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Adverse action claims – the practical impact and consequences

10 August 2011

Adverse action claims – the practical impact and consequences

Maria Crabb, Associate

It has been over two years since the commencement of the Fair Work Act 2009 (Cth) and the adverse action provisions. While at the time of their introduction many commentators commented on their “novelty” and their potential breadth, these provisions amalgamated a number of the rights already contained in the Workplace Relations Act 1996 (Cth) including the unlawful termination provisions.

These provisions protected employees from being dismissed due to a temporary absence from work, trade union membership, making a complaint against an employer alleging violations of workplace laws and on discriminatory grounds.

The adverse action provisions seek to protect employees in similar circumstances, not only from termination of their employment, but from other “adverse treatment”. The adverse action provisions also expand the categories of protection to employees who have exercised their “workplace rights”.

An employee has a workplace right if they are:

  • entitled to the benefit of and/or have a role or responsibility under a workplace law;
  • able to initiate or participate in a process under a workplace law; or
  • able to lodge a complaint or enquiry in relation to their employment or to seek compliance with a workplace law.

Fair Work Procedure

The adverse action provisions provide employees with a quick and informal way to commence legal proceedings. PCS has seen a trend of employees earning over the unfair dismissal threshold attempting to use “adverse action” as they would unfair dismissal, if they had access.

If the matter relates to the dismissal of the employee, the parties must attend a conciliation hearing before a member of Fair Work Australia. If the asserted “adverse action” does not relate to the termination of employment of the employee, there is no obligation for the employer to attend the conciliation. This has the effect of frustrating the employee’s claim and requiring them to pursue their claim in the Federal Magistrates Court (“FMC”) (or the Federal Court of Australia) without the benefit of a prior informal conciliation.

Whether the matter will resolve at conciliation or not, is largely dependent on the employer’s willingness to participate actively in the conciliation. It appears that some employers and their advisers have recognised that there is a tactical advantage for them in the process i.e. if the matter is not resolved at conciliation, an employee must commence formal court proceedings at the FMC. Whereas in the unfair dismissal jurisdiction, when a matter cannot be resolved by conciliation, Fair Work Australia will arbitrate. This is less formal than a FMC hearing.

Commencing proceedings in the FMC can be a costly step, and not one which all employees can afford. This is reflected in Fair Work Australia’s yearly statistics which demonstrate that only 5% of matters in 2009/2010 proceeded to the FMC.

Although this may provide some tactical advantages to employers at this point in the process, recent cases suggest that breaching adverse action provisions can have serious consequences for employers, which will encourage more employees to commence formal court proceedings.

Recent decisions

The first successful adverse action case was decided by the Federal Court in 2011, following an appeal from the first instance decision in the FMC that found that Bendigo TAFE had not engaged in adverse action. Up until this time, employers had little guidance about what risks they could face in the event adverse action proceedings were brought against them.

Barclay v Bendigo TAFE

A teacher acting in his capacity as a union official sent an email to all union members at Bendigo TAFE. The email stated that the teacher was aware of serious misconduct engaged in by un-named employees at Bendigo TAFE. The CEO of Bendigo TAFE asked the teacher to “show cause” as to why he should not be disciplined for failing to report the misconduct. The teacher alleged that Bendigo TAFE had engaged in adverse action against him because of his union officer role, industrial activity and workplace rights.

The Court found that Bendigo TAFE had engaged in adverse action as the email the employee had sent amounted to the employee engaging in industrial activity, and the Court found that the employer’s actions were taken because the employee was a union of cer, even though Bendigo TAFE stated the employee was disciplined for his conduct as an employee.

The Federal Court determined that the test in deciding whether adverse action was taken cannot be purely subjective. The objective circumstances in which the decision was made have to be examined to determine the real reason behind the decision. This resulted in Bendigo TAFE being unable to show that but for the employee’s union membership the employee would not have sent the email.

This case puts employers on notice that they need to exercise a higher degree of caution if they are contemplating action against an employee in response to anything they have done or said that could be deemed to be in their capacity as a union official or interpreted as taking part in industrial activity.

This case highlights the conflict between the employer’s prerogative to discipline an employee for conduct at work and manage the workplace, versus the employee having another loyalty to observe which, in this case, trumped the employer’s ability to discipline the employee.

The Federal Court also reiterated that the burden of proof in adverse action matters is on the employer to show that the actions taken by them were not as a result of the employee exercising their workplace rights (or some other protected condition).

ALAEA v Qantas Airways

An engineer was posted to Japan for six weeks. On his return, he claimed payment for additional hours worked, including night shift work. The engineer unsuccessfully sought to recover his entitlements through his line manager. The engineer lodged a dispute under the EBA dispute settlement procedure, which also gave him the right to be sent overseas on a posting. Following the dispute being raised, the manager suspended all overseas postings from the Brisbane site where the engineer worked.

Qantas was found to have taken adverse action against the engineer by coercing the engineer not to exercise his workplace right under the EBA. Furthermore, Qantas and the manager took adverse action by suspending all overseas postings from Brisbane where the engineer was based.

This case highlights how the removal of a benefit can amount to adverse action, even though in this case the engineer was unlikely to be posted overseas in the foreseeable future as he had just returned from a posting in Japan.

A decision as to the pecuniary penalties, if any, to be imposed on Qantas is yet to be handed down. It is also understood that Qantas has appealed the decision.

ALAEA v International Aviation Services Assistance Pty Ltd (“IASA”)

The employee was an aircraft maintenance engineer who performed work for various airlines including Garuda. In April 2009, the employee had concerns about his overtime and roster. The employee, accordingly, raised a complaint with the IASA management team.

After the employee made the complaint, his performance was reviewed and his employment was terminated. The employee commenced unfair dismissal proceedings and was reinstated.

However, following the employee’s reinstatement, the IASA management gave a negative assessment of the employee to Garuda. As a result, Garuda did not allow the employee to maintain his engineering quali cation. The loss of this qualification resulted in the termination of his employment.

The negative comments about the employee were made to Garuda by a manager who had not known the employee for a prolonged period of time, and were based on hearsay.

The reverse onus of proof, as discussed in the Bendigo decision, was reinforced by the Federal Court in this case. The Federal Court was of the view that the employer was not able to show that the adverse action was not taken because of the employee exercising his workplace rights.

There was no evidence around the decision-making process that led to the termination, and why a negative report had been given to Garuda.

The Federal Court therefore found that IASA had engaged in adverse action by victimising and dismissing the employee as a result of him raising his concerns about his pay. The adverse action also included IASA making a negative assessment about the employee and sending it to Garuda.

The Federal Court awarded the employee over $76,000 in lost wages together with $7,500 for hurt and humiliation. This is an important decision as it exposes employers to compensation for injury to feelings, a compensatory element not awarded in unfair dismissal cases. Employees may now opt to commence adverse action proceedings instead of unfair dismissal proceedings, as there is no limit to the compensation that may be awarded, together with the opportunity to argue that they are also entitled to damages for hurt and humiliation.

Stephens v Australian Postal Corporation

The employee was a driver on a fixed- term contract whose employment was terminated after making a workers compensation claim. Prior to the termination, the employee had been discussing the progress of his workers compensation claim with his manager. Due to the discussion taking place, the employee did not attend a customer site to make a pick-up.

When the employee returned to work an altercation occurred with his supervisor. This resulted in the employee using obscene language.

The following day the employee’s manager invited the employee to a meeting. The employee was asked to explain why he swore at his supervisor and why he had failed to attend a customer site for a pick up. The employee also alleged that at the meeting the manager had made discriminatory comments about the employee’s injury. The employee was terminated the following day.

The employee claimed that his employment had been terminated due to him:

  • exercising his workplace right to lodge workers compensation claim;
  • exercising his workplace right not to be discriminated on the grounds of his disability; and
  • due to his temporary illness.

The FMC found that Australia Post had engaged in adverse action against the employee because he had exercised his workplace right to lodge a workers compensation claim and on the grounds of his disability. Australia Post had overstated the seriousness of the alleged misconduct to hide the real reason behind the termination. Further, no contemporaneous notes or evidence were adduced by Australia Post relating to the alleged incident and disciplinary action taken. This lack of documentation did not assist the employer in showing that the employee had been dismissed for reasons other than him exercising his workplace rights.

The FMC ordered that the employee be reinstated and that the continuity of his employment be preserved. A further hearing is scheduled to deal with whether the payment of pecuniary penalties are to be imposed on Australia Post.

Consequences for employers

These decisions highlight the risks employers face if they are found to have breached the adverse action provisions. The Courts will uphold employees’ rights, and their consequent protection. As such, employers must take adequate steps to prevent their actions and decisions being challenged.

Employers should:

  • ensure managers and decision- makers are familiar with the adverse action provisions and protected grounds;
  • maintain complete and accurate records of complaints, investigations and disciplinary action that demonstrate sound reasoning behind the action taken;
  • remember that having a valid reason to discipline an employee does not protect them from an employee arguing that they have been subjected to adverse action;
  • review disciplinary policies, procedures and practices to ensure managers are aware of the obligation to provide reasons for their decisions; and
  • ensure all grievances raised by employees are taken seriously and dealt with promptly, and the decision makers should ensure that employees are not victimised as a result of raising a grievance.
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