Australia: Adverse action claim refuted by employer's workplace investigation

Last Updated: 3 September 2012
Article by Joe Catanzariti

Most Read Contributor in Australia, October 2017

Key Points:

An employer's workplace investigation proved critical in holding that adverse action had not been taken for a prohibited reason.

A workplace investigation which causes prejudice to an employee can be the subject of an adverse action claim under the Fair Work Act 2009 (Cth). However, in CFMEU v Leighton Contractors Pty Ltd [2012] FMCA 487, Burnett FM relied on the employer's workplace investigation in holding that adverse action had not been taken for a prohibited reason.

The decision is important because it illustrates the role played by workplace investigations in adverse action proceedings. This investigation demonstrated that the respondent's real motive was to assess whether the employee was entitled to workers' compensation. Therefore, entitlement to workers' compensation could not be an operative reason for any of the impugned conduct.


The respondent, Leighton Contractors, employed Mr Hayward as a coalmine operator. On 31 August 2011, Mr Hayward made an application for WorkCover payments under the Workers' Compensation and Rehabilitation Act 2003 (Qld) arising out of an injury suffered by him in Leighton's workplace. Leighton initially accepted Mr Hayward's claim.

However, in late September 2011, it received a report, based on rumours circulating in the workforce, that Mr Hayward had on past occasions fabricated workers' compensation claims. In light of this report, Leighton referred Mr Hayward to an occupational physician. The physician delivered a report on 4 October 2011, finding that the "prognosis remains good".

Leighton also commissioned an investigation into Mr Hayward's state of health, giving the investigator a copy of Mr Hayward's WorkCover application and the occupational physician's report. On 15 November 2011, Leighton received the investigator's report which showed that Mr Hayward had full and free neck movement. This contrasted with the report of the neurologist used by WorkCover who found "virtually little demonstrable neck movements".

On 16 December 2011, Leighton management met Mr Hayward and advised him of its surveillance material and its concern that he was being dishonest in his compensation claim. Mr Hayward did not respond to the allegations but sought a copy of the surveillance material. At the conclusion of the meeting, Mr Hayward was stood down, pending a further investigation into the matter. Subsequent correspondence from Leighton to Mr Hayward alluded to the possibility of disciplinary action.

Before Leighton could dismiss Mr Hayward, the applicant, CFMEU, filed an application restraining it from taking adverse action. The CFMEU claimed that Mr Hayward was the subject of adverse action for a prohibited reason under section 340(1) of the Fair Work Act.


Burnett FM first considered whether any of the alleged prohibited reasons were in existence, such that they could have formed part of the reason for the alleged adverse action. The prohibited reason put forward in the case was that Mr Hayward had a workplace right under a workplace law. The workplace law was alleged to be the Workers' Compensation and Rehabilitation Act and the rights under it were said to constitute workplace rights.

The first question was whether the Workers' Compensation and Rehabilitation Act constitutes a workplace law as defined in section 12 of the Fair Work Act. Burnett FM held that since the Workers' Compensation and Rehabilitation Act creates a regime for statutory compensation of workers' injuries, it regulates and defines the employer employee relationship. Therefore, it was held to constitute a workplace law under section 12(d) of the Fair Work Act.

Burnett FM next considered whether Mr Hayward had a workplace right under the Workers' Compensation and Rehabilitation Act. Ultimately, Burnett FM held that Mr Hayward had the following rights under the Act: his entitlement to claim WorkCover benefits and to prevent Leighton from making unauthorised use of or obtaining "workers' compensation documents" as defined in section 572A of the Workers' Compensation and Rehabilitation Act. (As explained above, Leighton was found to have provided certain documents to an investigator.)

Leighton sought to argue that section 572A of the Workers' Compensation and Rehabilitation Act could not be the basis of a finding on workplace rights because it was inconsistent with a federal industrial agreement, namely, the Leighton Moorvale/Olive Downs/Codrilla Enterprise Agreement 2012.

Leighton contended that the 2012 Agreement allowed it to investigate an employee's conduct for the purposes of investigating any alleged fraud. Therefore, section 572A, to the extent that it limited its access to workers' compensation documents and impeded its investigatory goals, was alleged to be inconsistent with the 2012 agreement and invalid by virtue of section 109 of the Constitution.

However, Burnett FM rejected this argument on the grounds that there was no intention in the 2012 agreement to cover the field of access to workers' compensation documents to the exclusion of section 572A. Rather, the two sources of rights were held to be supplementary to each other.

Was adverse action taken?

Mr Hayward alleged that the following acts were instances of adverse action in the sense that they caused a "prejudicial alteration in his position: commissioning the investigation report, use of the workers' compensation documents, the meeting of 16 December, namely, suspending Mr Hayward, and sending Mr Hayward show cause letters and other like correspondence on 17 February 2012, 10 March 2012 and 2 May 2012. Burnett FM held that, as a matter of principle, the mere commissioning of an investigation does not equate to a prejudicial alteration in an employee's position.

Burnett FM also held that the use of Mr Hayward's workers' compensation documents was not adverse action because the respondent had only used the documents to consider whether Mr Hayward was being dishonest at a stage when it had not embarked on any concrete course of action.

However, Burnett FM held that the meeting on 16 December and correspondences between Leighton and Mr Hayward from that date to 2 May 2012 constituted adverse action. These events caused a prejudicial alteration in Mr Hayward's position because:

  • at the 16 December 2011 meeting Mr Hayward was stood down;
  • Mr Hayward was called upon to show cause in relation to the allegations against him; and
  • the events generated a threat of dismissal.

Taken for prohibited reason?

Burnett FM's findings boiled down to one final question: did Leighton take the adverse action (that is, holding the meeting on 16 December 2011 and sending the subsequent correspondences) because of Mr Hayward's claim for WorkCover benefits and/or because of its unauthorised use of workers' compensation documents.

Since Burnett FM was satisfied about the existence of adverse action and Mr Hayward's entitlement to workplace rights, section 361 of the Fair Work Act came into operation, such that Leighton bore the burden of proving that the adverse action was not taken for any prohibited reason.

In accordance with the approach taken in Barclay v Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14, Burnett FM highlighted the need to find the "operative or immediate reason" for the conduct, which need not be a dominant or sole reason.

Burnett FM held that Mr Hayward's claim for workers' compensation was not an operative reason for any of the adverse action. The claim itself provided background for Leighton's conduct rather than an immediate reason.

Instead, Leighton's motivation was to determine whether Mr Hayward had engaged in fraud on the workers' compensation system. Mr Hayward's entitlement to WorkCover payments could not have been a reason for Leighton's conduct since Leighton had taken action to investigate whether or not Mr Hayward even had an entitlement to it: "I consider that the conduct of an investigation into a jurisdictional fact cannot of itself constitute evidence of improper motive unless that conduct was undertaken unreasonably or not in [a] bona fide manner".

Similarly, it could not have been the case that Leighton was motivated by Mr Hayward's entitlement to preclude unauthorised use of workers' compensation documents. Again, the evidence indicated that Leighton's motivation was to investigate the veracity of Mr Hayward's compensation claim. Thus, Burnett FM rejected the application because it had not been shown that the alleged adverse action was taken for a prohibited reason.

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