Australia: Adverse Action: recent cases raise issues for employers regarding the General Protection provisions of the Fair Work Act

Last Updated: 25 September 2011
Article by Brad Swebeck

In our September 2009 Workplace Update we informed you about the potential issues that might arise under the (then) brand new General Protection provisions of the Fair Work Act 2009 (the "Act"). We weren't wrong about their potential scope and, in our opinion, there are many more complex issues in this area heading for human resources.

The Act tells us that a 'person' (read, for example, employer/director or HR manager under section 550 of the Act discussed below) must not take adverse action against another 'person' (read, for example, employee/contractor) because the other person has a workplace right, has or has not exercised a workplace right, proposes or has at any time proposed to exercise a workplace right, or, take action to prevent the exercise of a workplace right by another person (say, an employee of a contractor). This is truly the Rubik's cube of Delphic workplace rights.

These provisions are now just over two years old and there is still little joy for employers wanting to get a firm grip on how they might operate and impact on workplace relations. Trying to predict all the looming workplace issues for employers and HR practitioners under these provisions is like looking at the tip of an iceberg and trying to discern the true depth of meaning and interpretation. The avoidance of iceberg damage will depend on Fair Work Australia's interpretation of adverse action vis-a-vis workplace rights, and, how popular employees/unions will find these provisions over the Act's unfair dismissal remedies.

In the recent Full Federal Court decision in *Barclay's case, an employer was found to have engaged in adverse action because it disciplined a workplace union delegate over union activities (an email which it argued damaged its' reputation) in the workplace. According to the Full Federal Court, if the employer had a complaint about the activities it should have taken it up with the Union given the employee was acting in his union capacity. The solicitor for the employee/union delegate was quoted as saying that: "provided the employee is performing his or her union activities, employers will not be able to dismiss, discipline or subject employees to any detriment by reason of their union activities simply by claiming that their actions were not motivated by the union activity in question"2.

In weighing up matters, the employee might be aware that an adverse action application under the general protections offers a remedy during employment, say, to stop a performance review or disciplinary matter with an injunction. Once the employment ends, the employee might again favour the adverse action cause of action given the uncapped damages (as distinct from the unfair dismissal damages which are capped) and the ability to include elements of compensation for distress and hurt (which are excluded from damages for unfair dismissal). After Barclay's case there is a real concern that it will be very difficult for an employer to justify any action was lawful once the workplace right has been established as a matter of fact by the employee.

It is not all bad news though. There has been another recent case which has taken a load off our mind. We must say, however, the relief might be temporary because it is only a single judge's decision which does not have the same authority as a Full Bench or Court of Appeal decision. In the Barnett decision the Court decided that a contract of employment was not a 'workplace instrument' (as defined by the Act) which gave rise to an adverse action claim3. Many applicant practitioners believe, however, that this decision is wrong and that contracts of employment, in the same vein as human resource policies, should give rise to work place rights which can be adversely affected by an employer's conduct or potential conduct. We must admit that this argument possesses, at first blush, a common sense feel about it. We will just have to wait and see but until then the judgment in Barnett's case is the authority on the question.

The General Protections are in addition to the rights employees have under the Act for unfair dismissal and unlawful termination because of a temporary absence or on discriminatory grounds. They are also in addition to, say, the two year right an injured employee has to seek reinstatement under the NSW Workers Compensation Act. Some commentators have referred to the additional protections as a bit of Labor exgratia to its main supporters at the last election.

In our opinion, these provisions could cover yet to be discovered employment rights which arise when employers are considering termination, performance management or discipline. Sort of like the applicant's force majeure of employment rights. Many employers still do not realise, for example, that the Act recognises contractors as "persons" who have workplace rights under the General Protection provisions of the Act dealing with adverse action. These rights could arguably (and notwithstanding Barnett's decision discussed above) be found in a workplace instrument (such as an HR policy or contract of engagement) granting a contractor the right to make a complaint.

The adverse action (including the threat of adverse action) can extend to an act (or threatened act) of dismissal, injuring an employee in his/her employment, altering the position of the employee to his/her prejudice, or, discriminating between employees in the workplace. These forms of action can potentially cover a wide range of matters. In ALAEA v International Aviation4 Barker J of the Federal Court stated that: "the simple statutory question for the purpose of identifying an 'adverse action' is whether, in a given case, there is an action taken by an employer against an employee that in fact 'alters the position of the employee to the employee's prejudice'+there [is no] requirement for that action to have been intentional".

Employers should be sitting up and paying attention to the case law developing around these provisions. Very recently the Federal Magistrate's Court said an employer had taken adverse action when it terminated the employment of an employee for misconduct in circumstances where the employee had also lodged a workers compensation claim5.The adverse action was the dismissal and the workplace right was the right to lodge the workers compensation claim.

In this case the employee sought and was granted reinstatement. The court stated that it was: "a remedy which is in practical effect intended to put the employee back in an employment situation which he lost by reason of an unlawful action. That is, in the immediately foreseeable future period after the making of the order".

There is also a real risk for directors, officers, General Counsel, HR managers and the like under section 550 of the Act who aid, abet, counsel or procure a breach of the Act, such as the adverse action provisions, or who conspire to effect a contravention of the Act or in any way by act or omission directly or indirectly are knowingly involved in the breach. This extension of liability applies to breaches concerning both contractors and employees (or prospective employees).

In the recent 2011 case of Fair Work Ombudsman v Centennial Financial Services Pty Ltd6 an HR manager was found guilty along with the company/employer under the (then) Workplace Relations Act 1996 because "as Centennial's human resources manager he was responsible for ensuring the company complied with applicable workplace relations laws". This same extension of liability has been maintained in section 550 of the Act and is of equal force when dealing with the general protection provisions.

Our advice is that HR practitioners should get themselves across a few facts about the Act's adverse action provisions:

  1. Fair Work Australia can award damages (uncapped) that can arguably include a component for distress and shock (as distinct from damages for unfair dismissal which specifically exclude such heads of damage and are capped at around $59,000);
  2. Reinstatement is a remedy (as in unfair dismissal);
  3. There is a reverse onus of proof meaning once the fact of a workplace right and conduct are established the burden of proving there was no adverse action shifts to the employer, that is, adverse conduct will be presumed unless and until the employer proves otherwise;
  4. If the action is taken for a prohibited reason then it does not matter what was or how many other reasons were behind the action;
  5. Some claims can linger for up to six years, for example, discrimination and arguably bullying, although once the employment has been terminated the time limit reduces to 60 days;
  6. Injunctions can be granted by the Court to stop an employer from seeking to prevent an employee exercising a workplace right, for example, a complaint under a disputes procedure;
  7. The definition of workplace right extends to complaints "in relation to (the) employment". This would cover, in our opinion, matters that were not directly related to the employment relationship such as social issues (the "greening" of the workplace), bullying, or work/life balance claims pre-employment; and
  8. Employees can't hedge their bets – if they think they have an adverse action claim and an unfair dismissal claim they need to choose which one to bring – they can't bring both simultaneously, and if they bring one and fail they are likely to be out of time to bring the other.

Human resource practitioners should now factor into every workplace decision, which might affect an employee's employment or rights, the recent case law and points above. The minefield known as workplace relations has, since July 2009 when the Fair Work Act commenced operation, become a lot more dangerous for those employers which fail to appreciate the substantial changes it made to those workplace relations7 .

Quick OHS tip

Make sure your first aid facilities are in order! WorkCover is on the war path with nearly 400 improvement notices relating to first aid having been issued since 2008. The NSW Act is very prescriptive as to employers' first aid obligations. All workplaces are required to have a first-aid kit, with the size of the kit depending on the number of staff, and workplaces that employ more than 200 people (or construction sites with more than 100) must have a first aid room. First-aid rooms must be controlled by an ambulance officer, a registered nurse, a medical practitioner or a person with a current occupational first-aid certificate obtained in an approved course.


1 Otto Von Bismark once said that "laws are like sausages: It's better not to see how they are made". The Code of Practice on first aid under the harmonised law is due to be released next month but even if this is less prescriptive than the current NSW obligations don't expect WorkCover to slacken off any time soon.
2 Barclay v Board of Bendigo regional Institute of Technical and Further Education [2011] FCAFC 14
3 [2011] FCA 968
4 [2011] FCA 333
5 Stephens and Australian postal Corporation [2011] FMCA 448
6 [2011] FMCA 459
7 Wisdom consists of the anticipation of consequences (Norman Cousins 1912-1990).
*Barclay's case is the subject of a special leave application by the employer to the High Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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