Can a director be bullied?

Stephen Booth

Two recent cases have provided a reminder of the broad scope of the anti-bullying jurisdiction of the Fair Work Commission (FWC), as it applies to directors. Some commentary on this decision has suggested that could “paralyse” boardrooms and chill the “robust” discussions that sometimes occur between directors but is this really the case?

In the case of Kypuros (1 June 2017) the FWC made consent interim orders in a case where an employee, Ari Kypuros, complained about bullying by one of the directors, Costa Kypuros, of Mag Wheel & Tyre Pty Ltd. Among other things, the orders required Costa and his fellow director, Theo Kypuros, as well as Ari to:

a)     refrain from making abusive or offensive statements about each other, and from disparaging each other and other workers;
b)     be civil and respectful to each other; and,
c)     avoid any circumstance in which an argument, confrontation or violence may arise while at work.

These rules apply between the directors, as well as between them and the employee. Those orders might well constrain “robust” interactions but although a requirement to be civil and respectful, and to avoid offensive and disparaging comments, mandates a standard of behaviour, that shouldn’t inhibit each of the directors having their say, and making decisions (or not if they can’t agree on the matter at hand), so long as they keep it civil.

In the case of Adamson (19 May, 2017), Commissioner Hampton in the FWC decided that a director, who was not otherwise an employee of the corporation of which he was the director, was able to complain in the FWC about alleged bullying.

Mr Adamson was the Chairperson of a South Australian statutory corporation, Anangu Pitjantjatjara Yankunytjatjara Inc. As the elected Chairperson of the Executive Board of APY Inc, Mr Adamson alleged that the Deputy Chairperson and the General Manager bullied him by undermining his authority and preventing him exercising his powers as Chairperson.
Two preliminary questions arose:

a)     Was Mr Adamson at risk of further bullying, given that he had not been re-elected as Chairperson while the case was continuing in the FWC?
b)    Was he a “worker” within the scope of the anti-bullying jurisdiction, which depends on the definition of “worker” in the uniform Work Health and Safety Acts?

The Commissioner decided that there was no ongoing risk of bullying because Mr Adamson no longer occupied the role of Chairperson and dismissed the application. However, the Commissioner also dealt with the scope of “worker.”

Not surprisingly, the definition of “worker” in the WHS legislation is very broad. It relates to a person who “carries out work in any capacity for a person conducting a business or undertaking,” including employees, contractors, subcontractors, labour hire employees and various other classes of workers – it says nothing explicit about directors. Of course, a director who is also an employee or contractor would be within the definition for that reason but what about a director who has no other role with the organisation?

In Mr Adamson’s case, the constitution of the corporation gave him specific duties to exercise on behalf of the corporation, with the approval of the Executive Board. He had official roles to fulfil in relation to the functioning of the corporation and was paid “significant remuneration for doing so” - well above the sitting fees for general members of the Board and exceeding cost reimbursement. The Commissioner concluded that Mr Adamson’s activities represented work for APY Inc. 

As the intention of the definition of “worker” in the WHS Act is intentionally broad, isn’t limited to the classes of worker listed, and the scope of the definition goes well beyond a “worker” in the traditional sense of an employee for an employer, the Commissioner concluded that Mr Adamson was a worker, and therefore had the right to commence anti-bullying proceedings.

Given the broad scope of the WHS legislation, and the focus of the anti-bullying jurisdiction on work health and safety risks, it isn’t surprising that someone whose role is solely that of a director should be included in the scope of “worker.” The Commissioner observed that “WHS hazards and risks do not discriminate based on legal relationships.”

So will “robust” interactions between directors commonly become the subject of anti-bullying applications in the FWC as a result of this decision? It seems unlikely. Applications to the FWC under the anti-bullying legislation are relatively infrequent, probably because of the absence of any power to award compensation: the Commission can only issue “stop bullying orders” to try to prevent the objectionable behaviour. The requirement of an ongoing risk is also significant limitation.  

So a flood of anti-bullying applications by directors is unlikely. However, the decision does serve as a reminder that not only must organisations ensure that bullying behaviour isn’t tolerated at the employee level, the same consideration applies at board and management levels. The need for “robust” interactions shouldn’t be treated as cover for humiliating, rude or aggressive conduct, which might fit within the definition of bullying in the Fair Work Act.  

And really, this makes sense: it would be surprising if the decision makers who need to enforce anti-bullying policies and codes of conduct by employees could operate on a different basis from the rest of the organisation. This decision highlights that where there is tension or dispute at board level, the board should still function in a civil manner, without bullying behaviour: the controlling mind of the organisation and individual directors ought to be leading by example.

Stephen Booth, Principal
Phone: + 61 2 9895 9222
Email: sbooth@colemangreig.com.au 

 

If you would like to receive our regular legal Updates, please subscribe here.