A Full Bench of the Fair Work Commission (FWC) recently made some important observations about the extent to which an employee covered by the Victorian Public Service Enterprise Agreement 2016 (Agreement)1 is entitled to progression pay if they have been subject to a misconduct process during their performance cycle.
In Toby Tucker v State of Victoria2, a FWC Full Bench, comprising Vice President Catanzariti, Deputy President Gostencnik and Deputy President Millhouse, upheld a decision of Commissioner Bissett3 that Mr Tucker was not entitled to progression pay in circumstances where he was the subject of "proven misconduct" in accordance with clause 21 of the Agreement.
Watch this space
Mr Tucker's employment has been the subject of considerable litigation, spanning issues including an unfair dismissal application; alleged breach of the Agreement and section 50 of the Fair Work Act 2009 (Cth); alleged breach of the Public Administration Act 2004 (Vic); the alleged incorporation of Agreement provisions into the employment contract and alleged breach of contract; access to documents and alleged breach of duty or misconduct in the administration of the Freedom of Information Act 1982 (Vic); confidentiality and costs orders; interlocutory injunctions and undertakings as to damages; workplace investigations and the provision of investigation reports; and apprehended bias applications.
Given the wide-ranging issues arising in these proceedings, we will shortly be hosting a webinar exploring some of the more notable aspects of the various decisions and key learnings for Victorian public sector employers (irrespective of whether they are covered by the Agreement) – stay tuned for the invitation!
Mr Tucker had been a senior solicitor in the Customer Services and Debt Management Branch at the State Revenue Office in the Department of Treasury and Finance from 2011. Mr Tucker was suspended from duty on 9 June 2017 until his dismissal on 19 July 2019. In addition to the litigation referred to above, Mr Tucker remains involved in an ongoing unfair dismissal application in respect of that termination.
Prior to his dismissal, Mr Tucker lodged a dispute under the Agreement in which he raised two issues against the State Revenue Office:
- what was the correct classification of the position he occupied at SRO; and
- whether he was entitled to progression pay in conjunction with a misconduct process, including his suspension from his employment.
In a separate decision, Commissioner Bissett found that Mr Tucker should not have his position re-classified.4
Both Mr Tucker and the State of Victoria (State) agreed that Commissioner Bissett (at first instance5) was required to deal with the construction of clause 24 of the Agreement (the progression or top of grade/value range payment clause), in particular:
- the circumstances under which an employee will be entitled to progression; and
- the circumstances when an employee will not be entitled to a progression payment under clause 24.3(g)(iv) of the Agreement.
The following provisions of the Agreement bear noting:
clause 24.3(g)(iv), which provides that an employee is not entitled to a progression payment where "the employee is subject to proven misconduct as per clause 21 during the performance cycle"; and
clause 21 of the Agreement, which deals with managing misconduct and includes the following subclauses:
(a) clause 21.10, in relation to the investigation of allegations of misconduct, which provides that:
(i) the investigator will, in relation to each allegation of misconduct, find that the allegation is substantiated or not substantiated (clause 21.10(d));
(ii) where there is a finding by the investigator that an allegation is substantiated, the employer is required to consider that information and propose a discipline outcome (clause 21.10(f));
(b) clause 21.11, which provides for the employee to have an opportunity to respond to the investigator's findings and the proposed discipline outcome;
(c) clause 21.12, which provides for the employer to:
(i) consider various matters, including the investigator's findings and the employee's response, and then determine the discipline outcome which is to apply to the employee (clause 21.12(a)); and
(ii) advise the employee of the discipline outcome (clause 21.12(c)).
Mr Tucker argued that an employee is only subject to "proven misconduct as per clause 21" of the Agreement when the relevant misconduct process concludes (i.e. when a disciplinary outcome is imposed under 21.12(c)), and not when the alleged conduct was said to have occurred nor when the investigator's findings are made. Mr Tucker contended that the process concludes when the employer advises the employee that the findings have been accepted and implements the disciplinary outcome.6 In his circumstances, Mr Tucker argued that the "proven misconduct" was established when he was dismissed, rather than the date he was advised of the proposed sanction and afforded the opportunity to respond.7
In response, the State argued that "proven misconduct" is a reference to a finding by the investigator that the alleged misconduct is substantiated under clause 21.10(d)(i) of the Agreement. The State also submitted that the phrases "subject to proven misconduct" and "during the course of the performance cycle" are a reference to the performance cycle in which the misconduct occurred rather than the performance cycle in which the finding of misconduct was made.
Mr Tucker also argued that he was entitled to progression pay, despite being suspended from duty. He submitted that, for the period of his suspension, he was ready and available to work; and that there is no "carve out" for suspended employees from eligibility to participate in and receive the benefits of progression pay.
In response to this aspect of Mr Tucker's claim, the State conceded that suspension was not a specific ground of ineligibility for progression under clause 24.3(g) (in comparison to, for example, the clear exclusion of employees who have engaged in proven misconduct). However, it submitted that:
- Mr Tucker did not qualify for progression pay because he did not perform any work against which his performance could be assessed (as a result of his suspension); and
- although Mr Tucker was not ineligible to receive progression pay in the years he was suspended, that did not mean he was by default entitled to progression pay. He remained eligible, but needed to satisfy the requirements for progression (which he could not, by virtue of his suspension).
At first instance, Commissioner Bissett found:
- an employee is "subject to proven misconduct" under clause 21 of the Agreement when the employer has completed a consideration of the response of the employee under clause 21.11 of the Agreement. This step can be said to have been completed when the employer determines the discipline outcome under clause 21.12(a),8 not when the investigator appointed under clause 21 makes their findings as to which allegations are substantiated under clause 21.10(d)(i) as the State contended. Commissioner Bissett considered that misconduct cannot be proven until the employer has taken all of the information into account, including the employee's response to the investigator's findings; and that to consider the misconduct as proven any earlier would be a denial of procedural fairness to the employee, in rendering their opportunity to respond to the findings and put forward material that might influence the final decision, meaningless;9
- the misconduct exception to eligibility for progression pay under clause 24.3 of the Agreement is enlivened when an employee's conduct is proven per clause 21, and not post clause 21 or after appeals from clause 21 or when processes under 21 are exhausted;10
- the effect of the exception in clause 24.3(g)(iv) is that where there is proven misconduct, the employee is ineligible for a progression payment in the year the misconduct occurs. This may result in an employee receiving a progression payment for which they are subsequently determined (when the misconduct is proven pursuant to clause 21.12(a)) not to have been entitled, but this is a matter for the employer to manage; and
- an employee cannot participate in progression while suspended, on the basis that they cannot participate in the steps necessary to determine a performance plan within the requirement of clause 24 of the Agreement. Commissioner Bissett was satisfied that eligibility for progression pay must be considered more than just an absence of ineligibility pursuant to the exclusions in clause 24.3(g). However, Commissioner Bissett flagged that this matter may need to be addressed in circumstances where an employee is reinstated following an investigation with no finding of misconduct.11
Mr Tucker appealed Commissioner Bissett's decision to a FWC Full Bench.
The Full Bench decision
Mr Tucker raised, inter alia, the following grounds of appeal:12
- Commissioner Bissett erred in her construction of clause 24.3(g)(iv) of the Agreement, as the Commissioner should have found that an employee "is subject to proven misconduct as per clause 21 during the course of the performance cycle” in the year in which the employee is advised of the disciplinary outcome (in accordance with clause 21.12(c) of the Agreement) and that the misconduct eligibility exclusion applies only in that year.
- Commissioner Bissett erroneously construed clause 24.3 of the Agreement and thereby erred in concluding that Mr Tucker was not eligible for progression pay because Mr Tucker was suspended from duty under clause 21 of the Agreement.
The Full Bench agreed with Commissioner Bissett's construction of clause 24.3(g)(iv) of the Agreement. The Full Bench made the following remarks regarding the approach taken by Commissioner Bissett at first instance:
- Commissioner Bissett did not "re-write" clause 24.3(g)(iv) of the Agreement (as alleged by Mr Tucker), but instead engaged in a conventional process of construing the relevant provisions of the Agreement in accordance with well-established principles regarding text, context and purpose.
- "Proven misconduct" means proven at the time the employer determined the disciplinary outcome as required under clause 21.12(a) of the Agreement, and the words "during the course of the performance cycle" refer to the period when the misconduct, later proven, occurred.
- Commissioner Bissett's construction was not inconsistent with the Agreement's requirements for investigating and addressing alleged misconduct "expeditiously", for managing misconduct with minimal disruption, or for completing the misconduct process "as quickly as possible".
- Given the determination of the disciplinary outcome would logically occur in close temporal proximity to when an employee is advised of the disciplinary outcome, the FWC did not support Mr Tucker's argument that misconduct can only be plausibly proven when the final outcome is advised to an employee under clause 21.12(c).
- The Full Bench rejected Mr Tucker's argument that if an employee is found to have engaged in misconduct over one or more performance cycles, it should only disentitle an employee to progression pay in the year the misconduct is proven. An employee's misconduct must be considered in respect of the same performance cycle for which progression pay is being considered, with the evident purpose of clause 24.3(g)(iv) being to deny progression pay to an employee who engaged in proven misconduct in the particular progression year in which the misconduct occurred.
The Full Bench agreed with Commissioner Bissett's finding that an employee is not eligible for progression while they are suspended from duty under clause 21 of the Agreement.
Under the Agreement, an employee is eligible for progression pay under clauses 24.1(d) and 24.3(f) in circumstances where the employee and employer agree on progression criteria in a performance plan, the employee has been assessed against the criteria and the employee meets all elements of their performance plan.
The Full Bench found that if an employee such as Mr Tucker did not have any progression criteria in a performance plan in place, it was difficult to see how an employee, suspended from work, could meet the standards of professionalism, capability and productivity (which form the core of progression requirements), especially in circumstances where an employee is suspended due to misconduct which is subsequently substantiated.
The Full Bench also rejected Mr Tucker's argument that because "suspension from employment" is not an express ground for ineligibility under clause 24.3 of the Agreement, he was eligible for progression pay.
Will the position change under the Victorian Public Service Enterprise Agreement 2020?
The proposed Victorian Public Service Enterprise Agreement 2020 (Proposed Agreement) is currently awaiting approval from the FWC. Progression payments will form part of a new clause 29 under the Proposed Agreement.
The Proposed Agreement makes clear that progression arrangements for the performance cycle 1 July 2019 to 30 June 2020 will be completed in accordance with the existing progression arrangements under the Agreement.
Under the Proposed Agreement, the performance cycle will continue to be 1 July to 30 June each year. The Proposed Agreement also clarifies that employees who refuse to participate in the performance development and review process will be ineligible for progression, unless the employee's lack of participation is due to the employer's failure to initiate the performance development process.
Clause 29.5(b)(iv) of the Proposed Agreement will provide that an employee is not eligible to be considered for a progression payment in respect of a performance cycle if the employee is subject to proven misconduct. However, the Proposed Agreement will also clarify that:
- if an investigation of alleged misconduct spans more than one performance cycle, the eligibility exclusion is to be applied in the performance cycle in which the discipline outcome is determined (under clause 25.12 of the Proposed Agreement); and
- if an investigation is ongoing but has not been concluded, the employee is eligible to be considered for progression payment, but the employer is not precluded from considering matters of misconduct arising under clause 25 of the Proposed Agreement in assessing whether the employee has met their progression criteria, where it is fair and reasonable to do so.
The obligations under the Proposed Agreement are broadly consistent with what the Full Bench found with respect to Mr Tucker's application (noting that the Proposed Agreement again does not include suspension as an express ground for ineligibility for progression payment).
- Misconduct will be "proven misconduct" when the outcome is determined by the employer under clause 21.12 of the Agreement. This is likely to happen at the same time as the employee is informed of the outcome of the misconduct investigation.13
- An employee will be ineligible for progression pay in the performance cycle in which the substantiated misconduct occurred.
- It is not unreasonable for an employer to await the outcome of a misconduct investigation before determining an employee's eligibility for progression pay.14 However, in circumstances where an employee receives an overpayment as a result of receiving a progression payment when they were otherwise ineligible, Commissioner Bissett noted that it may be considered unfair for an employer to recover such payments made and accepted in good faith.15 This issue will be expressly dealt with in the Proposed Agreement, which will allow an employer to consider misconduct matters in assessing whether the employee has met their progression criteria, where it is fair and reasonable to do so.
  FWCFB 4971 (Full Bench decision).
 Toby Tucker v State of Victoria  FWC 3159 (First instance decision).
 Toby Tucker  FWC 3896.
 The First instance decision also considered whether it had jurisdiction to arbitrate Mr Tucker's claims for progression pay in relation to the progression years ending on 30 June 2015 (finding that it didn't, on the basis that it was not a dispute or grievance that was being considered pursuant to the Victorian Public Service Workplace Determination 2012 at the time the Agreement commenced operation) and 30 June 2019 (finding that it did). The First instance decision was also intended to deal with the merits of Mr Tucker's claim to progression (but this ultimately did not need to be determined given Commissioner Bissett found that Mr Tucker was not eligible to receive progression pay).
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