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Grievance procedures must be followed

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In a decision handed down earlier this month, the Federal Court held that a grievance procedure in an Australian Workplace Agreement (“AWA”) must be applied by the employer despite the fact that the wording was ambiguous. The court effectively held that grievance procedures were included in workplace agreements for the benefit of the employee and any ambiguity must be interpreted in favour of the employee. This case has wide implications for such provisions in AWAs, Collective Agreements and possibly common law employment agreements.

The employee was a Barge Master who was outsourced by his employer, CMA, to John Holland Constructions, with other CMA staff, to demolish a wharf at Port Headland.He moved from Geelong to Port Headland WA for the project during the project he had clashes with his Project Manager and his position was purportedly made redundant.

The court held, in fact, that the employee’s employment had been terminated as a result of his OHS concerns and the employer had failed to follow the grievance procedure contained in his AWA. CMA argued that the employee was only required to comply with the grievance procedure if the employer chose to apply the procedures.

The Court held that despite the ambiguous language, grievance procedures are intended to govern the employment relationship and a reasonable person would assume that such a clause would be binding on both parties when an employer has concerns about the behaviour of the employee.

The Court calculated that the damages payable to the employee at $274,000, on the basis of what the employee would have earned had the contract not been breached.

Whilst the Court drew upon the fact that an AWA is a statutory instrument, it is possible that the decision will have wider implications in interpreting grievance procedures in Collective Agreements and even common law employment agreements. Rather than interpreting the literal words of the grievance procedure, the Court relied upon the principle that a reasonable person would expect that if such a clause is contained in the document setting out the employment relationship, then it was intended for the benefit of both parties.

When considering the disciplining of employees, employers should ensure that they follow their own grievance procedures.

If your grievance procedure is impractical or out of date – consideration should be given to varying the clause to ensure that it is workable.

Author: Charles Cody