Workplace Watch – 15 October 2026: decision from FC settles the test for determining the identity of the “true employer”, FWC decisions
Welcome to the latest edition of the KHQ Workplace Watch where we give you insights on key developments in workplace relations and safety law and what that means for you as an employer, HR practitioner, in house legal counsel or fellow IR enthusiast.
In this edition, we cover a decision from the Federal Court that settles the test for determining the identity of the “true employer” and decisions from the Fair Work Commission including a Full Bench decision considering the opportunity to respond and a good faith bargaining decision that examines proposed additional payments for employees that work during industrial action.
We also take the opportunity to remind you that the Commission’s guidance note on the use of generative artificial intelligence commences next week (see our previous update here).
Offer of continuity payment breach of good faith bargaining
The Fair Work Commission made bargaining orders against an employer that offered a ‘customer service continuity payment’ to be paid to employees that continued to work during proposed industrial action.
The TWU made an urgent application for good faith bargaining orders seeking that the employer withdraw the offer of the payment on the grounds that the payment constituted unfair conduct that undermined freedom of association contrary to s 228(1)(e) of the Fair Work Act 2009 (Cth) (FW Act).
The employer opposed the application submitting that the payment was not unfair: the payment would be paid to all employees that worked during the protected industrial action (union members and non-union members), and was an incentive to turn up to work in a ’less pleasant environment‘ considering the industrial pressure brought to bear on employees if they attempted to ‘cross a picket line’. The employer asserted that the payments were akin to the gift cards provided in Corinthian Industries to workers who continued to work during a period of industrial action (in that case the Federal Court found that providing the gift cards was not adverse action).
Commissioner Thornton made the orders sought by the TWU finding that although employees could still choose whether or not to take industrial action, considering the fairness test in Capcoal “the influence exerted on an employee’s decision whether to take protected industrial action by offering a financial incentive to make an alternative choice, is conduct that in my view falls short of expected standards of fairness and is therefore unfair” (at [38]).
A copy of the decision can be found here.
Commission exercises discretion to dismiss application to deal with sexual harassment dispute
The Fair Work Commission has dismissed an application to deal with a dispute about sexual harassment because it was lodged outside the 24 month timeframe.
Section 527G of the FW Act provides that the Commission may dismiss an application that is made more than 24 months after the contravention, or the last of the contraventions, is alleged to have occurred. The application was objected to on those grounds which required the Commission to consider the provision for the first time.
The Commission summarised the principles relevant to the exercise of its discretion and held that:
“…the Commission must balance the broader objects of the FW Act to protect against sexual harassment and to provide accessible and effective procedures to resolve grievances and disputes, against the purpose of s 527G to encourage the timely making of sexual harassment allegations. The original policy purpose underlying the 24-month timeframe (implemented first in the AHRC Act and later adopted in the FW Act) reflects this balancing act: seeking to avoid the negative impact of delay on the Commission’s ability to effectively deal with disputes while recognising that the reasons for delay are often complex in the context of sexual harassment…” (at [29])
The Commission dismissed the application against two of the individual respondents, maintaining the application against the third (and the employer) as the alleged sexual harassment may have fallen within the 24-month window.
A copy of the decision can be found here.
Who is the employer?
The Federal Court has provided clarity on whether the appropriate test to determine the identity of the “true employer” should follow the “contractual approach” taken in Rossato, Personnel Contracting and Jamsek or the “multifactorial approach” to assess the “totality of the relationship” between the parties when identifying the employing entity (see the authorities referred to at [36] – [39]).
The Fair Work Ombudsman initiated proceedings against a company and its directors for breaches of the FW Act. The Ombudsman submitted that the appropriate test was set out in Resilient and that the Court must consider “the reality of purported contractual arrangements”, to ensure that consideration was appropriately given in circumstances where documentation was created for parallel purposes without reflecting the reality of the relationship.
Justice Meagher rejected the Ombudsman’s submissions (and dismissed the application) and held that an objective contractual approach is the correct approach. This resulted in the Court having “regard to what objectively known matters had occurred” when engaging in the objective contractual inquiry for the purposes of determining the identity of the engaging entity.
A copy of the decision can be found here.
Full Bench clarifies opportunity to respond in unfair dismissal criteria
The Full Bench has clarified the construction and application of s 387(b) and (c) of the FW Act, the criteria for considering whether a dismissal was harsh, unjust or unreasonable that deal with whether the employee was notified of, and given an opportunity to respond to, any reason for the dismissal related to the conduct or capacity of the person.
In this case, an employee received a final written warning in January 2023 for engaging in intimidating and aggressive behaviour toward another employee. Allegations were made that the employee engaged in aggressive and intimidating behaviour toward a different employee in April and September 2024. Those allegations were investigated and the employee was subsequently issued with a show cause letter and dismissed.
The Commission held at first instance that it was a procedural failure by the employer that witness statements prepared as part of the investigation were not provided to the decision maker and that there was no witness statement prepared for another witness.
The employer appealed on seven grounds and relevantly submitted that that the Commission had applied different meanings to the term ‘reason’ in s 387(b), the reason for dismissal articulated in the show cause and termination letter, and (c), the “reason” the employee had an opportunity to respond to.
The Full Bench held:
[33] In issue was whether Mr Mouat was given a genuine opportunity to respond and whether OS MCAP had undertaken a rational and fair decision-making process in circumstances where statements and information from eyewitnesses were not obtained and/or provided to OS MCAP’s decision-maker Mr Hanson, or Mr Mouat.
[34] Denial of an opportunity to respond can be because the reason for dismissal was not put in clear enough terms to allow the employee to properly respond to it or it can be because there was some material that would have assisted the employee’s response that was not considered or available.
[35] Mr Hanson’s ignorance of Mr Lowrie’s version of events and the failure to consider the versions of events given by Ms Fredericksen and Mr Bartley (all versions that are unfavourable to the respondent) strongly indicate that the dismissal was unfair. If those statements had been before Mr Hanson they could have led to a different result. We do not consider the Commissioner was illogical or applied different meanings to the term “reason” in ss 387(b) and (c).
A copy of the decision can be found here.
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