High Court to clarify adverse action law

The High Court of Australia will hear an important appeal on the meaning of the adverse action provisions of the Fair Work Act. It will be the first time that the new provisions have been tested in the highest court.

Bendigo TAFE appealed against a decision of the Full Court of the Federal Court of Australia, which found that the TAFE had taken adverse action against an employee. The employee was a union delegate who used his employer’s email system to distribute an email advising employees that he had been informed that employees were being asked by management to falsify documentation relating to an accreditation audit process. The TAFE suspended the employee on the grounds that he should have reported the alleged misconduct to management before publishing the allegation in the workplace and that his email damaged the reputation of the employer.

Mr Barclay took action against the TAFE, saying that the suspension constituted adverse action for the prohibited reason that he was engaging in union related activity. The TAFE before a single judge of the Court and Mr Barclay appealed. The effect of the finding of the Full Court was that employers face enormous difficulty in distinguishing the actions of an employee in his or her capacity as an employee and those actions which are undertaken in the capacity of a union official.

The key departure from previous case law in this area was that the Full Court said that it was not enough for the management of the TAFE to give evidence that they were taking action for breach of the employer’s policy and that they did not act not for reasons relating to the employee’s union activity. The objective circumstances of the case will determine whether or not the employer acted for an improper reason, even if the Court accepts that the intent of the manager was not to act for a prohibited reason. The Full Court said that the wording in the Fair Work Act was broader than previous legislation with similar provisions.

This approach leaves employers potentially facing an almost impossible task in defending adverse action claims.  In effect, the reasons given for an employer’s action will always be coloured by the surrounding facts.  The surrounding facts in a dispute of this nature, taken at face value, will almost always suggest that it is possible that a prohibited reason was activating the decision of the employer.  The onus on the employer to prove that they did not act for a prohibited reason, if they cannot rely on evidence of actual intent, becomes almost impossible to discharge.

The High Court will be asked to rule that an adverse action claim can be successfully resisted if the employer gives evidence, which is accepted by a court, that the employee acted for an “innocent” reason and not a proscribed reason.

Employer groups have recently joined the chorus for reform of the Fair Work Act including the adverse action provisions. Even if the High Court finds in favour of the employer in Barclay’s case, it is likely that the recent rise in adverse action claims, particularly as an easy alternative to unfair dismissal claims, will continue. From the perspective of small and medium employers, legislative reform remains a must. In the meantime, employers should ensure that that are hyper alert to the prohibited reasons for taking adverse action. Adverse action can include concepts as broad as “altering the position” of the employee to his or her prejudice. If you are planning to take any step which might adversely affect an employee who has industrial responsibilities, or who has or may be considering some form of complaint: document your reasons for doing so clearly before acting; consider what the real reasons for your intended actions are; if you are satisfied that your motivation is legitimate, for instance because of the employee’s misconduct, get advice anyway. It could save you time and money in the long run.