worker was the longest serving employee and the only employee not to sign the new contract. He said he was the most significantly impacted by these changes due to his longstanding employment with the company.

The worker kept the company car and did not receive a pay rise in 2015 or 2016. In November 2016 he was advised that the employer would be taking the company vehicle back in July 2017. He was subsequently given a pay rise so that he was no worse off than those who had given up the car in 2015.

The worker alleged that from late 2016 until the time he went on stress leave in 2017, he was concerned by various safety and ethical issues. He also said he was bullied and harassed about his decision not to sign the new employment contract.

He went off work in 2017 and alleged that he suffered a psychological injury as a result of bullying and harassment. After ceasing work, the worker wrote various emails and letters to the employer in which he identified the issues relating to the employment contract as being his primary concern.

The worker made a workers compensation claim and the employer raised a defence under Section 11A on the basis of the provision of employment benefits to workers. The employer identified changes to entitlements regarding company cars, salary increases, leave and redundancy entitlements as “employment benefits”.

The WCC proceedings

The worker argued that his injury had been caused by workplace difficulties and not by the contract negotiations. He also argued that the employer’s actions with respect to the contract negotiations were not reasonable.

The employer argued that the other matters were irrelevant as they arose after the worker’s condition had developed. It also argued that the medical evidence overwhelmingly supported that the worker’s condition was caused by the contract dispute. If further argued that the actions taken with respect to the provision of employment benefits to workers were reasonable.

The Arbitrator found that the worker’s injury was predominantly caused by the employer’s actions with respect to the new contract. The Arbitrator noted that for the first year after ceasing work, the GP did not record any complaints about work-related issues other than the contract negotiations. She said there was no contemporaneous evidence that any other work-related issues contributed to his psychological condition or ceasing work.

The Arbitrator then turned to the issue of whether the actions were reasonable. The worker submitted that there were insinuated threats of termination if he did not sign the new contract but the Arbitrator found there was no evidence (except for his own statements) of any such threats. Although the worker described his employer’s actions as “dismissive”, the Arbitrator noted it had offered to fund further therapy to support a return to work. She considered the tone of the employer’s letter was respectful. Further, the Arbitrator said that the employer’s desire to change or update the terms of an employment contract was not of itself unreasonable. The Arbitrator accepted that employees had been consulted about the changes, which had been introduced over a number of years. The Arbitrator found that the employer’s actions with respect to the contract negotiations and changes were reasonable.

The defence under Section 11A was therefore made out and the Arbitrator made an Award for the Respondent.

Conclusion

This case indicates that matters such as the provision of a company car or redundancy and leave entitlements fall within the category of “employment benefits”. In the right circumstances, those matters may give rise to a defence under Section 11A.

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