How can you defend an employee's claim for adverse action?

On 7 September 2012 the High Court of Australia delivered its much anticipated decision in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32. 

In this Bartier Bulletin we examine the valuable guidance provided by the High Court on the proper application of the adverse action provisions in the Fair Work Act 2009.

The Barclay decision does make it possible to successfully defend adverse actions claims if it is the case that the employer's decision was not motivated by a protected attribute or taken for unlawful reasons.  Employees cannot now confidently rely on the mere fact that they might have a protected attribute (such as being a union member) as the sole basis to pursue their claims.

A cautionary note: The Barclay decision is not a shield to claims of adverse action.  Seen in perspective, the decision still requires courts to determine, on all the available evidence, the reasoning behind the employer making the decision.  Decision makers must still defend their decisions, ultimately in the witness box and under cross examination.

Adverse action

Under the Fair Work Act, an employer cannot take adverse action (which includes dismissal or any other detrimental action) against an employee for reasons that include the fact the employee has a workplace right or protected attribute.  These rights and attributes include being a union member, engaging in industrial activity, making a complaint, having a benefit under a workplace law or being of a particular race, sex, sexuality etc.

An employer has a reverse onus of proof, meaning the employer must demonstrate that the reason or reasons for taking the action were not because of a workplace right or protected attribute held by the employee.

There are civil penalties for a contravention of the adverse action provisions of the Fair Work Act and a court may award compensation for any loss or damage (uncapped).

The facts

Mr Barclay was a team leader employed by the Institute and was also a union official.  Mr Barclay sent an email to union members at his workplace advising of reports of employees "being asked to be part of producing false and fraudulent documents" and asking them not to participate in creating "false/fraudulent documentation" as part of the Institute’s current process of applying for re-accreditation. 

Mr Barclay did not relay these concerns or reports about alleged fraud to his employer.

When becoming aware of Mr Barclay’s email correspondence to on-site union members, the Institute’s CEO suspended Mr Barclay for not disclosing the alleged fraudulent behaviour particularly given his role as a public servant and team leader.  Mr Barclay claimed the suspension was adverse action and that the action was taken because of the attribute of his union membership and the fact he engaged in industrial activity in communicating to members.

The Federal Court decisions

At first instance, the CEO satisfied the trial judge that her reasons for suspending Mr Barclay had nothing to do with his union membership or industrial activity in sending the email.  The CEO acted because Mr Barclay did not disclose the serious allegations of fraud to her.

The Full Federal Court on appeal held that the CEO made the decision because of Mr Barclay's role and activity as a union official.  That Full Court said this reason may have been unconscious.  The Court said the CEO could not disassociate from the reasons for her decision to suspend Mr Barclay first from the fact the employee was a union official, and second that the act complained about was in respect of the employee acting as a union official.

So employers faced the prospect of reasons being imputed to them even if they had thought they had acted for some other reason.

The High Court’s decision

The High Court rejected the approach of the Full Federal Court.  It returned to a more common-sense and workable approach. 

The High Court said:

• The fact a person has a protected attribute (such as a union official) does not provide immunity from adverse action. 

• The reverse onus of proof imposed on employers is not a heavy onus.

• The reason for the adverse action cannot be unconscious – as that is a concept that would provoke “hilarity”.

• The action taken need not be entirely disassociated from the protected quality.

• The question for the Court is: why, on the balance of probabilities, did the employer take the action against the employee?

• The reason needs to be a substantial and operative reason, amongst many reasons, in the employer's decision making process.

• The assessment of an employer’s reasons for acting, are to be considered against all facts and circumstances, including the evidence of the decision maker.

In this case, the High Court agreed with the trial judge that the CEO did not act because of any protected quality but rather because of what Mr Barclay did (i.e. not disclose the reports of fraud).

Conclusion

In the past month, Bartier Perry has seen an immediate impact of the High Court’s decision in Barclay on matters in which we are currently acting.  We have had a hearing in one matter vacated and seen speedy resolutions in other applications.  Applicants have appeared, at least initially, less reluctant to pursue claims to a final hearing.

Adverse actions are still nevertheless a high risk area for employers.  The decision maker or makers still need to convince a Court that it did not act because of a workplace right or protected attribute.

However, the Barclay decision does provide employers with the basis to defend decisions if acting genuinely and honestly, and for lawful reasons, without the need of having to meet any unrealistic standards. 

Author: James Mattson