The attached document replaces the document previously issued with the above code on 26 June 2015.

At paragraph [12] the word “included” has been replaced with the word “concluded”. At paragraph [138] the word “that” has been replaced with the word “than”.

Associate to Vice President Hatcher

Dated 13 January 2016

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Stephen Keenan
v
Leighton Boral Amey NSW Pty Ltd
(U2015/2778)

Application for relief from unfair dismissal.

Introduction

[1] Mr Stephen Keenan has applied under s.394 of the Fair Work Act 2009 (FW Act) for an unfair dismissal remedy in relation to his dismissal from his employment as a Team Leader with Leighton Boral Amey NSW Pty Ltd (known as the Leighton Boral Amey Joint Venture or “LBAJV”). Mr Keenan was dismissed as a result of his conduct at the LBAJV Christmas function on 12 December 2014. The letter of dismissal, which was dated 19 January 2015 and signed by Mr Andrew Macourt, LBAJV’s People and Capability Manager, relevantly stated:

“. . .
In your role as a Team Leader you have a responsibility for the health and safety of yourself and those that work with you, and therefore the Company must hold you to the highest standards of behaviour and compliance.

However, you have failed to demonstrate these values. Your behaviour during the evening of 12 December 2014 has failed to meet our expectations with specific reference to our core value ‘Safety and Respect’. The issues, as substantiated in the investigation, include:

• Repeatedly making undesired romantic and sexual propositions to Tara Kennedy, despite her clear decline and refusal.



• Suddenly kissing Rachel O’Reilly in an unsolicited and unprovoked manner.

I am satisfied that you have failed to comply with your duties and obligations and have failed to demonstrate the necessary attributes required by the Leighton Boral Amey Joint Venture.

In light of this, taking into account your response to the allegations and your length of service with both RMS and LBAJV, the Joint Venture no longer has trust or confidence in your ability to perform your duties to the required level in the future. Therefore the Joint Venture has decided to terminate your employment.

This letter is notice of the termination of your employment with effect from Tuesday 20 January 2015. In accordance with your contract of employment you will receive four weeks pay in lieu of notice. LBAJV’s pay office will also process other termination entitlements including any untaken annual leave entitlements.
. . .”

[2] Mr Keenan contends that his dismissal was harsh, unfair and unjust, and he seeks the remedy of reinstatement.

Preliminary matters for determination

[3] Section 396 of the FW Act requires that four specified matters must be decided before the merits of the application may be considered. There was no contest between the parties about any of those matters. I find that:

(a) Mr Keenan lodged his application within the period required by s.394(2);

(b) Mr Keenan was a person protected from unfair dismissal;

(c) LBAJV was not a “small business employer” as defined in s.23 of the FW Act, so that the Small Business Fair Dismissal Code was inapplicable; and

(d) the termination of Mr Keenan’s employment was not a case of genuine redundancy.

The facts

The witnesses

[4] Mr Keenan gave evidence in support of his application, and he also called evidence from Mr Paul Noack, a Senior Branch Organiser of his union, the Australian Workers’ Union (AWU), and Mr Ryan Cottee, a Team Leader with LBAJV. Mr Keenan, Mr Noack and Mr Cottee each made a statement of evidence and were cross-examined on their statements. Ms Lesley Kearns, who was at the relevant time an Operational Control Centre (OCC) Controller at LBAJV, also gave evidence in Mr Keenan’s case pursuant to an order to attend and give evidence.

[5] LBAJV adduced evidence from the following persons:

• Mr Max Dallarmi, LBAJV Senior Project Manager, Tactical Pavement Projects;



• Ms Tara Kennedy, LBAJV Communication and Stakeholder Engagement Manager of the Sydney Region at the relevant time;



• Ms Rachel O’Reilly, LBAJV OCC Controller;



• Ms Danielle Malouf, LBAJV Communication and Stakeholder Engagement Coordinator;



• Ms Jessica Stokes, LBAJV Executive Team Coordinator;



• Ms Stephanie Ng, LBAJV People and Capability Coordinator;



• Mr Andrew Macourt, LBAJV Senior People and Capability Advisor;



• Mr Simon Denmeade, LBAJV Maintenance Superintendent; and



• Mr Ben Goodsell, LBAJV Painter.

[6] Each of the witnesses for LBAJV made a statement of evidence and all except Mr Goodsell were cross-examined on their statements.

[7] The critical factual issue in this matter was Mr Keenan’s conduct at the LBAJV Christmas function and afterwards on 12 December 2014. There were some significant differences between Mr Keenan and other witnesses about some (but far from all) of his interactions with other persons at the Christmas function and afterwards. I will identify and resolve these specific factual differences in due course, but as a general proposition I consider that the evidence of LBAJV’s witnesses about these matters is to be preferred to that of Mr Keenan. As will become apparent, Mr Keenan quickly became heavily intoxicated by alcohol at the Christmas function, and this undoubtedly affected his capacity to remember all of what occurred. He had a tendency to make firm denials of conduct on his part which he probably had no recollection of, and was in some instances evasive with the truth. The LBAJV witnesses who described his conduct, on the other hand, generally did so in a manner which impressed me as being balanced and truthful. Their evidence was in most instances consistent with earlier accounts they had given of the relevant events, and there was no motive for them to be untruthful about those events.

Employment background

[8] LBAJV was established for the purpose of carrying out road maintenance work in the central Sydney area pursuant to a contract with Roads and Maritime Services (RMS), a NSW Government entity. RMS had originally conducted this work itself, but it was contracted out to LBAJV effective from 1 April 2014. The employees of RMS who had performed this work were transferred to LBAJV with full continuity of employment maintained.

[9] Mr Keenan was employed by the Roads and Traffic Authority (RTA), the predecessor of RMS, as a casual employee from 2000 through to 2003. He then worked as a plumber in Newcastle for some years before returning to Sydney to resume work as a casual Road Worker Grade 3 of the RTA in 2005. In or about 2007 he applied for and was successful in obtaining a permanent fixed term Road Worker Grade 3 position. From 19 January 2007 Mr Keenan was appointed to an ongoing permanent Road Worker Grade 4 position. He subsequently acted up as a relief Team Leader on many and some extended occasions. His employment transferred to LBAJV effective from 1 April 2014, and his continuity of employment and pay grade were maintained. In October 2014, he was appointed as a permanent Team Leader. Mr Keenan was elected the AWU delegate in April 2014, and was also one of the two elected employee Work Health and Safety Representatives.

[10] There was no issue concerning the quality of Mr Keenan’s work performance. There was only one blemish in his employment record, namely the issue to him by RMS of a warning letter dated 1 June 2012. That warning letter concerned three notes which had been sent to Mr Keenan’s acting Works Supervisor in March 2012. The letter recorded that Mr Keenan had confirmed that he was the author of the notes, which were described as containing “inappropriate material and may be considered as harassment”. The letter contained the following warning:

“This letter serves as a formal warning that your behaviour as outlined above is not acceptable to RMS and you are to ensure that you will not engage in such behaviour in future. Should there be a repeat of such conduct, this could lead to disciplinary proceedings and outcomes including termination of employment”.

[11] The letter went on to note that two unopened bottles of beer had been found in the meal room refrigerator, which Mr Keenan had admitted belonged to him, and that Mr Keenan had advised that he had been experiencing some personal and substance abuse issues for which he intended to seek counselling. He was reminded of RMS’s policies concerning alcohol and illicit drugs, including that they were not to be brought into the workplace. This aspect of the letter was not part of the warning, and there was no suggestion in the letter that Mr Keenan had consumed alcohol in the workplace.

[12] There was no clear evidence about the nature of the conduct on the part of Mr Keenan which caused this warning to be issued. None of the LBAJV witnesses had any knowledge of it. Mr Keenan’s evidence about it was confusing: he said that he had “taken the fall” for somebody else, but at the same time suggested that the warning arose out of his conduct as a union representative on behalf of another employee. The content of the notes referred to in the warning letter is unknown. As to the bottles of beer, Mr Keenan said that although he admitted they were his they in fact belonged to someone else. He said that he did have a problem with marijuana abuse at the time, but that this had been resolved after counselling. All that can really be concluded about this matter is that it was adjudged sufficiently serious to warrant the issue of a warning letter.

[13] Only one other matter arose in the evidence concerning Mr Keenan’s prior work record. Ms Rachel O’Reilly said in her evidence that Mr Keenan had used some bad language in several work reports which he had sent to her in the September-December 2014 period. This appears to have been an expression of frustration on Mr Keenan’s part about various work difficulties he had encountered. Ms O’Reilly reported this to a more senior employee, Mr Alejandro Huezo, but it was not the subject of any formal action. It may be concluded from an event which occurred at the Christmas function and which is dealt with later that Mr Huezo spoke to Mr Keenan about this matter.

Relevant LBAJV policies

[14] Employees of RMS, including Mr Keenan, who went over to work for LBAJV were required to sign a contract of employment which, among other things, required them to read and comply with LBAJV’s policies and procedures as they related to their employment, and provided that a breach of the obligations under those policies and procedures might result in disciplinary action including termination of employment. Such employees, again including Mr Keenan, were required upon the commencement of their engagement with LBAJV to attend an induction session in which they were trained in, among other things, LBAJV’s “Values and Behaviours”. This training was carried out by way of a Power Point presentation which included the following statements and propositions:

• LBAJV’s values included “Safety & Respect”;



• Employees were required to “Take personal responsibility for your actions and words”;



• LBAJV’s Code of Conduct “sets out the standards of behaviour expected from everyone on an LBA site”;



• LBAJV’s employment practices were intended to ensure that “The workplace is efficient and free of harassment and discrimination”;



• There was a policy in place to prevent and prohibit bullying, harassment and discrimination;



• Harassment was defined as “any form of unreasonable and inappropriate workplace behaviour that a person does not want; finds offensive, humiliating or intimidating; and targets them on the basis of the attribute groups”;



• Sexual harassment was defined as “any form of sexually related behaviour that you do not want; and which offends, humiliates or intimidates [and] is of a sexual nature”.

[15] Mr Keenan accepted that he had signed the contract, and although he did not read it in its entirety said he had “looked at it”. He likewise attended the induction session and had paid attention to most of it. He understood that he was required not to engage in harassment, or sexual harassment, at the workplace. However, as will become apparent, there was an issue in this case about what the boundaries of the workplace were.

Organisation of the Christmas function

[16] The organisation of the LBAJV Christmas function was assigned to Ms Jessica Stokes who was, as earlier stated, the Executive Team Coordinator. She was assisted in this task by Ms Gabrielle Cosser, who was an Administrator. Neither was an employee with managerial or supervisory status. The venue arranged for the event was the Endeavour Room in the Novotel Sydney Brighton Beach Hotel (Hotel). The time set for the event was from 6.00pm to 10.00pm. These times were identified on a notice concerning the Christmas function which was issued and displayed. The arrangement was that the Hotel would serve beer, wine, some mixed drinks, soft drinks, finger food and canap�s during these hours as part of the hire of the room (that is, without charge to the attendees).

[17] LBAJV entered into a written contract with the Hotel for the hire of the Endeavour Room. Clause 37 of this contract provided:

“The Hotel complies with the National Alcohol Beverage Industries Council guidelines on the Responsible Service of Alcohol. The Hotel staff are instructed not to serve any alcoholic beverages to guests under the age of eighteen (18) years, or to guests in a state of intoxication. The Hotel policy is to serve guests in a responsible, friendly and professional manner. The right to discontinue liquor service is reserved by the Hotel. The Hotel will not supply beverages to the table for guests to serve themselves. All service for beverages will be provided by the wait staff.”

[18] Mr Macourt directed LBAJV’s supervisors to remind employees about appropriate standards of behaviour at the Christmas function prior to its commencement. Mr Keenan’s supervisor, Mr Heath Powderly made a note, dated 27 March 2015, of what he said to employees under his supervision during working hours on 12 December 2014. The note was admitted (as an annexure to Mr Macourt’s statement of evidence) without objection, and its content was, broadly speaking, accepted by Mr Keenan as correct. The note recorded:

“I said the work Christmas party is on tonight, I’m not going but to those guys who are going, enjoy yourself, it is a thank you for your work this year. Kevin is putting drinks on for everyone. Do me a favour, don’t be that idiot that I have to deal with on Monday morning. Don’t be that person who gets blind drunk, abuses someone or punches someone. Have a good time.”

[19] The Hotel set up a temporary bar facility in the Endeavour Room for the purpose of the LBAJV Christmas function. A number of tables were set up in a half-rectangle shape behind which Hotel Staff served the alcohol. Either one or two Hotel staff were serving alcohol for the duration of the Christmas function. Generally speaking a drink was able to be obtained by speaking to a person at the bar facility, who would then pour or hand over the drink. Bottled beer was contained in a “big Esky-type container”, and appears to have initially been handed out upon request by the bar staff. However it was the evidence of Mr Keenan that, beyond a certain point, attendees at the function were able to help themselves to the bottled beer. He was supported on this point by Mr Ryan Cottee, another LBAJV Team Leader who attended the function. I accept that evidence.

[20] The Endeavour Room was set up so that there were chairs placed around the walls, and the centre of the room was left empty for people to mingle and for dancing. Loud music was played in the background for the duration of the function. Being a fully enclosed function room, the Endeavour Room did not have any facility for cigarette smokers. However there was a public bar, restaurant and lounge area upstairs from the Endeavour Room which had an outdoor terrace upon which smoking could take place. This caused smokers to move upstairs and back downstairs during the course of the function.

[21] No manager was tasked with supervising the overall running of the Christmas function or the conduct of staff. Mr Macourt departed the function between 8.30-9.00pm. Ms Stokes and Ms Cosser were left with the task of finishing up the function once the service of food and alcohol ceased at about 10.00pm.

Mr Keenan arrives at the Christmas function

[22] Mr Keenan finished work on the afternoon of 12 December 2014 at 3.30pm and went home to shower and change before attending the event. Mr Keenan’s partner drove him to the function and he arrived at around 7.00pm. His evidence was that he had two stubbies of beer before arriving at the Hotel. He was not the only employee who drank before arriving at the function; another employee, Mr Goodsell, said in his witness statement that he consumed 8 or 9 drinks before arriving at the Endeavour Room, and Mr Macourt had two schooners of beer prior to his arrival.

[23] Mr Keenan appears to have quickly consumed a large amount of alcohol. His estimate was that from the time of his arrival until about 11.15pm, he drank a total of about ten beers and one vodka and coke. Events during the course of the evening, which are described below, demonstrate that he quickly became intoxicated. At no stage while he was in the Endeavour Room was he refused service of alcohol, although as earlier discussed he was beyond a certain point simply serving himself with beer. Nor did anyone remonstrate with him about his behaviour or suggest that he stop drinking or leave the function while he was in the Endeavour Room.

Incident with Mr Boggan

[24] After initial conversations with Mr Cottee and Mr Macourt, Mr Keenan was introduced to Mr Andy Boyd, the General Manager of Boral Asphalt NSW, a director of LBAJV and a “fellow Scotsman”, with whom he had a discussion. Mr Keenan said that their conversation topics included “Scotland, work-related issues and general small talk”. His evidence was that they were “rudely interrupted” by a male who involved himself in the conversation. This person, who Mr Keenan did not know, was Mr Richard Boggan, LBAJV’s Manager Network Operations and a LBAJV director. In his statement, Mr Keenan stated that in response to this intrusion he said to the man “Who are you mate?”. However in his oral evidence Mr Keenan accepted that he said to the man “Fuck off mate”. Mr Keenan said his conversation with Mr Boyd then continued, and ended with Mr Boyd handing him his business card.

[25] Neither Mr Boyd nor Mr Boggan gave evidence. Mr Denmeade gave evidence that in a subsequent conversation Mr Keenan said that he had told Mr Boggan to “fuck off” although he did not know who he was speaking to at the time. I find that Mr Keenan did say “Fuck off mate” to Mr Boggan (although he did not know who Mr Boggan was at the time).

First incident with Ms Stokes

[26] Shortly after his conversation with Mr Boyd, Mr Keenan approached Ms Stokes. Ms Stokes gave evidence that between 7.30pm and 8.00pm she was approached by Mr Keenan and during this conversation Mr Keenan pointed at Mr Boggan and asked who he was. Ms Stokes said that it was Mr Boggan and advised that he was on the Board for Leightons. Mr Keenan then said “All those Board members and managers are fucked, they can all get fucked. Kevin Badger [LBAJV Contract Manager] is a cunt.” Mr Keenan then pointed at Mr Boyd and asked who he was. Ms Stokes said that it was Mr Boyd, and advised that he was a General Manager for Boral and was also on the Board. Mr Keenan started laughing and said “I think I just told him to fuck off”.

[27] Ms Stokes asked Mr Keenan why he had a problem with management and told him that she worked closely with those people and did not agree with what he was saying. Mr Keenan said to Ms Stokes “What do you even do?” to which Ms Stokes laughed as she believed he was joking and Mr Keenan then said “No seriously. Who the fuck are you? What do you even do here?”. Ms Stokes did not respond and simply walked away. In her statement of evidence Ms Stokes said that she found Mr Keenan’s language offensive, and that during the conversation his speech was slurred and hard to follow and he was speaking very close to her ear.

[28] When Mr Keenan was taken to this part of Ms Stokes’ evidence in examination in chief, he denied saying that he swore at Mr Boyd, denied swearing about LBAJV management generally, and denied swearing at her. Both in examination in chief and cross-examination he said he had no recollection of this conversation with Ms Stokes at all.

[29] I substantially accept the evidence of Ms Stokes. She had only consumed about two drinks at the time of this conversation, so that it cannot be said that her recollection was affected by alcohol. Ms Stokes gave a clear account of Mr Keenan speaking aggressively and offensively to her, and there was no suggestion that she had any motive to invent or embellish her account. However in one respect her recollection was clearly faulty. Having regard to the earlier events I have described, it must have been Mr Boggan, not Mr Boyd, who Mr Keenan asked to be identified and whom he said he had told to “fuck off”. On the basis of Ms Stokes’ evidence I find that Mr Keenan was already significantly affected by alcohol by this time. I also suspect that the incident may have occurred somewhat later in the night than suggested by Ms Stokes given the degree of intoxication displayed by Mr Keenan.

Incident with Ms Kennedy

[30] Ms Tara Kennedy, LBAJV’s Communication and Stakeholder Engagement Manager, gave evidence that at around 10.00pm she sat down by herself on one of about ten chairs positioned against one of the walls of the Endeavour Room in order to rest her left foot, which was hurting her. After about five minutes Mr Keenan came and sat in the chair directly next to her and began talking to her. At this point in time Ms Kennedy had only seen Mr Keenan once before at an induction. Her evidence was that Mr Keenan began by saying “I hate working for LBAJV. It’s a shit place to work. In fact I just told the head of Leightons to fuck off”. He then began to “interview” her by asking her a number of questions which she regarded as personal in nature. She described a conversation to the following effect occurring:

[31] Ms Kennedy said she did not respond to this final comment and Mr Keenan then said words to the effect “I want to ask for your number, but I don’t want to be rejected”. Ms Kennedy laughed at this but did not respond and Mr Keenan repeated the statement three or four times whilst they were sitting down. In her witness statement, Ms Kennedy said that she felt embarrassed and intimidated by his behaviour and tried to answer Mr Keenan’s questions as politely and briefly as possible so that he would not get angry with her. She described Mr Keenan’s demeanour as aggressive and said that he was speaking close to her face. In her oral evidence she said that he was intoxicated.

[32] Ms Kennedy’s evidence was that she became increasingly uncomfortable and looked around the room trying to get someone’s attention. She said that she made eye contact with Mr Max Dallarmi, LBAJV’s Senior Project Manager, and tapped her head a couple of times with one of her fingers. This was a signal which some of the female employees of LBAJV had agreed to use at the Christmas function if they became stuck in a conversation they wanted to get out of, and about which Mr Dallarmi had earlier been made aware. Mr Dallarmi came over to where she and Mr Keenan were sitting and sat down in the chair next to her on the opposite side. Mr Keenan reacted to this by saying to Mr Dallarmi “I’m talking to her now fuck off”. Ms Kennedy said that she then asked Mr Dallarmi “Do you think it’s ok if I go now?”, to which Mr Dallarmi nodded. Ms Kennedy then got up, walked out of the room and went home.

[33] Mr Dallarmi’s evidence was broadly consistent with that of Ms Kennedy’s. He confirmed that after he saw Ms Kennedy using the head signal, he walked over and sat down next to her. He said that he asked “Do you want to leave?”, to which Ms Kennedy replied “I don’t feel comfortable leaving” but then shortly afterwards said “You know what? I’m just going to go” and left. Mr Dallarmi stayed sitting with Mr Keenan to make sure he did not follow her, and then Mr Keenan was joined by some other LBAJV employees who handed him a beer. Mr Dallarmi said he saw Mr Keenan pull a face and nod his head in his (Mr Dallarmi’s) direction, which he took to mean that he was not happy with the interruption to his conversation with Ms Kennedy. He did not recall Mr Keenan speaking to him at any time. He did confirm that Mr Keenan was sitting in the seat right next to Ms Kennedy’s.

[34] Mr Keenan recalled that he had a conversation with Ms Kennedy, but his account differed in a number of respects to hers. He agreed that he initiated the encounter by approaching her while she was sitting alone, but said that he sat down with one empty seat between him and her. He described the conversation as lasting five to ten minutes, and said that she volunteered that she had split up with her husband and was left on her own with two children. He denied that part of the conversation described by Ms Kennedy in which he said he hated working for LBAJV. He also denied asking for her phone number. He said that his children were horse riders, not ice skaters, so that Ms Kennedy had not correctly recollected the discussion they had about their children. He accepted that Mr Dallarmi had joined them, but denied speaking to him. His said in his witness statement: “At no point did I intimidate, invade her space, make any romantic sexual suggestions, caress or make any advances which could be seen as unwarranted”.

[35] I broadly accept Ms Kennedy’s version of this conversation. I accept that Mr Keenan sat directly next to her; this was corroborated by Mr Dallarmi. I accept that he spoke of his dislike of his work; Ms Kennedy’s account of this part of the conversation is entirely consistent with the evidence, earlier set out, that Mr Keenan told Mr Boggan to “fuck off”. I accept that Mr Keenan asked Ms Kennedy a number of questions about her personal and family life. Ms Kennedy may not (unsurprisingly) have recalled the precise details of this part of the conversation correctly, but that a conversation of this general nature occurred was not denied by Mr Keenan. I accept, over Mr Keenan’s denial, that in an indirect fashion he asked for her phone number more than once. There is no dispute that Mr Dallarmi intervened in the encounter at a certain point. I accept Ms Kennedy’s evidence that Mr Keenan said to Mr Dallarmi something along the lines of “I’m talking to her now fuck off”. The fact that Mr Dallarmi himself did not hear this is likely explained by the facts that he was two seats away from Mr Keenan, Mr Keenan was slurring his words, and there was loud music playing in the background. Mr Dallarmi’s separate evidence about Mr Keenan’s subsequent facial expression and nod in his direction confirms that Mr Keenan was not pleased with his intervention. Finally, I accept that the encounter disturbed Ms Kennedy sufficiently to cause her to leave the Christmas function.

Second incident with Ms Stokes

[36] The LBAJV function officially ended at 10.00pm with service of alcohol in the Endeavour Room ceasing at about that time. Some attendees remained in the Endeavour Room for some time after this, but a large group which included Mr Keenan moved upstairs to the public bar area (to which reference has earlier been made) to continue socialising. At this point, the participants were no longer at the Hotel as participants in a function, but were there simply as members of the public availing themselves of the Hotel’s services. In particular, they were buying their own drinks at this stage of the night.

[37] Ms Stokes gave evidence that she had a second encounter with Mr Keenan at this stage of evening while sitting in the outside courtyard area where the smokers gathered. She said that Mr Keenan attempted to start a conversation with her, and in doing so he was slurring his words and leaning in close to her face. Ms Stokes said she tried to ignore him and move away, but Mr Keenan kept trying to speak with her and move closer to her. Ms Stokes said “At one point, he tried a number of times to touch the dimple on my chin. I pulled away from the Applicant and did not let him touch me.” In her oral evidence, Ms Stokes made it clear that Mr Keenan did make contact with her chin at least once and she pulled away. I accept Ms Stokes’ evidence about this incident.

Incidents with Ms Cosser

[38] There were two incidents involving encounters between Mr Keenan and Ms Gabrielle Cosser. Ms Cosser herself did not give evidence, having left her employment with LBAJV earlier this year and returned to the United Kingdom. The first of these two incidents is referred to in notes taken by Ms Ng of an interview with Ms Cosser on 16 December 2014. It is not clear at what stage of the night the incident occurred. The notes record the allegation that, having observed Ms Cosser have a conversation with Mr Kevin Badger, Mr Keenan came up to her after the conversation had ended and said “why the fuck are you talking to Kevin?”. When this was raised with Mr Keenan in cross-examination, it was put to him that it occurred in the upstairs bar. Mr Keenan agreed that he said this to Ms Cosser, thus confirming the allegation which was otherwise not the subject of any direct evidence.

[39] The second incident was witnessed by Ms Stokes. It occurred in the terrace area outside the upstairs bar after the function had ended. Ms Stokes said that she overheard Mr Keenan say to Ms Cosser “I used to think you were a stuck up bitch, but Ryan [Cottee] says you are alright. If Ryan likes you then you must be ok”. Soon after this Ms Stokes and Ms Cosser went to the bathroom together, and Ms Cosser said to Ms Stokes that she was very upset by what Mr Keenan had said to her. Ms Danielle Malouf, although she did not witness the incident, gave evidence that she subsequently saw that Ms Cosser was upset and crying, and that Ms Cosser told her that Mr Keenan had called her a bitch.

[40] Mr Keenan’s evidence was that at one stage of the evening he danced with Ms Cosser and had engaged in amicable conversation with her prior to dancing. However, he effectively conceded the substance of the conversation in that he gave evidence that he said to Ms Cosser words to the effect of: “I thought you were a little bitch but you know you’re okay and I like you”. Mr Keenan denied that this upset Ms Cosser and claimed that a completely unrelated incident had caused her to become upset.

[41] Clearly the incident occurred substantially as described by Ms Stokes. Mr Keenan, expressing himself with a drunk’s frankness, no doubt thought that he was paying Ms Cosser a backhanded compliment. However she was understandably upset by being described as a “bitch” and became upset to the point of tears. I reject Mr Keenan’s evidence that it was a different matter which caused her distress.

Incident with Ms O’Reilly

[42] The final incident in the Hotel involved Ms Rachel O’Reilly, an LBAJV OCC Controller. She gave evidence about the incident, as did two others who witnessed it, Ms Malouf and Mr Goodsell. Ms O’Reilly’s evidence was that earlier in the night she had a brief conversation with Mr Keenan at approximately 8.00pm in which he said that “Alex” (Mr Alejandro Huezo) had spoken to him about his “comments” in his work reports and that he was “Sorry if I upset you or anything”. Ms O’Reilly recalled that later during the course of their conversation Mr Keenan said “I don’t drink spirits, it gets me into trouble”, and shadow punched the air, which concerned her somewhat. However the conversation between them continued and moved onto other more agreeable topics.

[43] After this conversation Ms O’Reilly did not interact with Mr Keenan again until about 10.30-11.00pm, after the function had ended and Ms O’Reilly was in the upstairs bar area. She had gone up to the bar to buy herself a drink when Mr Keenan approached her. She described him as agitated, slurring his words and not walking properly. She said he pointed out somebody who was standing in the outside terrace area, and the following exchange occurred:

[44] They were then joined by Ms Malouf. Ms O’Reilly said that she turned to the bar to get a drink of water, and the conversation continued as follows:

[45] Ms O’Reilly then ordered Mr Keenan’s drink and handed it to him. Her evidence was that general conversation continued for about five minutes, with Mr Goodsell joining them at some point. Then, while she was leaning against the bar and her drink was sitting on the bar, Mr Keenan, with no warning whatsoever, suddenly reached forward, held her face on both sides with his hands, and kissed her on the mouth. Ms O’Reilly was shocked by this. She said Ms Malouf talked to Mr Keenan to distract him, and Mr Goodsell said to her “I’m so sorry”. Ms O’Reilly then went to the bathroom to remove herself from the situation. When she emerged with another work colleague, they walked past Mr Keenan, who, according to Ms O’Reilly, said: “I’m going to go home and dream about you tonight”.

[46] Both Ms Malouf and Mr Goodsell’s evidence was consistent with Ms O’Reilly’s. Ms Malouf’s evidence was that during the conversation they could not understand what Mr Keenan was saying and they knew that he was drunk. She described the kiss as a peck on the lips, and said that those present “laughed in shock”. Mr Goodsell said that Mr Keenan’s speech was slurred and difficult to understand, and that he had put his hands around Ms O’Reilly’s head and kissed her on the lips. He confirmed that, immediately after the incident, he apologised to Ms O’Reilly, and then told Mr Keenan that he had to leave. Mr Goodsell said he put his hand on Mr Keenan’s shoulder and walked him out of the venue and downstairs to the taxi stand in the street.

[47] Mr Keenan did not deny kissing Ms O’Reilly. When Mr Keenan was first interviewed in relation to the incident he said that he kissed Ms O’Reilly on the cheek and described it as a “Merry Christmas” kiss. However in his witness statement, Mr Keenan described it as a “quick kiss on the lips”. He said that he noticed Ms O’Reilly at the bar with other LBAJV employees and that he approached her and asked “How are you?” before giving her the kiss and saying “Merry Christmas”. He attempted to place this in the context of an amicable though infrequent work relationship. In his statement he denied touching her, although in his oral evidence he said that he touched her head and shoulders for a short time when he kissed her. He denied subsequently saying to her “I’m going to go home and dream about you tonight”. He also denied asking her to buy him a drink; he said that she offered to buy him a drink.

[48] The inconsistencies in Mr Keenan’s account of this event make it difficult to accept his version of events where it substantially differs from that of Ms O’Reilly. Not much turns on whether Mr Keenan asked Ms O’Reilly to buy him a drink or whether she offered; the critical observation to be made about this part of the encounter is that Ms O’Reilly bought Mr Keenan a mixed drink in circumstances where it was plain to her and those with her that he was drunk. I accept that Mr Keenan placed his hands on both sides of Ms O’Reilly’s face when he kissed her. The kiss itself was a brief one. Nobody heard Mr Keenan say “Merry Christmas” when he kissed her, although it is possible that he did so but nobody understood what he was saying. I accept that Mr Keenan subsequently said to Ms O’Reilly: “I’m going to go home and dream about you tonight”. I further accept that Mr Keenan’s conduct caused Mr Goodsell to steer him out of the bar and outside to the taxi stand.

[49] What was going on in Mr Keenan’s head during this behaviour is difficult to discern. He was undoubtedly well past being capable of rational behaviour at this point, and I tend to the view that the kiss was the impulsive act of an intoxicated man. Whether it was an oafish attempt at friendliness or an intentionally sexual act is impossible to say, although his subsequent comment to Ms O’Reilly tends to suggest that the latter was the case. For reasons which will be explained, it is not ultimately necessary to resolve this issue.

Incident with Ms Kearns

[50] A number of the LBAJV employees decided to move on to another venue, the Rocksia, at some time after 11.00pm. They gathered outside the Hotel at the taxi stand for the purpose of travelling to this venue. Mr Keenan became part of this group, which included Ms Lesley Kearns. Ms Kearns’s evidence was that, while they were waiting for a taxi, the following exchange occurred between Mr Keenan and her:

[51] Ms Kearns said that she was not offended by Mr Keenan’s behaviour and that she simply kept her distance from Mr Keenan because she knew that he was intoxicated (she described him as stumbling and swaying by this time). Mr Keenan did not deny that this incident took place, and I find that it occurred as described by Ms Kearns.

[52] Shortly after this conversation Mr Keenan caught a taxi with Ms Kearns, Mr Goodsell and another LBAJV employee to the Rocksia. Mr Keenan was refused entry (making that the first time that responsible service of alcohol obligations were adhered to that evening). A fellow employee then directed Mr Keenan to a taxi and he went home.

Investigation and dismissal process

[53] LBAJV management first became aware of the allegations against Mr Keenan on Monday 15 December 2014 when a number of employees approached Mr Macourt regarding Mr Keenan’s behaviour. Neither Ms Kennedy or Ms O’Reilly themselves raised any complaint about the incidents in which they had been involved, although it appears Ms O’Reilly had decided to raise the kissing incident but was approached by management about the matter before she could do so. As a result of the information he received Mr Macourt asked Ms Stephanie Ng to speak with Ms Cosser about the events at the Christmas function.

[54] On Tuesday 16 December 2014 Mr Macourt became aware of further allegations regarding Mr Keenan’s behaviour and formed the view that he would need to meet with Mr Keenan to discuss his recollection of events. Mr Macourt arranged to meet Mr Keenan for an “informal meeting” at the Rockdale depot that afternoon (the first meeting). In his statement of evidence Mr Macourt said that he called Mr Noack prior to his meeting with Mr Keenan and the following conversation occurred:

[55] It was Mr Noack’s evidence that after his conversation with Mr Macourt he called Mr Keenan and said that he would not be able to attend the meeting that afternoon and advised Mr Keenan not to answer any questions until Mr Noack could be present to represent him.

[56] At 3.00pm on 16 December 2014 Mr Keenan reported to the LBAJV office for his scheduled meeting with Mr Macourt. Mr Keenan gave evidence that he attended the meeting alone and when he realised that Mr Macourt, Mr Denmeade and Ms Ng were present he made the remark “I thought this was an informal chat!” Mr Macourt maintained that it was an informal discussion and that Mr Denmeade was present because he was Mr Keenan’s Manager and Ms Ng was present to take notes. Mr Keenan said that he was not offered a support person and he was denied suitable representation at the meeting. Mr Macourt said that Mr Keenan was not denied representation at the meeting and that while Mr Keenan was not offered a support person, had he requested a support person be present, this would have been accommodated. Mr Keenan said that despite the advice he had received from Mr Noack not to answer any questions, Mr Macourt continuously pressed him to respond saying “If you can’t remember or fail to respond this will go against you”. It was Mr Macourt’s evidence that the following conversation took place:

[57] There is an inconsistency in the LBAJV evidence regarding the timeline of this investigation. It was Mr Macourt’s evidence that because Mr Keenan was unable to put forward any information at this meeting, he decided that a formal investigation into the allegations was necessary and so he asked Ms Ng to conduct interviews in relation to the allegations. However, Ms Ng’s evidence was that she conducted interviews with Ms Kennedy, Mr Dallarmi, Ms Cosser, Ms O’Reilly, Ms Malouf and Mr Goodsell on Tuesday 16 December 2014 before the meeting with Mr Keenan took place.

[58] In any event, by 17 December 2014 Ms Ng had prepared a summary of her investigation, a copy of which was annexed to her witness statement, which identified eight alleged incidents of misconduct on the part of Mr Keenan as follows:

1. Inappropriate behaviour and language towards Mr Boggan and Mr Boyd.
2. Sexual harassment of Ms Kennedy.
3. Bullying of Ms Cosser (re her conversation with Kevin Badger).
4. Bullying of Mr Cosser by calling her names.
5. Bullying of Ms Stokes (the first incident).
6. Further harassment of Ms Stokes (the second incident).
7. Sexual harassment of Ms O’Reilly.
8. Sexual harassment of Ms Kearns.

[59] Mr Macourt was provided with a copy of Ms Ng’s report on 17 December 2014 and on the morning of 18 December 2014 a meeting between Mr Keenan, Mr Noack, Mr Macourt, Ms Ng and Mr Denmeade took place (the second meeting). The purpose of this meeting was to seek Mr Keenan’s response to each of the eight allegations. However it is apparent from Mr Macourt’s own account of the meeting that he failed to identify the factual content of most of the allegations in a way which would permit Mr Keenan to give an informed response. Mr Macourt’s evidence was to the effect that he described the allegations in very general terms similar to the way in which I have set them out above. He then went through each allegation, but did so by asking open questions about them rather than putting the substance of the allegation. For example, regarding allegation 3 Mr Macourt asked “do you remember anything regarding an incident where you saw Kevin Badger talking to Gabrielle Cosser?” In relation to allegation 4 Mr Macourt asked “did you at any point call Gabby any names that resulted in her crying?”, and in relation to allegation 6 Mr Macourt asked “Do you remember any other interactions with Jess that made her feel uncomfortable?” Allegation 5 was misrepresented, since Mr Macourt first asked whether Mr Keenan had described certain managers in offensive terms to Ms Stokes, and then simply asked “Do you remember any other interactions with Jess that made her feel uncomfortable?” Concerning what turned out to be the critical allegations, namely allegations 2 and 7, Mr Macourt simply asked “Regarding allegation 2, do you remember the conversation with Tara Kennedy where you asked for her number?” and “Did you kiss Rachel O’Reilly?” Notwithstanding the way in which the allegations were made, Mr Keenan provided answers which effectively confirmed allegations 1, 4 and 7.

[60] During this meeting, Mr Keenan and Mr Noack proposed a number of measures as alternatives to dismissal, including:

• a written warning;



• a written apology;



• counselling;



• demotion from Team Leader (although without loss of pay);



• a ban from attendance at any future Company-organised functions; and



• monitoring of progress and observance of behaviour.

[61] At the conclusion of the meeting Mr Macourt said that the company would need some time to consider the issues and the parties agreed that if the decision had not been made by the next day, it would be communicated to Mr Keenan on 20 January 2015 after he and Mr Noack returned from leave.

[62] On the afternoon of either 17 or 18 December 2014 (there was some inconsistency in the evidence about this) Mr Macourt, Ms Ng, Mr Denmeade and Mr Badger met to discuss the allegations. The decision was made to terminate Mr Keenan’s employment with LBAJV. Mr Macourt said that in making this decision, the following matters were taken into account:

• the “findings” in Ms Ng’s report that Mr Keenan had sexually harassed Ms Kennedy and Ms O’Reilly;



• the seriousness and impact of the behaviour towards Ms Kennedy and Ms O’Reilly;



• LBAJV’s stated values and behaviours, including its Code of Conduct and its Equal Employment Opportunity, Discrimination, Bullying and Harassment policy;



• that Mr Keenan knew or should have known that his conduct was in breach of the Code of Conduct and the identified policy;



• Mr Keenan’s responses at the meetings on 16 and 18 December 2014;



• the disciplinary outcomes proposed by Mr Keenan and Mr Noack;



• Mr Keenan’s employment history with both LBAJV and RMS;



• the lack of any alternative locations to which Mr Keenan could be sent to ensure that he would have no interaction with Ms Kennedy or Ms O’Reilly; and



• the fact that the demotion proposed was without loss of pay.

[63] It was decided not to inform Mr Keenan of his dismissal immediately so as not to spoil his Christmas holiday. It was eventually communicated to Mr Keenan at a meeting on 20 January 2015, after he had returned from his holiday. He was handed the letter of termination (bearing the previous day’s date) at this meeting. Only allegations 2 and 7 were relied upon to justify the dismissal. Mr Macourt said that this was because allegations 1 and 8 were not considered substantial enough to warrant dismissal, and the other allegations could not be corroborated.

[64] Mr Noack, who was present at the 20 January 2015 meeting, strongly protested the decision to dismiss Mr Keenan. In doing so, he contended that the decision was inconsistent with the treatment of members of senior management involved in “much worse incidents”. He gave as an example of this that Mr Denmeade, who was the LBAJV Maintenance Superintendent, had said to a female apprentice in late 2014: “Let’s put our cocks on the table and see who’s got the biggest”. Mr Macourt responded by saying that this matter had been dealt with. Mr Noack requested that the decision be reviewed, and proposed that Mr Keenan be moved to an alternative position at Dead Man’s Creek and lose his Team Leader’s position (without loss of pay). Mr Macourt undertook to consider this and get back to Mr Noack within 24 hours. Mr Macourt subsequently contacted Mr Noack in accordance with this undertaking, and said the decision to dismiss would stand.

Events since the dismissal

[65] Mr Keenan has been unable to obtain alternative employment since his dismissal, although it appears he has only attempted to obtain temporary or casual employment to last him until his unfair dismissal case is determined.

[66] Ms Kennedy no longer works at the LBAJV depot; she has transferred to a Leightons construction project, and it is unlikely that she will return to employment with LBAJV in the foreseeable future. Ms Cosser, as earlier stated, has left her employment with LBAJV and has moved out of the country. Ms O’Reilly is currently rostered to work night shifts, but may be transferred to day shifts in the near future.

Incident involving Mr Denmeade

[67] The incident involving Mr Denmeade to which Mr Noack referred at the 20 January 2015 meeting was the subject of evidence in this matter. It became of significance because Mr Keenan contended that in deciding to dismiss him, LBAJV treated him unequally and unjustly having regard to its response to this incident. Mr Denmeade was LBAJV’s Maintenance Superintendent and was a participant in the decision to dismiss Mr Keenan.

[68] Mr Noack gave evidence that he had been approached by a female temporary trades employee (not an apprentice, as he had stated at the 20 January 2015 meeting) named Sandy, who had told him about the incident (in the terms conveyed by Mr Noack at the 20 January 2015 meeting). She told him she was upset about the incident, but did not want to complain because she was hoping to be made a full time employee and did not want to affect that.

[69] In reply to this, Mr Denmeade in his evidence gave his own description of what occurred. He said that in about November 2014 he conducted a series of meetings with the maintenance team regarding a management decision to reduce the number of rostered days off for electricians and electrical supervisors from two to one per month. He said that at one of these meetings Sandy had become agitated by the decision and the following exchange between her and Mr Denmeade took place:

[70] According to Mr Denmeade, he realised he had said something inappropriate and asked Sandy to stay back after the meeting. He said that they resolved the issue with mutual apologies, and self-reported what had happened to Mr Macourt.

[71] Mr Macourt’s evidence was that after Mr Denmeade had reported the matter to him, he spoke to Sandy. He said that Sandy had acknowledged her involvement in the incident “and the extent to which her own conduct had contributed to Mr Denmeade’s response”, that she did not feel threatened, harassed or intimidated, was comfortable with Mr Denmeade’s response and did not want the matter to be taken any further. Mr Macourt said that he then counselled Mr Denmeade about his use of inappropriate language.

[72] Sandy was not called to give evidence about the matter by either party. I am not prepared to make findings about her conduct at the meeting, or her subsequent conversations with Mr Denmeade or Mr Macourt, in the absence of her having had an opportunity to respond. The critical fact which has clearly been established by the evidence is that Mr Denmeade said to Sandy, in front of a meeting of employees at the workplace: “Do you want us to get our cocks out and measure them too?” I accept the substance of Mr Noack’s evidence that Sandy told him she had been upset by the incident but did not feel herself in a position to complain about it. That puts in considerable doubt whether anything she told Mr Macourt concerning the incident represented her true feelings about it.

Whether Mr Keenan was unfairly dismissed

[73] Section 387 of the FW Act requires the Commission, in considering whether a dismissal was harsh, unjust or unreasonable, to take into account a number of matters specified in paragraphs (a) to (h) of the section. I will deal with each of these matters in relation to Mr Keenan’s application in turn below.

Paragraph 387(a)

[74] Although LBAJV relied on only two of the eight allegations identified in Ms Ng’s report (that is, allegations 2 and 7 of those set out in paragraph [58] above), at the determinative conference in this matter it sought to rely upon all eight allegations. It was entitled to take this approach. In MM Cables v Zammit 1 a Full Bench of the Australian Industrial Relations Commission said, in relation to s.170CG(3)(a) of the Workplace Relations Act 1996 (the equivalent of the current s.387(a)) that “the Commission is obliged to consider whether there was a valid reason for the termination - that inquiry is not limited to the reason given by the employer for the termination”. However LBAJV properly acknowledged that, in light of Mr Macourt’s evidence that allegations 1 and 8 were not considered sufficiently serious to warrant dismissal, it could not rely upon those allegations as constituting by themselves a valid reason for dismissal.

[75] Based on the findings of fact I have earlier made, I am satisfied that the factual basis of each allegation has been established on the evidence before me. The question is therefore whether the conduct of Mr Keenan which I have found to have occurred constituted a valid reason or reasons for his dismissal.

[76] In my consideration of that question, it is necessary to deal at the outset with a significant submission made on behalf of Mr Keenan, namely that the conduct which occurred after the end of LBAJV’s Christmas function at about 10.00pm at the upstairs public bar and out in the street (that is, allegations 4, 6, 7 and 8 and possibly allegation 3) was outside the scope of Mr Keenan’s employment, was properly characterised as private activity, and therefore could not constitute a valid reason for dismissal.

[77] In a factual sense this submission is well-founded. The time boundaries of the Christmas function were, in the notice to employees, identified as 6.00pm to 10.00pm. It can be inferred from the evidence that the physical boundary of the function was the venue booked for it, being the Endeavour Room. Employees were informed in advance that, in substance, LBAJV’s standards of conduct would apply at the function, but there was no suggestion of any expectation that those standards would apply to behaviour outside the temporal and physical boundaries of the function. The period spent by employees in the upstairs bar and out in the street after 10.00pm was outside of the workplace and outside of working time, however broadly construed the concepts may be.

[78] The circumstances in which “out of hours” misconduct may constitute a valid reason for dismissal was classically stated in Rose v Telstra Corporation Limited 2 as follows:

“It is clear that in certain circumstances an employee's employment may be validly terminated because of out of hours conduct. But such circumstances are limited,:

• the conduct must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employer and employee; or



• the conduct damages the employer's interests; or



• the conduct is incompatible with the employee's duty as an employee.

In essence the conduct complained of must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee.

Absent such considerations an employer has no right to control or regulate an employee's out of hours conduct.”

[79] Rose involved a fight between the dismissed employee and another employee. The dismissed employee was on a work trip to a country town, but was off-duty at the time the fight occurred. There was no evidence that the reputation of the employer had been tarnished by what occurred. It was not accepted that the dismissed employee’s conduct, objectively viewed, was such as to be likely to cause serious damage to his relationship with his employer. The Commission held in Rose that the dismissed employee’s conduct did not fall within the limited circumstances in which an employee may validly be terminated because of conduct outside of work.

[80] LBAJV argued that the circumstances identified in Rose in which out of work conduct may constitute a valid reason for termination were present here because Mr Keenan’s conduct towards Ms O’Reilly constituted sexual harassment as defined in s.28A of the Sex Discrimination Act 1984 (Cth) (SD Act) for which LBAJV would be vicariously liable under s.106 of the SD Act. Employee conduct for which the employer could be vicariously liable, LBAJV submitted, was conduct which legitimately fell within the scope of employer supervision and could constitute a valid reason for dismissal because it had a significant potential to damage the employer’s interests.

[81] It may be accepted that where an employer is vicariously liable for the conduct of an employee outside of working hours, that creates a sufficiently significant connection between the conduct and the employment such as to bring the conduct within the scope of legitimate employer supervision. The question here is therefore whether Mr Keenan’s conduct at the upstairs bar - particularly in relation to Ms O’Reilly - constituted unlawful sexual harassment for which LBAJV was vicariously liable. That requires an analysis of the relevant provisions of the SD Act.

[82] Section 28A of the SD Act provides as follows:

28A Meaning of sexual harassment

(1)  For the purposes of this Division, a person sexually harasses another person (the person harassed ) if:

(a)  the person makes an unwelcome sexual advance, or an unwelcome request for sexual favours, to the person harassed; or

(b)  engages in other unwelcome conduct of a sexual nature in relation to the person harassed;

in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated the possibility that the person harassed would be offended, humiliated or intimidated.

(1A)  For the purposes of subsection (1), the circumstances to be taken into account include, but are not limited to, the following:

(a)  the sex, age, sexual orientation, gender identity, intersex status, marital or relationship status, religious belief, race, colour, or national or ethnic origin, of the person harassed;

(b)  the relationship between the person harassed and the person who made the advance or request or who engaged in the conduct;

(c)  any disability of the person harassed;

(d)  any other relevant circumstance.

(2)  In this section:

"conduct of a sexual nature" includes making a statement of a sexual nature to a person, or in the presence of a person, whether the statement is made orally or in writing.

[83] I consider that it is abundantly clear that Mr Keenan’s conduct in kissing Ms O’Reilly would fall within the s.28A definition of sexual harassment. It was “unwelcome conduct of a sexual nature”, the sexual element being constituted by the physical act of kissing. 3 A reasonable person would, having regard to the circumstances (most relevantly, that Ms O’Reilly did nothing whatsoever to invite Mr Keenan’s conduct) anticipate the possibility that Ms O’Reilly would be offended and humiliated by Mr Keenan’s conduct. Section 28A does not require a sexual intent on the part of the person perpetrating the harassment, making it unnecessary to determine what Mr Keenan’s thinking was in kissing Ms O’Reilly.4 Accordingly that element of LBAJV’s argument is established.

[84] Section 28B(2) relevantly provides that “It is unlawful for an employee to sexually harass a fellow employee ...”. The submission of LBAJV appeared to assume that it was sufficient for this provision to be applicable that Mr Keenan and Ms O’Reilly shared the same employer, regardless of the circumstances in which the harassment occurred. I do not consider this assumption to be correct. In Leslie v Graham 5 the Federal Court (Branson J) considered whether sexual harassment which occurred in the early hours of the morning in an apartment that the complainant and another employee were sharing whilst attending a work-related conference was unlawful under s.28B(2). Her Honour said:

“[71] I therefore conclude that in the early hours of Saturday, 16 November 1996 Mr Lincoln Graham sexually harassed Ms Leslie within the meaning of s 28A of the Act. His conduct was unlawful by reason of subs 28B(2) of the Act if it constituted sexual harassment of one employee by a fellow employee. Although Ms Leslie and Mr Lincoln Graham were away from their normal workplace at the time of the Mollymook incident, I am nonetheless satisfied that the incident constituted the sexual harassment of one employee by a fellow employee. At the time of the Mollymook incident the relationship of Ms Leslie and Mr Lincoln Graham as fellow employees was a continuing relationship. They were sharing an apartment at Mollymook in the course of their common employment; it was the accommodation provided to them by Roger Graham & Associates for the purpose of their attending the Bus & Coach Association's Regional Conference. It could not, in my view, be suggested that their common employment was unrelated, or merely incidental, to the Mollymook incident (see Smith v The Christchurch Press Co Ltd [2000] NZCA 341; [2001] 1 NZLR 407). I conclude that Mr Lincoln Graham's conduct was rendered unlawful by subs 28B(2) of the Act.”

[85] Leslie v Graham, including the above passage, was referred to with approval in the Federal Court Full Court decision in South Pacific Resort Hotels Pty Ltd v Trainor 6. It may be concluded from this passage that it is not sufficient for s.28B(2) to apply, where the harassment occurs outside of working hours and outside of the workplace, that the relevant persons share a common employment where this is unrelated to or merely incidental to the circumstances of the event. Some connection between the circumstances of the harassment and the employment is required.

[86] In A v K Ltd & Z 7, the view was expressed in relation to s.86(2)(a) of the Equal Opportunity Act 1995 (Vic), which provides that an employee must not sexually harass another person employed by his or her employer, that “the conduct complained of must not merely be between two people who happen to have a common employer but must be in the capacity of employee” and that “[t]he harassment must take place within the scope of the common employment rather than in circumstances where common employment is a mere incidental factor”.8 In that case, a claim that unlawful sexual harassment occurred during an out-of-hours social function was struck out as misconceived on the basis that the relevant persons were not acting as employees at the relevant time.9 The approach taken in A v K Ltd & Z is arguably a narrower approach than in Leslie, but confirms that the mere fact of there being a common employer is not sufficient to render the relevant conduct unlawful.

[87] I will proceed on the basis of the analysis in Leslie, namely that the act of sexual harassment must occur in circumstances which have some connection with the common employment in order for the persons involved to be treated as “fellow employees” for the purpose of s.28B(2). I will return to this issue shortly.

[88] Section 106, which deals with vicarious liability, provides as follows:

106 Vicarious liability etc.

(1)  Subject to subsection (2), where an employee or agent of a person does, in connection with the employment of the employee or with the duties of the agent as an agent:

(a)  an act that would, if it were done by the person, be unlawful under Division 1 or 2 of Part II (whether or not the act done by the employee or agent is unlawful under Division 1 or 2 of Part II); or

(b)  an act that is unlawful under Division 3 of Part II;

this Act applies in relation to that person as if that person had also done the act.

(2)  Subsection (1) does not apply in relation to an act of a kind referred to in paragraph (1)(a) or (b) done by an employee or agent of a person if it is established that the person took all reasonable steps to prevent the employee or agent from doing acts of the kind referred to in that paragraph.

[89] The sexual harassment provisions of the SD Act are contained in Division 3 of Part II; accordingly for relevant purposes vicarious liability in respect of an unlawful act of sexual harassment by an employee against a fellow employee will arise if it is done “in connection with the employment of the employee” (subject to subsection (2)).

[90] On the basis of the above analysis, the questions of whether Mr Keenan engaged in unlawful sexual harassment of Ms O’Reilly and, if so, whether LBAJV was vicariously liable for that conduct are to be answered by reference to whether there is a connection with Mr Keenan’s employment.

[91] It is reasonably clear that if the criterion was whether the conduct occurred in the course of the employment of the employee, then it would not be satisfied here. In the context of an issue concerning workers’ compensation liability where the relevant test for liability was whether the injury occurred in the course of employment, the High Court in Comcare v PVYW 10 held that where an injury occurred outside of work as a result of attendance at a particular place or engagement in a particular activity, the injury would only be in the course of employment if the employee attended the place or engaged in the activity because of encouragement or inducement by the employer.11 There was no evidence in this case that Mr Keenan was induced or encouraged by LBAJV to attend the upstairs bar after the Christmas function had ended.

[92] However, the criterion of “in connection with the employment of the employee” is a different one. In South Pacific Resort Hotels Pty Ltd v Trainor 12, a Federal Court Full Court decision, Black CJ and Tamberlin J said in relation to s.106 of the SD Act:

“[42] We would add that the expression chosen by the Parliament to impose vicarious liability for sexual harassment would seem, on its face, to be somewhat wider than the familiar expression ‘in the course of’ used with reference to employment in cases about vicarious liability at common law or in the distinctive context of workers compensation statutes. Nevertheless cases decided in these other fields can have, at best, only limited value in the quite different context of the SDA.”

[93] No clear test as to what is sufficient to establish the necessary connection has been enunciated. In South Pacific Resort Black CJ and Tamberlin J said that the expression “in connection with” in its context in s.106(1) was a “broad one of practical application” 13 and that “each case is likely to turn very much on its own facts, but within a framework of consistent principle developed over time by the cases”.14 However it must be said that in the few cases decided on this issue to date, it is difficult to discern as yet any such framework of consistent principle. Kiefel J, who agreed with Black CJ and Tamberlin J but added some observations concerning s.10615, did formulate a test in the following way:

“[70] In my view no narrow approach to the operation of s 106(1) is warranted. It is consonant with its purpose to read the words ‘in connection with the employment of the employee’ as requiring that the unlawful acts in question be in some way related to or associated with the employment. Once this is established it is for the employer to show that all reasonable steps were taken to prevent the conduct occurring, if they are to escape liability under s 106(2). In this way the aim of the SDA, to eliminate sexual harassment in the workplace, might be achieved.”

[94] However her Honour went on to say: “Each case will turn on its facts and it may be that it is difficult to draw the line in some cases”. 16

[95] The facts in South Pacific Resort were not dissimilar to those in Leslie. The sexual harassment occurred on two occasions at night in staff accommodation provided by the employer for the purpose of employment in a hotel on Norfolk Island. The staff accommodation was actually part of the employer’s hotel complex, so that the sexual harassment occurred on the employer’s premises. The employer exercised a considerable degree of control over the accommodation and staff behaviour within that accommodation, including by way of policy requirements included in its staff handbook. In their judgment Black CJ and Tamberlin J said:

“[39] As in Leslie v Graham, the conduct here occurred in accommodation occupied (albeit in separate rooms) by the complainant and her fellow employee because of, and for the purposes of, their common employment. The accommodation provided for the weekend conference in Leslie v Graham equates with the accommodation provided for employees who might need it whilst working on a remote island. As in Leslie v Graham, it could not be said here that the common employment was unrelated or merely incidental to the sexual harassment of one by the other.

[40] In the present case the connection between the employment and the acts in question was even closer since the prohibition on staff having visitors in the staff accommodation meant that, absent any special arrangements by the employer, only staff were permitted there. It was only by virtue of their being staff that Mr Anderson and Ms Trainor were in the Staffies premises where the acts of sexual harassment occurred.”

[96] In Kiefel J’s additional observations concerning s.106, her Honour said that it would “seem logical to say” that out of work conduct which could be seen to adversely affect the working environment would be sufficient to establish the necessary connection. However this statement does not appear to form part of the ratio decidendi of the Full Court’s decision. The facts recited in the decision do not appear to refer to any such adverse effect, actual or potential. It does not reflect the approach taken by the other members of the Court. The statement is best regarded as obiter for the purposes of s.106, although it is relevant in another connection to which I shall return.

[97] The connection between the events in the upstairs bar and the employment was said (by Mr Macourt in his evidence) to be that the employees including Mr Keenan and Ms O’Reilly would not have been there if it were not for the prior occurrence of LBAJV’s Christmas function. As a factual proposition that is undoubtedly correct. However, that approach involves the application of a “but for” test to establish the connection with the employment - that is, any event which but for the employment would not have happened is said to be connected to the employment. I do not consider that to be the correct approach. It would mean, in the context of the events of the evening of 12 December 2014, that any sexually harassing conduct between employees following the end of the Christmas function, including conduct in the upstairs bar, out on the taxi stand, at the Rocksia and on the trip home would be connected with the employment and would therefore be conduct for which LBAJV was potentially liable under s.106. That casts the net too widely over conduct occurring in a private social setting. In this connection I find persuasive the following analysis in the New Zealand Court of Appeal decision of Smith v Christchurch Press Company Ltd 17 (underlining added):

“[17] It was not argued that the appellant’s conduct, if it was sufficiently related to his employment, did not amount to serious misconduct justifying dismissal... The argument for the employee was directed to the link between the conduct and the employment necessary to trigger the right of dismissal. As already mentioned, the Judge adopted the test of “but for” the employment relationship, conduct would not have occurred though she had qualified this by reference to “in the employment setting”. She used this to ascertain whether the appellant was acting “in the course of his employment”. Her conclusion was that the fact that the incident took place away from the work premises during the lunch time “does not remove the nexus between employment and the sexual harassment”.

[18] The “but for” test is not unfamiliar, though in other fields it no longer is accepted as a sufficient test of causation giving rise to legal liability. It was applied in the High Court in a case of sexual harassment in employment under the Human Rights Commission Act 1977 in Ellis v Proceedings Commissioner [1997] 1 ERNZ 325, 329. The test was adopted in that case from earlier employment cases, though again it seems to have been complemented with a finding that the conduct “arose out of the employer – employee relationship”. Those earlier employment cases are NZ Labourers, etc IUOW v Fletcher Challenge Ltd (1989) 3 NZILR 129, 197 and Z v A [1993] 2 ERNZ 469, 483. The “but for” test for causative link in those cases appears to be traced back to McMahon v Post & Telegraph Department [1958] NZLR 717, 718, but matters have moved on somewhat since then: see Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664, 681; Price Waterhouse v Kwan [1999] NZCA 311; [2000] 3 NZLR 39, 46.

[19] Without more the “but for” test could not provide a test for all circumstances. As Mr Couch pointed out, at the extreme it could extend to all conduct, whenever occurring, involving persons who first met in an employment situation. Plainly that would permit employers to intrude too far into the private lives of employees.”

[98] Whilst the above analysis concerned whether particular conduct occurred in the course of employment, I consider it equally applicable to the question, in the context of ss.28B and 106 of the SD Act, whether conduct occurred in connection with the employment. In particular, the underlined part of the above passage would apply with equal force so that any sexually harassing conduct by one person against another, where both persons have the same employer and first met as a result of their common employment, could be said to be in connection with that employment regardless of the contextual circumstances. That is an approach I reject. It was certainly not the approach taken in South Pacific Resort or Leslie.

[99] LBAJV pointed to the Federal Magistrates Court decision in Lee v Smith & Ors 18 as supporting its position that sexual harassment occurring in a purely private setting could nonetheless be connected with employment. In that case there were a range of instances of sexual harassment, some of which occurred in the workplace but the most serious of which occurred out of work. The relevant facts were that the female applicant employee was invited by a fellow female employee to attend after work dinner and drinks at her home with the female employee’s male partner (also a fellow employee) and a second male employee. During the course of the evening the applicant became intoxicated and passed out. When she awoke, she was being raped by the second male employee. The Court held that the employer of the applicant and the second male employee was vicariously liable for this conduct under s.106 of the SD Act. The Court’s reasoning with respect to the connection with employment required by s.106(1) was as follows:

“[206] In determining the issue of the application of s 106(1) of the Sex Discrimination Act 1984 (Cth) to the incident of rape, I am satisfied that particular regard should be given to the factors I have previously indicated - that the rape was the culmination of the earlier incidents of sexual harassment directly in the workplace. Consequently I accept the submissions of the Applicant’s counsel that the First Respondent’s conduct was an extension or continuation of his pattern of behaviour that had started and continued to develop in the workplace he shared with the Applicant. The nexus with the workplace was not broken.”

[100] It is difficult, with respect, to accept this reasoning. The fact that the perpetrator in this case had engaged in earlier unreported acts of sexual harassment in the workplace did not, in my view, create a logical connection between his employment and the criminal act of rape committed at private residential premises outside of working hours. The conclusion reached appears, in substance, to be the result of the application of the “but for” approach earlier discussed. I do not consider that Lee provides guidance for the correct outcome which should pertain in this case. In any event, the connection found to exist in Lee, namely that the relevant act of sexual harassment was a continuation of earlier acts of sexual harassment in the workplace, is not a connection which exists here. Mr Keenan has not engaged in sexual harassment at the workplace. Nor, as will be discussed later, did he engage in sexual harassment at the Christmas function.

[101] I do not consider that conduct which occurred at the upstairs bar can be said to be in connection with Mr Keenan’s employment. The social interaction which occurred there was not in any sense organised, authorised, proposed or induced by LBAJV. Those who gathered there did so entirely of their own volition. It was in a public place. There was nothing in LBAJV’s Code of Conduct or relevant policies which suggested that they had any application to social activities of this nature. Mr Macourt gave evidence that he expected that LBAJV’s standards of behaviour would apply until all employees were safely home that night, but there was no evidence that any such expectation was communicated to employees or that employees generally had any understanding that this expectation existed. Mr Keenan’s conduct in the upstairs bar was merely incidental to his employment.

[102] It follows from that conclusion that Mr Keenan’s sexually harassing behaviour towards Ms O’Reilly was not rendered unlawful by s.28B of the SD Act, and it was not conduct for which LBAJV was vicariously liable. It cannot for that reason constitute a valid reason for dismissal, even though that conduct, as I have found, fell within the statutory definition of sexual harassment. 19 The same conclusion applies to Mr Keenan’s conduct towards Ms Kearns at the taxi stand.

[103] Leaving aside the application of the SD Act, I do not consider that what occurred at the upstairs bar constituted conduct within the scope of Mr Keenan’s employment which could legitimately constitute a valid reason for dismissal in accordance with the principles stated in Rose v Telstra. My reasons for this conclusion are similar to those stated in respect of the SD Act. Because it was conduct which occurred in essentially a private social setting, albeit involving persons sharing a common employer who had just attended an official Christmas function, it was not conduct which could be regarded as indicative of a rejection or repudiation of Mr Keenan’s employment contract.

[104] Private conduct by one person towards a second person with the same employer may damage the employer’s interests (and thus meet the Rose v Telstra criteria) if the capacity of the second person to perform his or her duties for the employer is affected by that conduct. An example of this is the Federal Court decision (Finn J) in McManus v Scott-Charlton 20. That matter concerned the question of whether a direction to an employee to cease private sexually harassing behaviour towards a co-employee was lawful. The Court determined that the SD Act could not provide a lawful basis in respect of private sexual harassment, but went on to say that the direction would be lawful where “the harassment has had and continues to have substantial and adverse effects on workplace relations, workplace performance and/or the ‘efficient equitable and proper conduct’... of the employer’s business because of the proximity of the harasser and the harassed person in the workplace”.21 In that case, the necessary substantial and adverse effects were identifiable in the evidence in that affected employees were “emotionally disturbed” by the harassers actions to the extent that they were using work time to discuss their concerns with other more senior employees and were paying reduced attention to their duties to the detriment of their work “because their concern about the [harasser] was playing on their minds”.

[105] McManus v Scott-Charlton did not involve a dismissal, and it may be that the demonstrated adverse effect on work performance would have to be of greater significance in order to provide a valid reason for dismissal. In any event, the evidence did not demonstrate actual adverse workplace effects of the type identified in McManus v Scott-Charlton in respect of the conduct on the part of Mr Keenan which occurred after the end of the Christmas function. Nor was there evidence of potential effects (noting that Mr Keenan was stood down with pay on 16 December 2014 and did not return to work prior to his dismissal). Ms O’Reilly gave evidence that initially she did not want to make a complaint about the kissing incident because she was concerned that it might jeopardise her relationship with the road crews, but that by the Monday following the Christmas function, she realised that Mr Keenan’s conduct would have longer term consequences because “Eventually I was going to be rotated back to day shift and at that point I would have been hugely uncomfortable having to see [Mr Keenan] again without having addressed his behaviours”. I accept her evidence in that respect, and I consider that it reflects an understandable and reasonable reaction to what occurred. That evidence does not suggest that her subsequent work performance was affected at any stage or would have been had Mr Keenan remained employed. Because she was working night shifts at that time she did not, as an OCC Controller, have any work contact with Mr Keenan. Her anticipation of discomfort at having to have dealings with him if she was rotated back to day shift was conditioned by the proposition that he may not have “addressed his behaviours”. Given that Mr Keenan had indicated a preparedness to apologise for his behaviour, and there was no evidence that he had engaged in behaviour of that type before when at work and unaffected by alcohol, I think it is reasonable to assume that there would have been no repetition of his behaviour had he not been dismissed that would have been such as to cause real concern on the part of Ms O’Reilly. I further note that, as at the time of the hearing, Ms O’Reilly had not yet been rotated back to day shift, although she had relieved on day shift from time to time.

[106] Ms Cosser was, as I have earlier found, distressed on the night of the Christmas function because of what Mr Keenan said to her at the upstairs bar, but there was no evidence of any continuing effect on her at the workplace and in any case she left her employment at LBAJV shortly afterwards for unrelated reasons. Ms Stokes did not give any evidence to the effect that Mr Keenan’s behaviour towards her at the upstairs bar had any relevant workplace effect upon her, and in any case her work contact with Mr Keenan was extremely minimal. Ms Kearns’ evidence was that she was not concerned by what Mr Keenan said to her out on the street.

[107] LBAJV made reference to the Australian Industrial Relations Commission (AIRC) Full Bench majority decision in Telstra Corporation Limited v Streeter. 22 That case concerned conduct at a hotel room which some employees had booked to stay in overnight after a Christmas party organised by employees themselves but partially funded by the employer. The hotel room was paid for by the employees who booked it. Ms Streeter, who was not one of the employees who booked the room, engaged in “rowdy behaviour” with other employees during the night, well after the Christmas party had ended, including engaging in sexual relations with at least one other employee. This upset some of the employees who had booked the room and wanted to sleep. They were distressed at work the following day, and complaints were made to the employer. Ms Streeter ended up being dismissed.

[108] The dismissal was on two bases: that Ms Streeter’s conduct constituted sexual harassment for which her employer was vicariously liable under the SD Act, and that she had lied about her conduct (including about the sexual activity she had engaged in) when interviewed by her employer. In the first instance decision 23, the Commission (Hamberger SDP) found that Ms Streeter’s conduct either did not constitute sexual harassment or, alternatively, was sexual harassment of the most indirect kind. As to the lying, the Commission found that although Ms Streeter had lied, it was lying about conduct that was “of an inherently personal nature” and occurred well away from the workplace in a hotel room booked and paid for privately, and therefore did not constitute a valid reason for dismissal. Ms Streeter was reinstated.

[109] This decision was overturned on appeal. However, there was no finding of error by the majority in respect of the sexual harassment conclusion, nor did the majority suggest that any of the conduct on Ms Streeter’s part itself constituted a valid reason for dismissal. The error was found in respect of the conclusion that Ms Streeter’s lying about what occurred in the course of her employer’s investigation of the incident did not constitute a valid reason for dismissal. The majority found that the employer was entitled to conduct its investigation and ask the questions it did because of the distressing effect her conduct had on other employees when they turned up for work the following day, which meant that the conduct had caused “difficulties at her work”. The lack of honesty on the part of Ms Streeter meant that her employer could not trust her to be honest in the future, and there was a breakdown in the necessary relationship of trust and confidence. In re-hearing the matter, the majority found that her dismissal was not unfair.

[110] I must say, with respect, that I strongly disagree with the conclusion of the majority in Streeter. I do not accept the validity of the proposition that an employer has a right to ask questions of an employee about private consensual sexual activity and to expect any answers, let alone truthful ones. The further proposition that a failure to answer such questions honestly can lead to a breakdown in the relationship of trust and confidence and constitute a valid reason for dismissal is equally unacceptable. There is no support for either proposition in any of the relevant authorities. An employer does not have the legal right to intrude so far into the private lives of employees.

[111] Be that as it may, Streeter provides no support for LBAJV’s case here in any event. As stated, there was no finding in Streeter that the conduct involved in that case (the surrounding circumstances of which are reasonably analogous to the facts here) was within the scope of the employment or could itself constitute a valid reason for dismissal. Mr Keenan was not dismissed for lying, and LBAJV did not run its case on the basis that any lying by him in the course of its investigation could constitute a valid reason for dismissal. In the course of closing submissions, LBAJV faintly suggested for the first time that because Mr Keenan had lied about the incident with Ms O’Reilly when interviewed (in that he said he kissed her on the cheek), that constituted a valid reason for the dismissal in line with Streeter. Flexible as the Commission’s procedures are, it does not permit new valid reasons for dismissal to be formulated in the course of closing submissions. In any event, I do not accept that this would constitute a valid reason for dismissal, because there was no evidence from Mr Macourt or any other LBAJV manager that this untruthful answer had led to a loss of trust and confidence in Mr Keenan.

[112] Accordingly, for the reasons stated, I conclude that none of Mr Keenan’s conduct in the upstairs bar or out on the street constituted a valid reason for his dismissal.

[113] That leaves for consideration Mr Keenan’s conduct at the Christmas function itself. Mr Keenan did not contest the proposition that what occurred at the Christmas function could be the subject of legitimate employer supervision by LBAJV. This implicit concession was properly made. The function was an official one which was organised and paid for by LBAJV, and, critically, LBAJV made it clear that compliance with its standards of behaviour was expected on the part of those who attended. Allegations 1, 2 and 5 (and possibly 3) arise for consideration in that context.

[114] Allegation 1 may be disposed of shortly. As earlier stated, Mr Macourt did not regard it as serious enough to justify dismissal. Although the evidence makes it clear that Mr Keenan said to Mr Boggan “Fuck off mate”, there is no evidence that Mr Boggan took offence at this or even remembered it. It only came to the attention of others because Mr Keenan, in his intoxicated state, insisted on telling other people at the function that he had said this. This was not a valid reason for dismissal.

[115] Allegation 2 involved the incident with Ms Kennedy. LBAJV contended in its letter of dismissal and its case at the determinative conference that this constituted sexual harassment. I do not agree that it constituted sexual harassment either under the SD Act or for the purposes of LBAJV’s relevant policy. Although Mr Keenan’s conduct towards Ms Kennedy was undoubtedly unwelcome, and it is arguable that a reasonable person might in all the circumstances have reasonably anticipated the possibility that Ms Kennedy would be offended, humiliated or intimidated, I do not consider that it had the requisite sexual nature. There was no express sexual advance or proposition. Nothing Mr Keenan said to Ms Kennedy involved the use of sexual language or sexual innuendo, and there was no express or implicit reference to sexual activity. There was no expression of love or physical attraction. What he proposed, in terms, was that they should meet together with their respective children to go horse riding or ice skating, and he communicated (indirectly) a desire to have her phone number for that purpose. That may have been an expression of a desire for a future relationship of some description - perhaps a romantic relationship - but it cannot be interpreted as necessarily involving a sexual element. Mr Keenan sat next to her and spoke closely to her face, but I consider that to be the result of the fact that because he was intoxicated and having to speak over the background music he was finding it difficult to make himself understood.

[116] Ms Kennedy’s evidence did not suggest that she discerned and was upset by any sexual element in what Mr Keenan said to her. Her distress, as I understand her evidence, was caused by the fact that she perceived Mr Keenan to be behaving aggressively, felt intimidated by him (because of his alcohol consumption), and was upset by his persistence in asking her questions which intruded into her personal affairs.

[117] It was not contended by LBAJV that Mr Keenan’s conduct constituted harassment (that is, non-sexual harassment) in breach of its harassment policy. That is understandable, since it was a necessary element of harassment as defined in that policy (earlier quoted) that the victim of the harassment be targeted on the basis of an attribute group. There was no suggestion, and no basis to suggest, that Ms Kennedy was targeted by Mr Keenan because she belonged to an attribute group.

[118] There was a general submission by LBAJV that Mr Keenan’s conduct “created a serious and imminent risk to the safety and welfare of himself and other employees in the workplace”. This submission was not elaborated upon, and it is unclear to me what the posited risk was. There was no suggestion that, drunk as he was, Mr Keenan exhibited any actual inclination towards violence (notwithstanding a number of aggressive comments he made on other occasions during the course of the night). The submission is rejected.

[119] Accordingly I conclude that Mr Keenan’s conduct towards Ms Kennedy, unpleasant although it undoubtedly was, did not constitute a valid reason for his dismissal. What occurred is best characterised as a boorish attempt by a drunk to lay the foundation for a future relationship with a woman whom he hardly knew. Ms Kennedy, obviously not wanting to offend him or aggravate the unpleasantness of the situation, did not put him straight and answered his questions. His oafish intrusion into matters of personal sensitivity clearly caused her distress and effectively spoiled the night for her. But in all the circumstances it was not conduct of a sufficiently serious nature to constitute a valid reason for dismissal.

[120] To the extent that allegation 3 may have occurred at the Christmas function and not afterwards, I do not consider that it was a valid reason for dismissal. Asking Ms Cosser “why the fuck are you talking to Kevin?” was simply not sufficiently serious in all the circumstances to justify dismissal.

[121] That leaves allegation 5. Mr Keenan’s conduct towards Ms Stokes at the Christmas function received surprisingly little attention at the hearing, but in my view it was the most serious behaviour on the part of Mr Keenan at that function. To repeat, Mr Keenan said to Ms Stokes, in a manner that was entirely unprovoked, “What do you even do?”, and when Ms Stokes laughed in response, said “No seriously. Who the fuck are you? What do you even do here?”. I consider that to be, objectively speaking, aggressive, intimidatory and bullying behaviour on Mr Keenan’s part, particularly given that Mr Keenan was an intoxicated middle-aged male and Ms Stokes was a much younger and smaller female. The behaviour was intentional. The robustness of Ms Stokes’ response in simply turning and walking away from Mr Keenan does not diminish the seriousness of that behaviour. LBAJV’s policy against bullying did not give it a definition, but on any reasonable view Mr Keenan’s behaviour did constitute bullying (noting that we are not here concerned with the special legislative definition of bullying in s.789FD of the FW Act).

[122] LBAJV omitted this incident as a reason for dismissal in the termination letter not because it was not serious but because, as earlier stated, it was not regarded as having been corroborated. However, as I have earlier found, I am wholly satisfied that the incident occurred as described by Ms Stokes. I consider that this constituted a valid reason for the dismissal.

Paragraphs 387(b) and (c)

[123] I have outlined the process that LBAJV followed in notifying Mr Keenan of the reasons for his dismissal and the extent of the opportunity he was given to respond to those reasons. In relation to allegation 5, which I have found to constitute the only valid reason for dismissal, I consider in accordance with my earlier finding concerning the conduct of the meeting on 18 December 2014 that the substance of this allegation was not communicated to Mr Keenan and accordingly he did not have a proper opportunity to respond.

Paragraph 387(d)

[124] The critical meeting to discuss the dismissal was that which occurred on 18 December 2014, at which Mr Keenan had a support person (Mr Noack). Even if the earlier meeting of 16 December 2014 is treated, for the purpose of s.387(d), as one which related to the dismissal, it is not the case that Mr Keenan was actually refused the right to have a support person. He was simply not told that he could have one.

Paragraph 387(e)

[125] Mr Keenan’s dismissal was on the basis of misconduct, not unsatisfactory performance, so the issue of prior warnings does not arise.

Paragraphs (f) and (g)

[126] LBAJV is a business of reasonable size, and has at least one dedicated human resources management specialist with expertise in this area. Its procedural failure to properly put all the allegations, including allegation 5, to Mr Keenan is therefore surprising.

Paragraph 387(h)

[127] There are eight additional matters which I consider relevant to whether the dismissal of Mr Keenan was harsh, unjust or unreasonable:

(1) the lack of any work consequences of the conduct;

(2) the prior work record of Mr Keenan;

(3) the isolated and aberrant nature of Mr Keenan’s conduct;

(4) the role of alcohol in Mr Keenan’s conduct;

(5) the service of alcohol at the Christmas function;

(6) the alternatives to dismissal available to LBAJV;

(7) the personal consequences of dismissal for Mr Keenan; and

(8) the differential treatment of Mr Denmeade.

[128] I will deal with each of these matters in turn.

[129] There was no evidence that Mr Keenan’s conduct towards Ms Stokes had any ongoing consequence for the workplace - in particular Ms Stokes’ capacity to perform her work. Her duties only involved very limited contact with Mr Keenan. Although Ms Stokes said she found Mr Keenan’s remarks offensive and inexplicable, she did not suggest they did or would have any effect on her ability to perform her duties. Dismissal was therefore not required in order to properly protect Ms Stokes’ position in the workforce.

[130] I have earlier set out the work record of Mr Keenan. He had a good record of continuous employment with the RTA, RMS and LBAJV during in excess of seven years of permanent employment (or over nine years of employment if the prior regular casual employment is included). The only blemish was the 2012 warning letter, but what he was actually warned about was obscure. That work record weighs in favour of a finding that Mr Keenan’s dismissal was harsh.

[131] There is no evidence that, when at work, Mr Keenan ever engaged in the type of behaviour which he engaged in at the Christmas function and afterwards which caused his dismissal. The conduct which I have found constituted a valid reason for his dismissal can fairly be characterised as isolated and aberrant in nature. That also weighs in favour of a finding that Mr Keenan’s dismissal was harsh.

[132] It is clear, I consider, that Mr Keenan’s conduct was the result of him becoming intoxicated by alcohol at the Christmas function. That is itself a mitigating factor. I do not mean to suggest by this that Mr Keenan can divest himself of responsibility for what occurred because of his state of intoxication. Mr Keenan should have exercised greater control over his consumption of alcohol in order to ensure that he was able to control his behaviour and comply with LBAJV’s policies at what was an official work function. However, it is the nature of alcohol that it tends to induce a loss of self-restraint and a sense of responsibility. The extent of this effect differs from person to person, but it obviously had a significant effect in Mr Keenan’s case.

[133] An exacerbating factor in that respect was the manner in which alcohol was served at the function. In my view, it is contradictory and self-defeating for an employer to require compliance with its usual standards of behaviour at a function but at the same time to allow the unlimited service of free alcohol at the function. If alcohol is supplied in such a manner, it becomes entirely predictable that some individuals will consume an excessive amount and behave inappropriately. It is true that LBAJV’s contract for the hire of the Endeavour Room obliged the Hotel to discharge the responsible service of alcohol requirement, but there was no evidence to suggest that LBAJV took any step to satisfy itself as to how the Hotel would go about this. It should have been obvious at the function itself that alcohol was not being served responsibly, given that from a certain point persons were able freely to help themselves to beer and that Mr Keenan at an early stage presented himself to a number of persons as intoxicated. During the Christmas function proper, Mr Keenan was never refused a drink or prevented from accessing alcohol, and no one suggested to him that he should stop or control his drinking. Indeed other employees during and after the function (including Ms O’Reilly) continued to supply him with alcohol notwithstanding his visible intoxication. This was ultimately a result of the fact that LBAJV did not place anyone with managerial authority in charge of the conduct of the function, but essentially let it run itself. I consider that the role of alcohol at the function weighs, at least in a limited way, in favour of a conclusion that the dismissal was harsh.

[134] The evidence discloses that there were substantial disciplinary alternatives available to LBAJV short of dismissal. They included those proposed by the AWU, namely removal from the position of Team Leader (which would have minimised his contact with the office staff), a written apology to the staff members concerned, a ban from future Christmas functions, a warning and monitoring of future behaviour. The AWU’s proposal did not include a reduction in pay upon removal from the position of Team Leader, but that did not mean that LBAJV could not have taken that course. Likewise the AWU did not propose that the warning be a final one, but notwithstanding that LBAJV could have issued a final warning. Taken together, those steps would have constituted a proportionate response to Mr Keenan’s conduct and would have prevented any real possibility of any repetition. That weights in favour of a conclusion that the dismissal was harsh.

[135] Mr Keenan has not been able to find alternative employment since his dismissal, meaning that the financial and personal consequences of the dismissal have been significant. However, as earlier stated, he has only sought casual rather than permanent work. The weight that can therefore be placed on this matter is very limited.

[136] Finally, there is I consider a significant disparity between the response to Mr Keenan’s conduct and that of Mr Denmeade. As I have earlier found, Mr Denmeade, a supervisor, said to a far less senior female employee at a meeting of employees during working hours: “Do you want us to get our cocks out and measure them too?”. Regardless of the context, that was a completely inappropriate thing for a supervisor to say. I regard it as objectively at least as serious, if not more serious, than the conduct of Mr Keenan which I have found to have constituted a valid reason for his dismissal. Unlike Mr Keenan’s conduct, it was not mitigated by the circumstance of occurring at a function at which alcohol was served. Mr Denmeade’s remark was demeaning, humiliating and of a bullying nature. It is of course to his credit that he quickly realised that what he said was inappropriate, and self-reported the incident to Mr Macourt. However, that does not justify the disparity between the fact that he was merely counselled and Mr Keenan was dismissed. It is well established that differential disciplinary treatment of similar misconduct by an employer may be a legitimate basis upon which to find that a dismissal is unfair. 24 I consider that the conduct of Mr Keenan and Mr Denmeade is sufficiently comparable that the disparity in the treatment of them is a relevant matter weighing in favour of the conclusion that Mr Keenan’s dismissal was harsh and unjust.

Conclusion

[137] Having regard to all of the matters discussed above, I consider that Mr Keenan’s dismissal was harsh and unjust notwithstanding that there was a valid reason for his dismissal, namely that he addressed remarks to Ms Stokes at the Christmas function that were of an aggressive, intimidatory and bullying nature. His dismissal was harsh in the sense that it was disproportionate to the gravity of that conduct, having regard to:

• the lack of any significant ongoing workplace consequence of his behaviour;



• his good employment record;



• the isolated and aberrant nature of the conduct;



• the fact that Mr Keenan was intoxicated as a result of alcohol consumption at a Christmas function when he engaged in the relevant behaviour;



• the manner of the service of alcohol at the Christmas function, including LBAJV’s failure to exercise any real control over this;



• the availability of alternatives to dismissal which were proportionate to the conduct involved; and



• the severity of the penalty compared to LBAJV’s response to Mr Denmeade’s conduct.

[138] I also consider that the dismissal was unjust because Mr Keenan was not accorded procedural fairness in respect of the relevant allegation concerning his conduct towards Ms Stokes prior to his dismissal (when he may have been in a better position than at the determinative conference to recall what occurred and advance some explanation for his conduct), and because of the differential treatment afforded to Mr Denmeade as compared to Mr Keenan.

Remedy

[139] Reinstatement is the primary remedy provided for in respect of unfair dismissals under the FW Act, in the sense that there must under s.390(3)(a) be a finding that reinstatement is inappropriate before any power exists to make an order for compensation. 25 Accordingly, in respect of remedy, the primary issue which must be considered is whether it would be appropriate to make an order for Mr Keenan’s reinstatement.

[140] I have earlier indicated that a proportionate response to Mr Keenan’s misconduct would have been to demote him from the position of Team Leader (with a commensurate reduction in pay), issue him with a warning (perhaps a final warning), require him to make a written apology for his conduct, and ban him from attendance at any future Christmas functions or other functions where alcohol is served. However that is not an outcome which can be produced by way of a reinstatement order under s.391, for two reasons. The first is that, under s.391(1), a reinstatement order must require appointment to the position in which the person was employed immediately prior to the dismissal (that is, in Mr Keenan’s case, the position of Team Leader), or another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal. Mr Keenan cannot therefore be reinstated to a lower paying position. Because the evidence was that there was no available alternative position on the same pay and conditions as that of Team Leader, then in practical terms any reinstatement order has to be to the position of Team Leader. The second reason is that s.391 does not authorise the making of a reinstatement order that is subject to conditions. 26

[141] Accordingly it is necessary for me to approach the issue of reinstatement on the basis that if a reinstatement order is made, it will have to require Mr Keenan to be reinstated to his position as Team Leader.

[142] In the event that a finding was made that Mr Keenan’s dismissal was unfair, LBAJV opposed the making of a reinstatement order of this nature. Mr Macourt’s statement of evidence disclosed three bases for this. He said that he was concerned that reinstatement would send the wrong message regarding acceptable workplace behaviour to the LBAJV workforce, particularly in circumstances where there was already a very low degree of gender diversity. That type of concern is often expressed in cases such as this. The answer to it is that there is nothing in this decision which suggests that Mr Keenan’s conduct is acceptable workplace behaviour, and indeed his behaviour has been heavily criticised by me. If a reinstatement order is made, LBAJV would be fully entitled to explain this to its workforce in an appropriate fashion.

[143] Mr Macourt also said that he was concerned about the implications of Mr Keenan’s reinstatement on its reputation with its client RMS. He said that reinstatement “could cause significant detriment to our relationship with our client, which has the potential to impact on LBAJV’s profitability under the existing contract and any future opportunities” and “would also serve to seriously undermine LBAJV’s diligence around performance management”. The reason for this concern is obscure. It is not clear to me whether RMS even knows about Mr Keenan’s dismissal or these proceedings. RMS is a large and sophisticated government organisation which would have a proper understanding of unfair dismissal processes under the FW Act, and would be fully aware that employers have to deal with proceedings such as these from time to time. Mr Macourt said that LBAJV had been “entrusted with the staff of the previous public sector organisation and we have worked hard to ensure a fair and high performance culture more akin to a private sector organisation”. That may be accepted to be the case, but where a dismissal has been found to be unfair, that could not constitute a valid reason as to why reinstatement would not be appropriate.

[144] Finally, Mr Macourt was concerned about the effect of reinstatement on Ms Kennedy and Ms O’Reilly. He described Ms Kennedy as having been assigned to another role in another Leightons company, but said that “this is only a short term role”. That is not consistent with Ms Kennedy’s evidence, which made it clear that she would not be returning to LBAJV in the foreseeable future. I do not think therefore that Ms Kennedy’s position is relevant to the issue of reinstatement.

[145] In relation to Ms O’Reilly, Mr Macourt said that he was concerned about her “on-going health and wellbeing” if Mr Keenan was reinstated. He said that Ms O’Reilly’s underlying concerns regarding Mr Keenan’s conduct had not been addressed and that it was “not appropriate to expect Ms O’Reilly to work permanent night shifts when we have the opportunity to rotate our staff across the day and night shifts”. Ms O’Reilly said herself that the prospect of reinstatement was “seriously upsetting” to her, that she would be “incredibly intimidated” at the prospect of having to face him again at work, and that she was concerned about the prospect that Mr Keenan “may seek retribution against me because of my complaints and everything that has happened since”.

[146] I dismiss at the outset as lacking any objective support the proposition that Mr Keenan would seek retribution against Ms O’Reilly if reinstated. However, I otherwise accept that Ms O’Reilly’s concern about dealing with Mr Keenan in the future is a relevant matter in considering the appropriateness of reinstatement. Although I have found that Mr Keenan’s conduct towards Ms O’Reilly did not constitute a valid reason for his dismissal because it lacked the relevant connection with his employment, and the evidence does not establish that his behaviour would prevent her from performing her duties, nonetheless any personal workplace distress which might be caused to her by a reinstatement order is, I consider, a matter I should take into account in considering whether I should make such an order.

[147] If I could order Mr Keenan to be reinstated to a position other than Team Leader (that is, on the basis that he was demoted), then that would resolve the problem, since his dealings with Ms O’Reilly in that case would be minimal. However, for the reasons earlier explained, that is not an order which can be made under s.391.

[148] It is not clear to me whether, if Mr Keenan is reinstated, it would be practicable for him to be rostered to work on different shifts than those of Ms O’Reilly so that contact between them is minimised. I raised this issue with the solicitor for LBAJV in closing submissions, who gave the proper response that the evidence did not demonstrate that it could not be done. Nonetheless I would like to have a more definitive answer to this question before I finally determine whether to issue a reinstatement order.

[149] Accordingly I propose to give the parties a short opportunity to be heard further on this issue before I proceed further. That may include adducing evidence that is relevant to this issue. I wish to make it clear that I am not otherwise proposing to re-open the whole issue of the appropriateness of reinstatement. Nor am I suggesting that an outcome which requires Ms O’Reilly to remain permanently on night shift against her wishes should Mr Keenan be reinstated is one which I would favour.

[150] In the event that I decide to order the reinstatement of Mr Keenan, I do not intend to make any order for payment of lost remuneration under s.391(4). Should it be necessary I will give my reasons for this in any further decision concerning remedy.

[151] The parties will shortly receive a listing for the further short hearing. In the interim, the parties may wish to consider whether they should confer in an attempt to reach an agreement about an appropriate outcome in the light of this decision. An agreed outcome would not be confined by the impediments upon remedy imposed on the Commission by the FW Act, and would allow consideration to be given to the outcome identified in paragraph [139] above or any other appropriate outcome which the parties may identify. If any assistance can be provided by the Commission in this respect, it will be provided on request. Whether the parties choose to engage in such a process is a matter entirely for them, and any choice they may make in this respect will of course be without prejudice to the final determination of Mr Keenan’s application and any appeal rights they may decide to exercise.

VICE PRESIDENT

Appearances:

V. Falconer with P. Noack for the Australian Workers’ Union on behalf of Stephen Keenan.

B. Gee with M. Bowe solicitors for Leighton Boral Amey NSW Pty Ltd.

Hearing details:

2015.

Sydney:

May 5 & 6.

 1   MM Cables (A Division of Metal Manufacturers Limited) v Zammit (unreported, AIRCFB, Ross VP, Drake SDP, Lawson C, 17 July 2000) Print S8106 [42]

 2   Print Q9292 [1998] AIRC 1592 (4 December 1998)

 3   See O'Callaghan v Loder [1983] 3 NSWLR 89 at 103

 4   Johanson v Michael Blackledge Meats [2001] FMCA 6 at [84]

 5   [2002] FCA 32

 6   (2005) 144 FCR 402 at [35]-[36]

 7   [2008] VCAT 261

 8   Ibid at [41]-[42]

 9   Ibid at [42]

 10   (2013) 250 CLR 246

 11   Ibid at [34]-[39] per French CJ, Hayne, Crennan and Kiefel JJ

 12   (2005) 144 FCR 402

 13   Ibid at [41]

 14   Ibid at [38]

 15   Ibid at [57]

 16   Ibid at [74]

 17   [2000] NZCA 341; [2001] 1 NZLR 407

 18   [2007] FMCA 59

 19   See McManus v Scott-Charlton (1996) 70 FCR 16 at 27D-E

 20   (1996) 70 FCR 16

 21   Ibid at 29E

 22   [2008] AIRCFB 15

 23   [2007] AIRC 679

 24   Darvell v Australian Postal Corporation [2010] FWAFB 4082 at [21]-[24]; Linfox Australia Pty Ltd v Stutsel [2012] FWAFB 7097 at [32]-[33]

 25   Melanie Millington v Traders International Pty Ltd [2014] FWCFB 888 at [66]

 26   Cartisano v Sportsmed SA Hospitals Pty Ltd [2015] FWCFB 1523 at [30]-[45]

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