The Notebooks for Teachers and Principals program (Program), which deducted payments for the lease of laptops directly from teachers’ salaries, has been declared unlawful by the Federal Court.
The Program was run by the State of Victoria’s Department of Education and Early Childhood Development (DEECD). The Program is now called eduStar.ntp.
Although the Program began in 1999, the Court was only concerned with the period between July 2009 and November 2013. Justice Mordecai Bromberg found that the Program during this time breached the Fair Work Act 2009 (Cth), and although further hearings are scheduled, teachers may be entitled to compensation.
The Program involved 40,000 laptops and, due to employment contracts ending and beginning, may involve up to 50,000 teachers and principals in Victoria.
Teachers in government schools were provided with laptops with relevant software and charged between $4 and $17 a fortnight. The Program led to overall deductions of over $20 million during its operation. The provision of laptops operated in ‘cycles’. Teachers would be issued with a new laptop at the beginning of a cycle, which occurred every 3 to 4 years, and the laptops would be gradually rolled out to participating teachers. These arrangements were governed by Recipient Agreements (Agreements) between the DEECD and the teacher. Although the specific terms of the Agreements changed over time, overall, teachers were not permitted excessive personal use of the laptops and the DEECD retained ownership of the laptop.
The legality of the Program was challenged by the Australian Education Union (AEU) on behalf of the affected teachers. Several issues were discussed in the case, including whether the:
A salary packaging agreement is an arrangement where part of a salary is delivered in a form other than money. For example, an employee may have part of their salary delivered in the form of a vehicle or a gym membership, and the monetary salary will be adjusted accordingly.
The DEECD argued that the laptop was provided as part of a salary packaging agreement, as the teacher gained benefits from the Program. But Justice Bromberg found that it wasn’t whether the benefits were capable of being a form of remuneration, but whether they were provided for the explicit purpose of being part of a teacher’s salary. As the teacher was required to pay a fee in exchange for participating in the Program, it became an agreement entirely separate to the teacher’s salary. The program was not considered to be a form of payment, especially as the ability of teachers to use the laptops was highly regulated and the DEECD reserved the right to reclaim the equipment.
The question then became whether the payments were unreasonable given the circumstances. Under the Fair Work Act employers are allowed to make deductions from amounts payable to employees in limited circumstances, including if the deductions are authorised by the employee in accordance with an enterprise agreement or authorised by Victorian law. The Act also invalidates contractual terms where they have the effect of permitting the employer to make a deduction if the deduction is:
The Program’s main benefit to teachers was the private use of the laptop that they were allowed. This varied with each teacher, making the matter difficult to decide in a general way.
The Court found that the amount recovered by the DEECD from the teachers went beyond recovering the cost based on a teacher’s private use of the laptop. Given the low amount of private use of the laptops and the fact that the DEECD gained a benefit from the provision of adequate work equipment, the Court found that a contribution of 10% or under of the overall cost would be reasonable. The average cost passed on to the teacher by the DEECD was 40% and in some cases 100%, and so the payments were seen as unreasonable.
The DEECD relied on the argument that the Program gave significant benefits to teachers as they received a laptop at a much lower cost than the average rental cost, and so teachers chose to participate in the Program as it was a desirable benefit. However, given the fact that there were so many restrictions placed on the use of the laptop, the Court did not believe that it was valid to compare the terms of the Program with the cost of purchasing or renting a laptop for private use. In some circumstances, teachers would only have access to important software if they participated in the Program, and as such, they felt they had no choice. This also indicated the unreasonableness of the Program.
The nature of the legal agreements in the Program were often complex and teachers were at times unable to understand the full nature of their obligations or entitlements. Their lack of understanding did not alter the enforceability of the agreement, as all individuals who sign a contract have a responsibility to ensure they understand the terms. However the format of such contracts can often impede understanding. Under the re-named eduStar.ntp Program teachers must accept the terms and conditions of an online licence agreement which may not be the easiest format for some to understand.
This is perhaps a reminder for schools that, if they wish for teachers to correctly uphold their contractual obligations (i.e. under an employment contract), they must set them out in an easily accessible manner. Similar principles apply to the wording of school policies and procedures which apply to teachers.
Although the Program applies to government schools, there are important lessons for non-government schools in relation to the provision of work equipment and making deductions from teacher salaries.
Schools should be careful when deducting monies from an employee’s wages, particularly in the absence of any specific provision for permission to do so under the applicable State or Territory employment legislation or the individual contract of employment.
Schools must pay careful attention to the Fair Work Act and provisions relating to salary packaging agreements to ensure that they are providing equipment in a reasonable manner and that they are not requiring any unreasonable payment from their staff.
Although the Court’s decision was only in relation to the DEECD’s policy, other States including NSW have similar programs in place. Consequently, this decision could have consequences regarding the legality of terms and conditions of those schemes. Importantly, the programs must have operated from 2009 for the same principles to apply, as it was from this point onward that the Fair Work Act operated.
The Age reported that Australian Education Officer Meredith Pearce labelled the decision ‘a win’ for the union members and stated that it would be an important precedent. She reported that her colleagues in other jurisdictions were watching the decision closely. Further developments will be closely followed by all States and Territories to see whether teachers will be repaid the $20 million collected as part of the program.
This Program constitutes yet another controversy for the DEECD. The Age reports that this is merely the latest development in an ongoing scandal relating to corruption within the Department.