A recent decision of the Federal Court provides a detailed example of the difficulties employers can encounter when attempting to defend an adverse action claim arising out of the selection of an employee for termination on redundancy grounds.
The Fair Work Act 2009 (Cth) (Act) contains provisions called "general protections" that prohibit employers from taking "adverse action" against an employee (e.g. termination, demotion, disciplinary procedures etc) for a range of reasons, including, but not limited to, the fact that the employee has, exercised, or proposed to exercise, a "workplace right". The definition of a "workplace right" is broad and includes an entitlement or responsibility under a workplace law, or the ability to make a complaint or enquiry about the employee's employment.
Employers found to have contravened the general protections provisions can face civil penalties of up to $51,000 per contravention for companies. Individuals such as managers and directors who are found to have been involved in the employer's contravention can also face personal penalties of up to $10,200 per contravention.
National Tertiary Education Union v Royal Melbourne Institute of Technology (2013) (RMIT Decision) FCA 451 involved a decision by the management of RMIT's School of Global Studies, Social Science and Planning (School) to terminate one of its employees, Professor Bessant, on the grounds that she had allegedly been made redundant because her position within the Youth Work discipline (Discipline) was no longer required to be performed by anyone as a result of a staffing restructure within the School.
For RMIT, it was contended that the sole decision maker in respect of the termination was Professor Gardner, who gave evidence that the reasons for selecting Professor Bessant as the employee within the Discipline to be made redundant were "primarily financial". RMIT put forward evidence that the Discipline was running at an annual loss of $300,000 and that the termination of Professor Bessant would contribute to a significant reduction in this deficit.
For Professor Bessant, it was contended that a management team of Professor Gardner, Professor Hayward, Professor de la Harpe and Ms Gough were in fact the decision makers in respect of the selection of Professor Bessant for redundancy. The union submitted that one of the reasons the decision makers had selected Professor Bessant for termination over the other 4 employees within the Discipline was that Professor Bessant had exercised a workplace right by making numerous complaints about Professor Hayward's conduct towards her to various persons in authority within RMIT and to external bodies, such as WorkSafe Victoria. Amongst other things, Professor Bessant alleged that Professor Hayward, the employee responsible for overseeing the restructure of the School, had engaged in workplace bullying towards her.
In ruling that RMIT had taken adverse action against Professor Bessant because she had exercised a workplace right to complain about her employment to competent persons within RMIT and external authorities, Justice Gray found as follows:
- The management team responsible for selecting Professor Bessant for termination consisted of Professor Gardner, Professor de la Harpe and Ms Gough, based on Professor Gardner's evidence that School procedure meant she could not approve Professor Bessant's termination unless the decision had first been endorsed and referred to her by Professor de la Harpe and Ms Gough;
- Although Professor Gardner gave evidence that the reasons for selecting Professor Gardner for termination were "primarily financial", her evidence did not preclude, and indeed even invited, the possibility that other reasons were also considered when making the decision to terminate;
- Professor Gardner was aware of the dispute between Professor Bessant and Professor Hayward and failed to act as "an impartial decision-maker" would by making inquiries to ensure that Professor Hayward was not using the financial position of the Discipline as a pretext to recommend the termination of Professor Bessant for reasons connected with their difficult professional relationship;
- In correspondence with Professor Bessant during the consultation process regarding the alleged redundancy, Professor Gardner repeatedly refused to identify the criteria upon which Professor Bessant had been selected for termination from the 5 employees within the Discipline, referring only instead to the deficit at which the Discipline was running;
- Professor Gardner was not asked whether, and therefore did not expressly deny that, Professor Bessant's actions in exercising a workplace right to complain about Professor Hayward were part of her reasons for selecting Professor Bessant for termination; and
- Because Professor de la Harpe and Ms Gough did not give evidence on behalf of RMIT, Justice Gray could not conclude that Professor Bessant's actions in exercising her workplace rights were not part of their reasons for selecting Professor Bessant for termination.
Lessons for employers
The RMIT Decision demonstrates that, in order to be in a strong position to defend a possible adverse action claim, employers must ensure they implement the following measures when selecting an employee for termination on redundancy grounds:
- A logical and transparent criteria for selecting employees for termination, based on the financial and practical needs of the business;
- All persons involved in the decision-making process create a contemporaneous record of their reasons for selecting an employee for termination;
- Where senior management is aware that a person involved in the decision-making process has a history of conflict with an employee recommended for termination, management must take steps to ensure the reasons that person has recommended the employee for termination do not include an unlawful reason;
- When responding to an adverse action complaint, ensure all decision-makers provide evidence on behalf of the employer and specifically address the unlawful reasons they are alleged to have taken into consideration.
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.