Adverse action claims just got harder to fight

Adverse action claims under the Fair Work Act are becoming a tool used more frequently by employees and former employees to press claims against employers. A recent decision of the Federal Court compounds the effects that is likely to have on employers’ abilities to defend those claims. A majority of the Court found that the Far Work Act makes it more difficult for employers to defend claims of this kind.

Fair Work Australia reported in its quarterly statistical reports for September and December 2010 that the number of adverse action claims under the Fair Work Act is on the rise. The number of claims in each of those quarters were 434 and 464 respectively. That compares to a total number of claims in the year ending June 2010 of nearly 1200.

The figures suggest that adverse action claims are becoming a more popular route for employees who don’t have unfair dismissal claims, are still employed and have complaints against their employer, or wish to make an anti discrimination claim.

The decision of the Full Federal Court in Barclay v Bendigo Regional Institute of TAFE represents a significant shift in the approach of the courts to interpreting adverse action provisions.

Defending claims under adverse action provisions and similar provisions contained in previous versions of IR legislation has always been difficult. The legislation specifies that any adverse action where it is proved that the employer has taken against an employee will be deemed to have been taken for an illegitimate reason unless the employer can prove to the contrary.

In Barclay’s case a union delegate alleged that disciplinary action was taken against him because of his position as a union delegate. To successfully defend the claim the Bendigo TAFE had to prove that it took the action against the employee not because of his position as a union delegate but because he engaged in conduct for which any employee would have been disciplined.

Barclay had sent an email to a number of fellow employees in their capacities as union delegates, warning them against assisting in the preparation of false documents connected with a critical quality audit which was to occur at the TAFE. The delegate had received complaints from four union members about pressure being applied by management but there was not any substantial evidence that that had occurred. It was found by the Court that his email went further than the conduct complained of.

Bendigo TAFE suspended the union delegate and commenced disciplinary action because he failed to report such a serious matter to management and because he refused to provide particulars of the allegations to management when asked. He refused to do so because the employees had asked the delegate to keep their complaints confidential.

The delegate and the union sued the Bendigo TAFE, claiming that it had taken adverse action against the delegate because he was a union delegate. The CEO of the Bendigo TAFE gave evidence that she was motivated by her concern about possible breaches of public service codes of conduct by the delegate and the fact that the email broadcast had the potential to damage the reputation of the TAFE, particularly in view of the audit process. She also said that she was not motivated by the fact that the employee was a union delegate.Her evidence was accepted and the Bendigo TAFE was found not to have acted for the prohibited reason that the employee was a union delegate.

The judge followed the approach of the courts to this question in previous cases — to determine the reasons why the person who took the adverse action against the employee made the decision to take that action.

The approach of the Full Court on appeal was very different. The majority of the Court decided it was not enough to determine the case on the basis of the CEO’s genuine intent at the time she acted.

According to the majority, the Fair Work Act alters the way that these claims must be considered. It is necessary in adverse action cases to examine the objective circumstances in which the decision was made to determine what the “real reason for the decision” was. In circumstances where the email from the union delegate was clearly sent in his capacity as a union delegate the employer could not try to distinguish between his conduct as a delegate and his conduct as an employee.

The net result of all this was that the TAFE was found to have breached the Act.

The consequences for employers are potentially very serious. By accepting the proposition put on behalf of the union and the delegate that his activity as a union delegate and as an employee were inextricably intertwined, the Court has potentially made it impossible to take any action against an employee if his action in some way relates to the activities of the union. On the reasoning of the Court it would not seem to matter that an employee, for example, sends an email that was grossly inaccurate and resulted in actual damage to the employer.

In short, taking any sort of disciplinary action against a union delegate may well have become, for all practical purposes, close to impossible to do in a legitimate way.

The lesson for employers is to exercise extreme caution when taking any disciplinary step against an employee where the conduct complained of is related to their activity as a union delegate or member.

Peter Vitale is a lawyer who has his own practice focussed on employment and industrial relations law. Find him at www.petervitale.com.au