Breaches of the Fair Work Act result in employee awarded over $1.2m in damages

Background

Mr Haylett was employed as an equipment operator by Hail Creek Coal (HCC). Following a spinal injury sustained at work, Mr Haylett was re-trained as a drill rig operator and worked in this role for three years.

HCC later stood Mr Haylett down from performing his duties as a drill rig operator. The stand down came:

  • four days after he was awarded $637,000 in common law damages for his spinal injury; and
  • one day after he underwent a pre-arranged medical assessment, which concluded he was unfit to undertake his current position as an operator.

Mr Haylett successfully challenged the medical assessment, with the Queensland Supreme Court deciding it had no effect under mine safety legislation. At around the same time, HCC ceased paying Mr Haylett’s wages on the basis that he had exhausted his personal and annual leave entitlements.

HCC then obtained a further medical assessment from the same doctor. The doctor initially concluded that Mr Haylett was fit to work, with some restrictions. After HCC intervened, the doctor changed his report to conclude Mr Haylett was not fit to work, due to those restrictions. Based on this second assessment, HCC maintained its earlier decision to stand Mr Haylett down and to cease paying his wages.

Mr Haylett challenged the second medical assessment and was again successful in obtaining an order that the assessment had no effect under mine safety legislation.

Notwithstanding that decision, HCC refused to reverse its decision to stand Mr Haylett down and to cease paying his wages. Mr Haylett then commenced proceedings in the Federal Court claiming that HCC had breached:

  • the general protections provisions in the Fair Work Act by standing him down because he had commenced proceedings for workers’ compensation; and
  • the Hail Creek Agreement 2011, by ceasing to pay his wages.
Decision

The Federal Court decided that HCC had breached the general protections and the Hail Creek Agreement 2011. The court was not satisfied that HCC had proved that the workplace rights exercised by Mr Haylett (commencing workers’ compensation proceedings) were not a substantial and operative reason for its decision to stand him down. Rather than being motivated by a concern to ensure compliance with the applicable mine safety legislation, the court concluded that HCC was motivated by a concern about potential increases to HCC’s insurance premiums.

Consequently, the court awarded Mr Haylett $1,272,109 in damages for past and future loss of wages, plus interest. HCC was also ordered to pay a pecuniary penalty of $50,000 to the applicant, the CFMEU. The court rejected HCC’s argument that the damages awarded to Mr Haylett were double dip compensation on the damages he received for his personal injury. The court emphasised that the two awards had different purposes. The personal injury award was for lost earning capacity resulting from the personal injury. The Fair Work Act award was for lost wages and future income caused by breaches of the Fair Work Act. The risk of double compensation was therefore low.

HOW DOES IT AFFECT YOU?

  • An employee may be able to recover separate damages awards in relation to the same chain of events, provided that those awards have different purposes. For example, in this case the employee first successfully sued the employer for lost earning capacity resulting from a personal injury and then successfully sued the employer for lost wages and future income caused by breaches of the Fair Work Act 2009 (Cth).
  • Employers may be required to pay pecuniary penalties, in addition to compensation, in circumstances where they have contravened the Fair Work Act.

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About Allens:

Allens workplace relations team works closely with its clients to ensure that their human resources strategies, policies and procedures achieve ‘best practice’ in a way that is consistent with their business objectives. Its experienced team provides clients with the full spectrum of workplace relations services throughout Australia and Asia to help minimise workplace issues, protect corporate reputation and promote clients as employers of choice. They offer clients workplace visits to advise on potential health and safety risks (including personal liability for directors and corporate officers).