Australia: The never ending story - Federal unlawful discrimination claims may never be out of time

Key Points:

If this decision is followed, former employees could bring unlawful discrimination complaints under Federal law without any real limitation period, long after records have been destroyed.

Most employers will keep employment records and other documents relating to their employees for a period of at least seven years after the employment ceases. After that time has passed, practices vary, but many employers will destroy those documents, secure in the belief that the time limit for making employment related claims has passed. A recent decision of the Federal Magistrates' Court of Australia has, however, raised significant concerns about the capacity for an ex-employee to bring an unlawful discrimination claim in the Federal system many years after the after the alleged discrimination occurred and the employment has ceased.

The claim

In Kujundzic v MAS National [2013] FMCA 8 (11 January 2013), Federal Magistrate Cameron considered an interlocutory application by the second respondent seeking dismissal of Ms Kujundzic's claim on the basis that it was out of time and thus statute-barred. She had been employed from 2003 to mid-2006. Over five years later, in August 2011, Ms Kujundzic lodged a complaint with the Australian Human Rights Commission (AHRC) alleging disability discrimination, racial discrimination and sexual harassment in the course of her employment.

Under the Australian Human Rights Commission Act 1986 there is no time limit for the bringing of a complaint to the AHRC but the President of the AHRC may terminate a complaint on a number of grounds – including if the complaint was lodged more than 12 months after the alleged unlawful discrimination took place. In this case, given that the alleged conduct had occurred more than five years before the complaint was made to the AHRC, the President terminated the complaint.

Ms Kujundzic then applied to the Federal Magistrates' Court within 60 days of the termination of the complaint by the AHRC, as provided for in the Act. The second respondent asserted that the application to the Court was out of time as the events referred to had occurred more than six years earlier.

Success for Ms Kujundzic in the Federal Magistrates Court

After considering the various legislative provisions and a range of arguments, including arguments relating to constitutional inconsistency, Federal Magistrate Cameron held that the Limitation Act 1969 (NSW) did not apply to the matter and that the only limitation on bringing a claim to the Court was that any such application must be made within 60 days of the complaint being terminated by the AHRC. In making this decision the Federal Magistrate noted the submission that this may lead to unjust outcomes.

Implications for employers

If the Federal Magistrate's decision represents the correct interpretation of the Act, then this is of significant concern to employers as it gives former employees the capacity to bring unlawful discrimination complaints under Federal law without any real limitation period. An ex-employee could bring such a claim 10 years after the cessation of employment (when all employment records have been destroyed and where witnesses may not be available and the memories of those who are available will have, inevitably, faded) without needing leave of the Court to do so. The only limitation would be where the ex-employee fails to bring such an application to the Court within 60 days of the termination of the AHRC complaint.

Such an outcome could not have sensibly been the intention of Parliament, particularly when no other Federal and State employment related claims have an unlimited period of time in which they can be made. The facts that the Act allows the President to terminate a complaint that is more than 12 months old, and that employee records under the Fair Work Act 2009 (Cth) only need to be kept for seven years post-employment, suggest that this outcome was not intended.

Be that as it may, employers should review and consider their record-keeping procedures for decisions that may be contentious (for example, how employees are selected for redundancy) to help meet any claims that are made post-employment.

The Human Rights and Anti-Discrimination Bill (Cth) 2012

As many employers would be aware, the Federal Government has released an exposure draft of the Human Rights and Anti-Discrimination Bill (Cth) 2012. Importantly, the Bill does not contain any time period or limitation on complaints being pursued in the Federal Court or Federal Magistrates' Court.

Like the current legislation, an applicant must bring such a complaint within 60 days of termination (or closure) by the AHRC. The Bill replicates the AHRC's current ability to terminate or "close" a complaint which has been brought 12 months after the alleged conduct occurred. However, if a complaint is closed by the AHRC on a basis which includes that it was made more than 12 months after the alleged conduct occurred, then the applicant must obtain the leave of the Court to pursue the matter in the Federal Court or Federal Magistrates' Court. It remains to be seen whether the Court will refuse leave in circumstances such as those in Kujundzic's case.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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