Nolan, Jim --- "Privacy in the workplace - Part 3: some legal issues" [1995] PrivLawPRpr 33; (1995) 2(3) Privacy Law & Policy Reporter 48

Privacy in the workplace - Part 3: some legal issues

Jim Nolan

In the final part of a series on workplace privacy issues, Jim Nolan examines cases in industrial law including such issues as video surveillance, information privacy and victimisation, drug testing, bag searches, and e-mail privacy.

Video surveillance - Byrne & Frew v Australian Airlines

Generally speaking, there is no bar to an employer maintaining video surveillance of his or her employees. Everyone is aware of video cameras surveying loading docks and customer service areas. The availability of relatively inexpensive technology means that such surveillance is now a permanent feature in the public customer service areas of financial institutions for obvious reasons.

Some employers will also, from time-to-time, use covert surveillance of employees suspected of pilfering. A disposition to treat such surveillance as the complete answer and 'quick fix' to employee dishonesty may lead to dangerous complacency as the recent full court decision in Byrne and Frew v Australian Airlines (1994) 52 IR 10 shows.

In Byrne & Frew three employees were dismissed as baggage handlers by Australian Airlines after video surveillance showed evidence of their involvement in pilfering (at least as far as the company was concerned). The video surveillance was covert as the company had experienced pilfering from passengers bags and it was keen to catch the culprits in the act. A camera was set up in the cargo hold of an aircraft and recorded the events which led to the dismissal.

Two of the employees, Byrne & Frew commenced proceedings for unfair dismissal and were initially unsuccessful in proceedings in the Federal Court of Australia before Hill J. A subsequent appeal[1] resulted in the dismissals being found to be unfair despite the existence of the video evidence. The decision stands as a warning to any employer who believes that surveillance evidence will prove to be the 'be all and end all' as proof of employee misconduct.

In the first place the court found that the video evidence did not provide unambiguous evidence of pilfering on the part of the employees. When the recording was played back, what appeared to be pilfering from the surrounding talk and gestures was occurring 'off camera'. Furthermore there were no complaints from passengers on the flight concerned that there was anything missing.

The court found that the employer had acted unreasonably in the manner in which it had handled the video evidence and confronted the men about their alleged misconduct. In particular, the court observed:

1. The men had been shown the video some five months after the incident. Their routine employment as baggage handlers would have made it difficult for them to recall the exact circumstances of events on that particular day and so disadvantaged in recalling and perhaps explaining apparently suspicious behaviour.
2. The employer had inexplicably failed to interview the fourth member of the four man crew, who may have been able to shed light on events.
3. The employer failed to make clear to the men what it believed the video evidence actually demonstrated. In the light of the 'equivocal' evidence provided by the video, it was up to the employer to make clear to the men what it believed they had done and why. It should have provided to the employees 'in clear language', the particular matter which was of concern so as to provide the employee with an adequate opportunity to persuade the employer that the concern was not justified or that the conduct should be excused. Were the employees accused of being active participants in the pilfering or alternatively, of turning a blind eye and if so whether carelessly or wilfully?

Byrne & Frew is an important case since it establishes that procedural unfairness, not just substantive unfairness, may ground a claim for unfair dismissal. In the particular context of employee privacy and the permissible bounds of surveillance and the uses of material obtained by surveillance it is a salutary lesson to employers to think carefully about the collection and use of this material. What an employer (no doubt frustrated by pilfering), sees as a 'smoking gun' can be viewed entirely differently through more dispassionate eyes.

Once again, the requirement for openness, and fair and timely action by an employer is underscored. In some cases, the apparent evidence obtained from video surveillance will not be conclusive evidence of employee misconduct.

Privacy Commissioner's guidelines on optical surveillance

Although not binding on private sector employers, the Privacy Commissioner's General guidelines for the conduct of covert optical surveillance provide valuable guidance to employers on the subject. Under the guidelines, Commonwealth agencies are advised to conduct optical surveillance only where, inter alia:

1. The decision has been taken at an appropriate senior level.
2. That there is a reasonable suspicion of unlawful activity.
3. The other forms of investigation have been considered and found inconclusive or unsuitable.
4. That the benefits arising from obtaining relevant information by means of the surveillance outweigh to a substantial degree the intrusion of privacy of the surveillance subjects.
5. The material should be used and disclosed in a manner consistent with the IPPs.

There would appear to be no reason why these guidelines should not be adopted by private sector employers who are contemplating covert surveillance activities. In the event of a dispute about such activities the Industrial Relations Commission could look to the guidelines as a standard of fairness against which to measure any employer practice and by which any award prescription if necessary, could be developed.

Information privacy and victimisation - Bowling v General Motors Holden

Bowling's case[2] concerned the victimisation of a union delegate. Among the issues raised was the use against Bowling of a system of employee records known as a 'yellow card' system. His employer, GMH, operated a system which was described in the joint judgment of Smithers and Evatt JJ as 'a dossier of incriminating notations, capable of being used unfairly to an employee, rather than a fair record of an employees performance' (at 215).

Among the reasons identified as relevant to the manner in which the 'yellow card system' was used unfairly to employees were:

1. The notations were often inconclusive.
2. Employees were often the subject of records which were made behind their backs.
3. Responses by employees (when they were confronted with complaints) were very often not recorded.
4. Little or no effort was made by the person who administered the card system to ensure that notations recorded were fair and accurate.

Their Honours commented that but for the litigation, the prejudicial material would have been retained in the cards and never exposed to the employee who suffered as a consequence of the card and whose record would have remained unfairly 'tainted'. Their Honours made the following (extraordinary) assessment of the 'yellow card' system (at 215):

To our minds a system so fraught with danger of injustice to employees is hardly worthy of an institution with pretensions to fair play in its employer-employee relations.

There is a real echo of the present case in the facts of Bowling and the (proper) response to a system utilising personal information to the detriment of employees.

Rights of access to 'clearances' - CEPU v Nabalco

An example of a significant industrial award being made on a privacy topic is to be found in the recent decision of Commissioner Merriman of the Australian Industrial Relations Commission in The Nabalco Pty Ltd and Manning and Recruitment Award, 1994 (the award).

The dispute concerned the discovery by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) of the existence of a 'clearance system' operated by Nabalco as the principal operator at Gove. The administration of the clearance system operates by giving a contractual veto over the employment practices of site contractors. Notwithstanding the fact that contractors operate as separate employers, a condition precedent to employment at the site by any contractor is a 'clearance' by Nabalco. A union member (Mr B) who was to be employed by one of Nabalco's contractors, ABB James Watt Pty Ltd, was denied employment when he was refused a 'clearance' by Nabalco.

Commissioner Merriman's decision[3] found that:

1. Nabalco Pty Ltd by its clearance policy, raises threatened, impending or probable industrial disputes that go to the question of manning, recruitment and access to the site which involves existing employees of the three companies, members of the unions employed at the site and future employees seeking employment at the site.
2. That there was no procedural fairness in the Nabalco clearance process because any person refused a clearance is not given a reason or an opportunity for an appeal or review of any such decision.
3. Discrimination may occur contrary to the Act which cannot be addressed because of the secrecy of the process.

The Commissioner's award directed the employment of Mr B and established a mechanism whereby the refusal of a clearance would be brought to the attention of the person affected. A system of grievance appeals was established where a person sought to challenge the decision refusing the clearance.

The objective of the Commissioner's award was to protect the 'information privacy' of those potentially injured by the operation of the 'clearance system' and in the particular circumstances of Mr B's case to redress the wrong which had been done to him. The award demonstrates the capacity of the Australian Industrial Relations Commission to mould an award to meet particular privacy concerns at the workplace. If the award survives appeal, it will no doubt spark considerable interest among other groups of workers who may be similarly affected.

Drug testing

Drug and alcohol testing typically occurs in Australian employment in areas where safety concerns are paramount. There is no doubt that such tests are an acknowledged intrusion on a person's privacy.

[T]he use of a person's body without his or her consent to obtain information about him or her, invades an area of personal privacy essential to the maintenance of his human dignity (LaForest Canadian Supreme Court).

Drug and alcohol testing occurs in employment in Australia in the railways, prisons, the defence forces, law enforcement agencies, coal mining and airlines. For example, the Rail Safety Act 1993 (NSW) provides for testing for alcohol and other drugs for employees involved in rail safety work in the NSW railways. Such employees are not limited to train drivers but include other operational staff. Penalties are prescribed in the Act for failure to co-operate in the provision of breath analysis or a blood or urine sample. These penalties are in addition to disciplinary proceedings. Another example is provided by the Australian National Railways random breath testing policy procedures handbook. Similar procedures apply in the other rail systems.

It is important to observe that these procedures have been introduced in environments where there is a highly unionised workforce which is knowledgeable about its rights of appeal and each provide significant procedural and substantive protections for employees who are the subject of testing. In the cases cited, body fluids are to be provided only under the supervision of a medical practitioner or nursing sister.

In the light of the increasing trend towards testing employees, the NSW Privacy Committee has recently produced a report on drug testing in the workplace. The privacy issues identified by the Committee report were:

1. The lack of any free consent to the tests.
2. The intrusion on physical privacy necessitated by the collection of biological samples.
3. The threat to 'information privacy' represented by the collection use and disclosure of the test data.

The Committee's preference was for specific legislation authorising the practice. Such legislation should set out procedural standards which protect the privacy interests of those tested. As observed above, the industrial tribunals have jurisdiction to arbitrate on workplace testing. Some of the cases referred to in the Privacy Committee report and the Canadian report show the scope for abuse where workers are unrepresented and have no access to industrial arbitration. Those who do not have access to industrial arbitration have no recourse to such protection

The Privacy Committee concluded that workplace testing in Australia is not widespread but on the increase. The recommendations made by the Privacy Committee were that workplace testing should only take place when:

1. A person's impairment by drugs would pose a substantial and demonstrable safety risk to that person or to others.
2. There is reasonable cause to suspect that the person to be tested may be impaired by drugs.
3. The form of drug testing which is used is capable of identifying the presence of a drug at concentrations which might be capable of causing impairment.

It would not be surprising if the various industrial relations tribunals deferred to the expertise of the Committee in determining whether the implementation of a drug testing program against employee opposition was reasonable in all of the circumstances.

Security and bag searches

Once again privacy issues arise in a very practical context where employees are subject to searches by their employers for security reasons. This activity occurs across a vast variety of workplaces.

The landmark decision of an industrial tribunal on this topic is that of Macken J in Security Arrangements in Retail Stores [1979] AR 72. The guidelines set out in this decision provide a model to protect employees' privacy to the degree necessary in the circumstances. Macken J's decision propounds guidelines dealing with procedures governing interviews with staff and security checks of bags, parcels, and/or lockers.

The physical intrusion encountered when an employer's representative requires an employee to submit to an interview is mitigated to a substantial degree by the guidelines which provide that:

1. An employee should be asked to agree to an interview and advised of his or her rights before the interview commences.
2. An employee may request the attendance at the interview of a union representative or other nominated person.
3. Where the employee agrees to the interview and it occurs in non-work time the employee shall be paid for that time.

In the event that an employee was dismissed as a result of an interview conducted in disregard of the guidelines, the employee would have a strong case under unfair dismissal laws.

Macken J also included guidelines on searches in his recommendation. These are:

Security checks of bags, parcels and or lockers shall not take place unless the employee concerned is present, or alternatively, that the employee has given permission for such a search to take place in his or her absence. An employee may have a union delegate or another nominated employee of the employees choice present during the search.

There would appear to be no reason why this approach could not be extended to the electronic 'desk drawers' or 'lockers' which many employees now utilise thanks to the advent of 'e-mail'.

In the US, there have been several recent newsworthy incidents involving employer access to employee 'e-mail' files. 'E-mail' as the term suggests, is 'electronic-mail' typically used by employees for inter-office memos in companies with a networked computer system. As Time[4] magazine recently reported:

It's a situation that arises a million times a day in offices around the world. An employee has something personal to tell a co-worker - a confidence, a joke, a bit of gossip that might give offence if it were overheard. Rather than pick up the phone or wander down the hall, he or she simply types a message on a desktop computer terminal and sends it as electronic mail. The assumption is that anything sent by e-mail is private - if not more so - than a call or a face-to-face meeting. That assumption, unfortunately, is wrong.

In general, it should be understood that a computer system as the employer's property is ultimately under the control of the employer. That said, there is undoubtedly an expectation - as there is an expectation by employees concerning the privacy of their lockers and desk drawers - that an employee's e-mail will be confidential if the system is established in a manner which represents to its users that it is secure. The US cases recently in the news involved systems where the e-mail was thought to be secure. The employer however, retained the access codes and covert access to e-mail files was regularly obtained by the employer. Inevitably, indiscreet mail was discovered and the employees concerned were dismissed.

There is no reason why the ground rules under which any e-mail system operates should be, in principle, no different from the rules which Macken J considered as appropriate to bag and locker searches. The lesson to be gained is that the guidelines propounded by the various privacy expert bodies and discussed above provide the basis for the adoption of fair practices with respect to the use of e-mail. Most importantly, consultation with employees and unions in relation to e-mail policies and the implementation of well-publicised and understood policies.

Conclusion

If employers attempt to introduce privacy-intrusive employment practices in a manner which is insensitive to employee

concerns, industrial tribunals will be called on to tailor industrial awards to meet those concerns. The tribunals generally have the power to regulate demonstrated and legitimate requirements for intrusive employment practices designed to meet specific employer concerns, for example, testing of locomotive engineers. These requirements will prove to be far more limiting than some employers presently might prefer.

Australia is fortunate to have a system of industrial relations which can act flexibly to review such issues. Employers and unions would be well advised to find out about the Privacy Commissioner's Charter, intentions and role and acquaint themselves with Privacy Committee guidelines and reports relevant to employee privacy issues. Employers and unions now have an opportunity to influence this important debate by providing the necessary expert input to relevant expert privacy bodies. Familiarity with the issues of privacy and employment and the sensitive treatment of those issues will be an indispensable part of industrial relations.

Jim Nolan

[1] A Full Court of five judges heard the appeal because an important legal issue concerning the level of damages and the relationship between the award and the contract of employment was raised. The court was invited to overrule a previous appeal bench decision.

[2] Bowling v General Motors Holden (1975-6) 8 ALR 197, especially Evatt and Smithers JJ at 215-6.

[3] 11 October 1994 [Print L5812].

[4] Quoted in Closing the E-Mail Privacy Gap, Cappell, Journal of Systems Management, December 1992, pp 6-11.