Australia: Adverse action and FWA: First High Court decision

Last Updated: 7 November 2012
Article by Nick Noonan

In Board of Bendigo TAFE v Barclay [2012] HCA 32, the High Court has overturned an earlier majority decision of the Full Court of the Federal Court, ruling in favour of Bendigo TAFE and its then CEO, Dr Harvey, finding that there was no adverse action taken against Mr Barclay in contravention of the Fair Work Act 2009 (the Act). The decision provides some much needed certainty to employers in relation to the general protections provisions contained in the Act and represents the first occasion the High Court has opined on the Act.

The High Court confirmed that when a union delegate was disciplined over misuse of email, his employer was motivated by the reasons it gave in evidence and not the employee's role as a union official, despite having been aware of that role. The decision means that employees who are union members, or engaged in industrial activity, cannot escape disciplinary action simply because of their union membership or because they are engaging in industrial activity. This represents a commonsense approach to the broad protections contained in the adverse action provisions, and should provide comfort to organisations forced to defend an adverse action claim.

The Fair Work Act

The Act prohibits an employer from taking adverse action against an employee for a number of proscribed prohibited reasons – such as union membership or activities, making a complaint, or for a discriminatory reason such as race, gender or disability.

The Federal Court decision

At first instance, Justice Tracey of the Federal Court found in favour of Bendigo TAFE, accepting evidence from the CEO that she took action against Mr Barclay because she regarded the allegations as a breach of Mr Barclay's responsibilities as an employee. On appeal, a majority of the Full Court of the Federal Court found in favour of Mr Barclay.

Key findings of the Federal Court were that

  • a prohibited reason could be "unconscious"
  • a person could breach the adverse action provisions even if they honestly believed they were not acting for a prohibited reason
  • a prohibited reason need only be broadly associated with the action taken and not a primary motivation.

The High Court decision

The decision of the Full Court of the Federal court was unanimously overturned. The High Court found that determining the reason for conduct is a question of fact which must be answered in light of all the evidence. Direct evidence from the decision maker that is reliable and accepted will be sufficient for an employer to resist a claim.

There were three separate judgments delivered – Chief Justice French and Justice Crennan; Justices Gummow and Hayne; and Justice Heydon.

Crucial points

  • The relevant provisions of the Act do not require a search for either the objective or subjective reason for a person's actions. Whether a person has contravened the Act is to be answered by asking whether adverse action has been taken for a proscribed reason
  • The prohibited reason must be a substantial and operative factor in taking the adverse action. There is no requirement that the prohibited reason be entirely disassociated from the adverse action
  • There will be no legitimacy in the search for an "unconscious" reason, which the Federal Court had undertaken in the appeal decision. Justice Heydon observed

"How could an employer ever prove that there was no unconscious reason of a prohibited kind? An employer's inquiries of the relevant employees would provoke, at best, nothing but hilarity. The employees might retort that while they could say what reasons they were conscious of, they could say nothing about those they were not conscious of."

  • Direct evidence of the decision-maker's state of mind, intent or purpose will be crucial to establishing the employer's reasons for imposing adverse action on an employee, and evidence comparing what the decision-maker would have done if an employee who was not a union official had engaged in the misconduct will be relevant (Chief Justice French and Justice Crennan).

Lessons for employers

Document any decision making process which concerns an employee or employees. Direct evidence from a decision maker about the reasons adverse action was taken is essential. It can displace the presumption that adverse action was taken for a prohibited reason

Ensure the reasons for making organisational and workplace decisions are justifiable, reasonable and not prohibited

Seek advice if in doubt of your position in relation to an adverse claim. The High Court's decision means that businesses that adopt a sensible risk management approach to adverse action have a significantly better chance of successfully defending an adverse action claim

Union officers are not immune from disciplinary action merely because of their status as union officers

Union officers who are employees may be treated the same way as other employees who are subject to misconduct allegations.

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.

Kemp Strang has received acknowledgements for the quality of our work in the most recent editions of Chambers & Partners, Best Lawyers and IFLR1000.

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Nick Noonan
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