Australia: High Court puts end to adverse action controversy

The High Court of Australia has overturned a controversial decision and found that Bendigo TAFE did not take adverse action when it suspended a union official and employee for alleged misconduct.

Background

Barclay was in employee teacher at Bendigo TAFE as well as an official of the Australian Education Union (Union). Barclay sent an email to members of the Union referencing allegations of fraudulent documents being produced as a part of an audit being conducted at the TAFE. Barclay had received the information regarding the allegations from Union members who had come to him in confidence.

Barclay had not discussed the allegations of fraud with TAFE management prior to sending the email. He was asked to show cause why he should not be disciplined and was suspended on full pay while the allegations were investigated.

At first instance the Federal Court found the evidence of Bendigo TAFE's CEO very credible and found that the reason she had made the decision to suspend Barclay was concern over the effect the conduct had had on the reputation of the TAFE, the distress the language in the email would cause to staff and the effect the email would have in undermining staff confidence in the audit process. The Federal Court found that the TAFE had not taken adverse action against Barclay for a prohibited reason.

Federal Court Appeal

Barclay appealed against the decision of the single judge in the Federal Court. The majority of the Full Court of the Federal Court set aside the earlier decision and found that the adverse action taken by the TAFE in suspending Barclay was done for a prohibited reason, specifically because of Barclay's association with the Union.

The Full Court of the Federal Court held that enquiry must be made into the real reason for the decision and that the real reason may not necessarily be the reason the person asserts and may even be a subconscious thought. This meant that the Full Court rejected the evidence of the TAFE's CEO with great weight being placed on the fact that the CEO knew of Mr Barclay's role as a union official and felt this must have somehow influenced (albeit unconsciously) her decision.

In addition to this, the Court held that Barclay sent the email in his capacity as a union official and not as an employee and therefore could not be disciplined as though he was acting as an employee at the time of sending the email.

The decision of the Full Court of the Federal Court was controversial as it created a perception that union officials were immune from disciplinary action so long as they were acting in their capacity as union officials and not employees at the time of any misconduct. In addition, the great weight placed on perceived unconscious influences affecting decision makers that flow from a consideration of the factual circumstances surrounding the decision, with little weight being placed on the actual evidence of the decision maker, dramatically increased the difficulties faced by employers in proving decisions were made for reasons that were not prohibited.

High Court Decision

The High Court overturned the decision of the Full Court of the Federal Court unanimously holding that the subjective state of mind of the decision maker is relevant in determining why adverse action was taken but the question is really one of fact, which must be considered in light of all of the evidence.

The reliable, convincing evidence of a decision maker is capable of determining the reasons behind a decision. Direct evidence of a decision-maker's state of mind is important evidence and is capable of discharging the employer's burden of the reverse onus of proof if such evidence is legitimate and accepted by the Court.

The Court further held that the surrounding factual matrix of a decision, such as the fact that Barclay was a union official, should not increase the burden placed on an employer in establishing a decision was made for a reason which was not prohibited. For the Court to approach the question otherwise would entitle Barclay to advantages that other employees are not afforded simply because Barclay was a union official.

Conclusion

The High Court's ruling is a welcome decision that should dispel the perception that had been brewing that Union officials and representatives were immune from discipline so long as they were acting in their Union roles.

The Court has also strengthened the position of employers to give direct, genuine evidence of the reasons for a decision and have that evidence accepted by a Court as discharging the reverse onus of proof without the need for examination of any possible subconscious or unconscious influences driving a decision.

Nonetheless, employers are advised to take great care and seek advice before taking adverse action which could invoke the general protections provisions in the Fair Work Act 2009.

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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.