Employers have managed employees for many years relying on the employee records exemption contained in the Privacy Act. However, in the recent case of Lee v Superior Wood  FWCFB 2946, the Full Bench of the Fair Work Commission (FWC) turned the common understanding of the employee records exemption on its head.
In this case, Superior Wood introduced biometric (fingerprint) scanners to log the start and finish times of employees. Mr Lee, an existing employee of Superior Wood, refused to register his biometric data and refused to use the system. A site attendance policy was put into place, requiring all staff to use the new system. After a series of meetings and ongoing refusal by Mr Lee to use the biometric scanning system, Superior Wood dismissed him for failing to comply with a reasonable and lawful direction.
Mr Lee brought a claim for unfair dismissal in the FWC. At first instance, the FWC held that Mr Lee’s refusal to register his sensitive information was unreasonable in the circumstances and Superior Wood’s collection of the data was reasonably necessary for its functions and activities. However, on appeal the Full Bench of the FWC overturned the decision.
The Full Bench found that the site attendance policy did not form part of Mr Lee’s terms and conditions of employment, as his employment contract only bound him to policies in place at the time the contract was entered into by the parties.
As the policy did not form part of his employment contract, any obligation to comply with the data collection would depend on whether the direction to comply was lawful and reasonable. If inconsistent with a law or legal principle, then the direction would not be lawful.
The Full Bench stated that the Australian Privacy Principles applied, including APP 3, which prohibits the collection of sensitive information (which would include biometric data) without the person’s consent and APP 5, which restricts the collection of personal information where it is not reasonably necessary to the entity’s functions or activities. The Full Bench went on to say that consent is not ‘genuine consent’ when faced with the threat of dismissal if the consent is refused.
It held that the employee records exemption applies to ‘records held by the employer’ and therefore did not apply to records yet to be created.
The Full Bench held that there were other options available to Superior Wood in order to log Mr Lee’s start and finish times, and that it was therefore unlawful to direct him to submit to mandatory fingerprint scanning.
What this means for employers
Employers must ensure that their systems and methods for the collection and use of any sensitive employee information, including biometrics or any other system used to record information such as hours of work, is legally compliant.
Further, employers must ensure that their employment contracts are drafted in such a way that any policies created, amended or implemented after the employee’s commencement of employment form part of the contractual arrangement between the parties.