Australia: Federal Court rejects employer’s evidence and finds employer took unlawful adverse action

Last Updated: 15 January 2015
Article by Rebecca Byun

Most Read Contributor in Australia, September 2016

In a recent decision, the Federal Court has found that an employer took unlawful adverse action against an employee because of the employee's workplace right of seeking to make an enterprise agreement and because of her engagement in an industrial activity.

Despite the employer's assertions that the reasons for her dismissal were because of several complaints made against the employee regarding her harassing, bullying and other unprofessional behaviour, Rangiah J determined as a matter of fact that the employee's industrial activities was the most significant factor influencing the employer in its decision making. As such, it was found to be unlawful adverse action.

United Voice v MDBR123 Pty Ltd [2014] FCA 1344


Ms Smith was an employee of a childcare centre and also a member of the Union, United Voice. In the lead up to the termination of her employment, the childcare centre received two complaints against Ms Smith by parents who had taken offence to Ms Smiths' concerns about their child's birth marks and the way in which Ms Smith disciplined another child. As a result, Ms Smith received a formal warning and was advised to immediately improve her interactions with children and families.

Ms Smith also participated in a union campaign to increase union membership at the childcare centre. The aim of this campaign was to achieve 60 per cent membership at the centre so that the Union would negotiate an enterprise agreement in order to access a Government fund for wage increases for early childhood educators.

In the process of persuading her colleagues to join the Union, another employee Ms Clignett declined to join and submitted a complaint against Ms Smith alleging that her conduct in persuading her was rude and harassing. Importantly, upon receipt of Ms Clignett's complaint, Ms Smith's employer chose not to investigate the allegations and proceeded to terminate Ms Smith's employment effective immediately. At the termination meeting, Ms Smith was provided with a termination letter which set out the allegations of unprofessional conduct, workplace bullying and harassment and her coercion of staff members to join the Union based on false information regarding the Government fund.

The reasons for the termination

On behalf of Ms Smith, the Union argued that the reason or one of the reasons for the dismissal was because of her attempts to recruit her colleagues to join the Union and to seek the negotiation of an enterprise agreement. As these alleged reasons were Ms Smith's engagement in industrial activity and her workplace right, her dismissal constituted unlawful adverse action.

Ms Smith's employer rejected that this was the case. Rather, her employer argued that the reasons for the termination were the receipt of complaints from other employees regarding workplace bullying and harassment and her coercion of staff members to join the Union as well as complaints from parents in respect of her aggressive and unprofessional conduct.

Evidence considered and tested by the Court

In seeking to determine the real reasons for the dismissal and whether any of those reasons included Ms Smith's workplace right or her participation in industrial activity, the Court carefully considered and tested all the evidence presented to the Court including:

  • The evidence of all decision makers – The decision makers' assertions that the dismissal was not for unlawful reasons were tested by the Court against documents and correspondence dated around the time of the termination of the employment. The Court found that as a matter of fact, the decision makers' reasons were more accurately represented by the documents and not their oral evidence. The documents showed that the decision makers held a general concern that union activity and increased membership at the childcare centres would negatively affect the culture and profitability of the centres.
  • Evidence which could support the reasons alleged by the employer – In testing the employer's reasons regarding Ms Smith's unprofessional and harassing conduct, no evidence was produced by the employer regarding any complaints of workplace bullying and harassment other than the complaint by Ms Clignett. However the Court found that Ms Clignett's concerns were not valid. More importantly, the Court found that the employer's willingness to accept Ms Clignett's complaint at face value and to proceed to termination of employment without investigation of the allegations discredited the employer's case. The Court also found that there were no grounds to the allegations that Ms Smith applied coercion and pressure to her colleagues in recruiting new members of the Union.

Finding of unlawful adverse action by the Court

In light of the above, it was held that while the reasons for the termination may have included concerns about Ms Smith's behaviour and the complaints received from parents and Ms Clignett, the allegations in the termination letter were overstated or exaggerated particularly in light of Ms Clignett's complaint. It was held that the very fact that these allegations were exaggerated and overstated indicated that the asserted reasons for the termination were not the genuine beliefs of the decision makers.

Based on the evidence, the Court therefore concluded that the most significant factor influencing Ms Smith's dismissal was her participation in the industrial activity, being her efforts to recruit staff as members of the Union and seeking the negotiation of an enterprise agreement.

Key takeaways for employers

An employer has the onus to prove that any adverse action was not because of an unlawful reason.

To best manage the risk of an adverse action claim and to assist employers with discharging this onus of proof if a claim is brought, we set out below some key takeaways for employers based on the approach of the Court in recent decisions:

  1. At the time of termination, be clear on the reasons for termination – It is important that employers take care with the reasons which are presented to the employee at the time of the dismissal. Special care should be taken if the reason being presented to the employee is in any way associated with an employee's workplace rights or participation in industrial activities. Remember, that this includes any workplace rights which the employee has not yet exercised or any industrial activities which the employee has not yet engaged in.
  2. Prepare evidence to support the reasons provided at the time of termination – If a claim is brought by an employee, employers will be tested on these reasons. Employers will therefore need to ensure that there is evidence to support any reasons which are given. The Courts will look not only at the termination letter but also any other correspondence or documents which may provide insight into the mind of the decision maker at the time of termination. It is also important that the reasons provided to the employee are able to be tested against the circumstances and context at the time of the termination. E.g. If the reason given for the termination is the employee's underperformance, evidence will need to be available to support the fact that there was underperformance and that the employee's underperformance was a concern of the employer.
  3. Prepare evidence to rebut any alleged unlawful reasons – Employers will also need evidence that rebuts the claim that the termination was because of a workplace right or engagement in industrial activity.
  4. Limit the number of decision makers – All decision makers involved in deciding to terminate an employee's employment will need to prove that they did not consider the employee's workplace right or involvement in industrial activity in the decision. As such, where possible, it is recommended that the decision makers are kept to a minimum.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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