Australia: Adverse action under Fair Work Act clarified by Barclay decision

Adverse action under the Fair Work Act has been one of the most high-profile issues in workplace law, and we now have the first major appellate court decision explaining how some of the relevant provisions work, and employers' responsibilities under them.

Although the Full Federal Court's decision in Barclay v The Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14 is based on the protection given to union members and officers, much of the reasoning will apply to the laws protecting all current and potential employees who exercise workplace rights too.

The decision was a 2/1 majority decision and the reasoning of the joint majority judgment differed significantly from that used by the trial judge and the dissenting judge, and gives the adverse action provisions a wider application, and creates for employers (and other persons) a larger area of potential liability than previously believed.

Barclay's email to union members and its repercussions

Using his work email account, but identifying himself as the President of his union sub-branch, Greg Barclay emailed other union members saying some union members had told him about serious misconduct by unnamed persons at his workplace. He did not report these allegations to his managers before sending the email, nor give them the names of the complaining members when requested.

His employer then asked him to show cause why he should not be disciplined for failing to report the misconduct. He was suspended on full pay, had his internet access suspended and was required not to attend work during his suspension. He was also asked to show cause why he should not be subject to disciplinary action for his conduct. Each of those actions by his employer was alleged to be "adverse action".

Because of the reverse onus, the employer had to positively establish that the adverse action was not taken for reasons that included a "prohibited" reason. It succeeded at trial by showing that the decision-maker's subjective reason had not been Mr Barclay's status as a union official or because he had engaged in industrial activity as defined in the Fair Work Act.

The Full Federal Court overturned this, and gave valuable guidance on how the adverse action laws work.

What the Fair Work Act says about adverse action and industrial activities

The Fair Work Act says in section 346 that adverse action cannot be taken against another person because the other person:

  • is or is not, or was or was not, an officer or member of an industrial association; or
  • engages, or has at any time engaged or proposed to engage, in industrial activity; or
  • does not engage, or has at any time not engaged or proposed to not engage, in industrial activity (which is defined in section 347).

There's also a similar ban relating to workplace rights.

Usually, claims of adverse actions involve an employer taking action against an employee, and so for the sake of convenience we'll use those terms in this Alert – but it's important to remember the Act doesn't limit the ban to employers and employees.

These laws not to be interpreted narrowly

The majority judges said that because these laws are meant to be protective, they should not be construed narrowly:

"Employees are to be free to assume membership and office in industrial associations and to be represented by industrial associations, and to engage in lawful industrial actions, without the risk that their employers will disadvantage them as a consequence."

They also said that a broad view should be taken the provisions that protect employees against adverse action because the employee is a member or officer of a union. It won't be limited to the mere fact of membership or office-holding. That means that the normal incidents of being a union member or officer will be protected.

What about the employer's state of mind?

The Full Federal Court said the employer must show that the real reason or reasons for taking the adverse action are "dissociated from the circumstances" listed in section 346:

  • the real reason may not be the reason that the relevant decision-maker asserts it is;
  • the real reason is not necessarily the reason the employer thinks it might have been – it might be an unconscious reason – and it doesn't matter that the employer had a benevolent intent; and
  • if there is an objective connection between the decision to take the action and the attribute or activity in question (for example, union activity) a conclusion can be reached that the action was taken because the person affected had that attribute, or engaged in that activity.

What if the employer subjectively believes that the employee's action as a union member or as part of their union activities is not lawful, and takes adverse action in response on that basis? The majority said this is not decisive, there will still be a breach of the Act if from an objective viewpoint the employer's adverse action can be seen as being connected to union membership or activity by the employee.

What must the employee show?

Whether an employee is a union member or officer, or has engaged in union activity, are objective issues that the employee must prove. But once that is proved, it is then for the employer to positively establish that any adverse action they have taken against the employee was not associated with the employee's status or activity as such.

Does it matter how the employer would have treated other employees?

Generally, no. It won't normally matter that the employer would have taken the same action against any other employee who acted in the same way.

The only time it will matter is if the adverse action is itself alleged to be discrimination when compared with other employees.

Does it matter how the employee / unionist expresses his or her views?

Here Mr Barclay expressed himself very strongly. That doesn't mean that he wasn't representing or advancing his union's views. As the Full Federal Court pointed out, it's not for the employer or the court "to make too close an examination of the terms in which a union delegate communicated with he members of his or her union".

Acting as an employee or as a union official?

A key challenge for employers will be understanding what happens when employee activities blend into union activities. The Full Federal Court said:

"If adverse action is taken by an employer in response to conduct of a union, it is impossible for that employer to dissociate or divorce from that conduct its reason for the taking of the adverse action simply by characterising the activity of the union as the activity of its employee."

This could mean, on one reading, that anytime the employee's conduct objectively is done in the capacity of a union member, official and/or as part of his activities as such, the employer's reactive action should be regarded as having been because of the employee's status or activities in a union.

Why Mr Barclay won

Mr Barclay's email and its blunt expression were both part of his functions as a President of a union sub-branch. So was his refusal to break the confidence of the members who approached him with their concerns. These three acts were at the heart of his engagement in industrial activity.

Let's assume Mr Barclay did not perform his industrial activity as well as possible, or overstated the complaints. The Full Court majority reasoned that any failure was his failure as a union officer, not as an employee. His employer should not have dealt with them as if they were his failures as an employee. It was therefore clear from the employer's letter that it had taken the adverse action because he was a union officer and had taken industrial activity, even though the decision-maker thought she was considering his conduct as an employee.

So what does this mean for employers?

It is fair to say that the Full Federal Court's reasoning may be regarded by some as having some contentious elements. Unless and until it is overturned by the High Court, or departed from by a differently constituted Full Court, however, that reasoning must be treated as stating the law on that issue.

It is therefore very important that those working in the field of workplace relations have a good understanding of what was decided in that case and the reasoning used to reach the decision.

The clear message from the Full Federal Court's decision to employers is that their subjective good intentions may not be enough.

Anyone in your organisation who can decide to take action that could be construed as adverse action under the Fair Work Act must understand properly how these laws can operate.

This is especially so when industrial activity, or the exercise of a workplace right, blurs into employment activities. Great caution needs to be exercised if you are contemplating action an employee in response to something that the employee has done or said that was arguably done in their capacity as a union member, official or as part of their industrial activities as such.

It is always necessary to analyse carefully what the employee is doing, whether that's part of their employment or a protected activity, and what (if any) response should be made. If there are doubts, you should seek advice.

It is not presently known whether the employer will seek to appeal the Full Court decision.

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